TOPEKA — More and more of the people seeking care at Kansas hospitals lack health insurance or other means to pay.

“People are out of work or losing hours and losing benefits. Companies have closed,” said Dennis George, chief executive of Coffey Health System in Burlington where the hospital’s charity or uncompensated care has jumped from about 2 percent a year to 9 percent over the past several months. “There are a lot of people who haven’t found jobs and they’re running out of benefits. We are seeing those young middle class people who are making tough choices.”

George isn’t the only hospital CEO to see a dramatic uptick in the amount of charity care being provided.

At this month’s Kansas Hospital Association Convention, nearly all administrators asked by KHI News Service about their hospital’s bad debt — or uncompensated care — reported significant increases over last year.

Also noteworthy, some hospital execs said, the profile of the typical uncompensated care patient today is different than before the economy tanked a couple years ago.

Changing profile

The old stereotype of a charity care patient was a homeless person long down on their luck or someone who never rose above a low-paying job that provided no health benefits.

But now, some hospitals are seeing more young, middle-class people who had health insurance before losing their jobs because of the downturn.

“When they lose their job, it’s very difficult to pay their COBRA, or even co-insurance and deductibles—it’s probably the highest stress I’ve seen for individuals,” George said. “So we’re trying to work with them and work through all this. As long as they fill out their application, we work with them on payment plans and charity.”

Kent Hudson reported a similar trend in south central Kingman County. As chief financial officer of Kingman Community Hospital, he’s watched his Critical Access Hospital’s uncompensated care costs rise 20 percent this year.

He said now some 7 percent of the hospital’s patients do not pay all or even part of their bills.

“For the most part it’s still individuals and typically they’re lower income,” Hudson said. “But more and more there are people who work and don’t have insurance. They can’t afford it or their job doesn’t offer it as a benefit anymore.”

Families, not singles

In Wichita, families are making up the bulk of the new uncompensated care patients at Wesley Medical Center, said CFO Matthew Leary.

“Previously a lot of the uninsured were singles and now we have more families that are coming in who don’t have insurance and haven’t quite yet qualified for Medicaid,” he said. “Many more family types are coming in who don’t have the insurance they once had. People who are working class, they’ve been laid off, their COBRA benefits have expired.”

Leary said the majority are seeking “low-level care” in the emergency room to avoid paying cash up front for treatment. He said last year some 13,000 ER visits were uncompensated — more than 35 visits per day.

John Bluford, chief executive of Truman Medical Center in Kansas City, Mo., said the stereotype of uncompensated care patients being mostly homeless no longer applies at his facility.

A more accurate description, he said at a recent business forum on federal health reform, would be “A 30- or 35-year-old without health insurance who two months ago worked at Sprint. The profile is changing dramatically and quickly. It now includes that young person's entire family."

Bluford said Truman’s uncompensated care costs doubled in the last year, up to 10 percent from the typical 5 percent.

At the University of Kansas Medical Center in Kansas City, Kan., uncompensated care went up by 10 percent to $36.8 million in fiscal 2010. But overall inpatient volume increased even more, said spokesman Dennis McCulloch.

Little change has been seen in the profile of the typical charity patient at KU, he said.

“We have not seen a major demographic change in the uncompensated care population, meaning we still see people with incomes below the poverty line. We have seen an increase in foreign nationals,” McCulloch said.

Bucking the trend

Plainville Medical Clinic is a rural doctor’s practice that has seen its level of uncompensated care shrink.

Dr. Jennifer Brull said her uninsured patients who couldn’t pay numbered less than half of last year’s tally, down to 6 percent. Underinsured patients who couldn’t pay were also down about 25 percent. The clinic’s total uncompensated care costs in 2009 were $25,000. In 2010, so far, the costs have been $14,000.

Brull attributed much of the drop to changes last year in the eligibility threshold for the Children’s Health Insurance Program, increasing the number of kids who qualified for HealthWave.

“Before this year, a lot of what we’d write off was kids who didn’t qualify for HealthWave because their parents made just a little bit too much money. Those are the people who will come and bring their kids for routine health visits even if they don’t have insurance.”

Another possible factor in lowering the uncompensated care costs, she said, was diligence getting people on payments plans with a scaled, write-off schedule.

People at the poverty level only have to pay 5 percent of the bill, people at 120 percent of poverty pay 20 percent of the bill and so on up to people at 400 percent of poverty, who pay 90 percent of their bill.

The disparity between Brull’s full-price fees and the payments she actually receives is “written off.”

Cost shifting

In some cases hospitals are prepared to accept such shortfalls as a cost of doing business, while in other cases they will turn bad debt over to a collections agency or charity fund.

For the time being, some hospitals qualify for federal Disproportionate Share (DSH) payments, if their uncompensated care numbers are particularly high. But those payments will be eliminated or reduced as part of federal health reform, when millions of the uninsured are expected to gain coverage either through Medicaid or through subsidized private insurance.

When hospitals don’t get paid, they have to pass costs along somewhere, said Fred Lucky, senior vice president for the Kansas Hospital Association.

“Uncompensated dollars have to be made up by someone else in order to have the hospital maintain its financial viability,” he said. “In most cases, we shift those uncompensated care losses over to insured patients — (that is), the rates we demand from Blue Cross or Cigna or Preferred Health.”

“You have a case of hospital charges escalating much higher than inflation because you to take into account those uncompensated care costs, which are growing substantially as we move forward with the economy being the way it is,” he said.

But insurance companies balk at having to pick up the uncompensated care costs.

“So at some point in time,” Lucky said, “The ability for hospitals to shift those losses to other payers is going to stop.”

The equation may change with health reform. Optimists predict the expansion of coverage to most people in the U.S. will mean far fewer people unable to pay their medical bills. Hospitals will be able to balance their books. The cost shifting also should go down, benefiting everyone across the board.

Opting out

But some hospital executives aren’t so sure. George said even if there’s universal insurance enrollment, there’s still potential for bad debt.

“If you look at the health exchanges, there’s still a cost component that the individual person will have to pay. Like on the silver plan I’ve seen that they’ll be responsible for 40 percent. I still have to go out and collect those dollars to balance my books,” George said.

A major component of health reform is the insurance exchanges — to be operational in each state by 2014 — through which people can buy affordable health coverage.

“And we’re still going to have a 5 to 7 percent gap of people uninsured, George said. “We’re still going to have people opting out.”

And same as today, he said, those people are going to be the ones coming to the emergency room for care and not paying their bills.

→ Related story: Medical debt and uncompensated care—two sides of the same health care coin