How Delaware’s charity care new law impacts hospitals

Delaware Gov. Matt Meyer pushed for a law to help patients with lower incomes get affordable care, but the legislation is going to pose challenges for the state’s hospitals.

Lawmakers approved legislation that makes more residents eligible for charity care. Delaware hospitals will be required to offer free care for those earning up to 300% of the poverty level, and discounted care for those with incomes up to 400% of that level. The Delaware Healthcare Association, which represents the state’s hospitals, supported the legislation.

Brian Frazee, president and CEO of the Delaware Healthcare Association, says the group worked closely with policymakers on the legislation. The group is also working with the state’s healthcare cost review board to enact regulations to fully implement the law.

“It will have a major impact,” Frazee tells Chief Healthcare Executive®.

“From a patient standpoint, it will certainly help people be eligible for charity care in cases where they might not have been before,” he says. “You know, hospitals already had very robust charity care policies prior to this law being enacted. We do it as a requirement of our tax-exempt status, and also because it's the right thing to do.”

While the association is working with policymakers on the regulations, Frazee says that the legislation will pose some challenges for Delaware’s hospitals. He spoke with Chief Healthcare Executive® in the latest episode of Changes, a video series of conversations with healthcare leaders.

“There's no doubt about that, and this is just another example of what I said earlier around we're being asked to do more with less,” Frazee says. “And so, there have been a lot of policies implemented in a short amount of time in our state to address healthcare affordability, this being one of them.

“And so, our message has been, you know, hospitals have really done our part in Delaware. We need the other healthcare sectors to step up, because in order to truly address healthcare affordability, it's going to take all of us stepping up,” he adds.

Frazee says the association recognizes that care is too costly for too many people.

“Healthcare is already too expensive, and we acknowledge that,” he says. “Healthcare affordability is our top priority to help address, and we've done a lot in Delaware. Hospitals have stepped up tremendously to help address healthcare affordability in our state. This is a national issue.”

The expansion of charity care in Delaware comes as the state’s hospitals are preparing to see more patients without insurance coverage due to changes in Medicaid programs.

In Delaware, looming cuts to Medicaid programs that will unfold over the next several years are expected to cost hospitals up to $200 million annually, Frazee says. Tens of thousands of Delaware residents are projected to lose coverage, he says.

But Delaware hospitals are already seeing more patients without insurance due to the expiration of tax credits supporting the Affordable Care Act. More than two million Americans nationwide have dropped ACA plans following spikes in premiums, the Associated Press reported. Frazee says Delaware hospitals are seeing more patients with no coverage.

“I'm hearing that from every single one of my acute care members across the state,” Frazee says, adding, “So people are certainly feeling the effects of that already, the people who we serve, and also the hospitals as well.”

Delaware hospitals already offered generous charity care policies for those with limited incomes before the passage of the legislation, Frazee says.

“We already had robust and favorable policies before,” he says. “Now they will be even more generous.”

Frazee says that the association supports the legislation to offer more people charity care, but he says the regulations to support the new law must be developed carefully.

“Hospitals have been very proud to lead the way here in Delaware, but this will certainly put a financial strain,” Frazee says. “There’s no doubt about it.”

He says the legislation will place more pressure on smaller hospitals, including those serving Delaware’s beach communities which see huge numbers of visitors in the summer months. “This will have a uniquely profound impact on them as well,” Frazee says.

“The regulatory advocacy we're doing with the cost review board will be very important to make sure that we account for those unique issues that they're dealing with,” he says.