Charity Care for Cancer Treatment

Is your cancer center a nonprofit hospital? Then its financial assistance program is not goodwill. It is a condition of keeping tax-exempt status. The rule is section 501(r) of the tax code. The IRS spells out what the policy must contain. It also sets what you can be charged, and what the hospital must do before it can come after you.

Knowing those rules changes the conversation. You are not asking for a break. You are asking whether you meet published criteria.

Under section 501(r)(4), a hospital must have a written financial assistance policy, usually called a FAP. The IRS lists what it has to contain.

• Eligibility criteria for each level of help, whether that is free care, a discount, or another form of assistance.
• The method for calculating what you owe, including the amounts generally billed, or AGB, for emergency and medically necessary care.
• How to apply, including what documents are required and who to contact for help filling it out.
• What happens if you do not pay. The FAP or a billing policy must describe what collection steps are possible. It must also say what the hospital will do to check if you qualify first.
• How the policy is publicized. It must be widely available on a website, offered on paper in key areas of the facility, and shared with the community.
• A plain language summary, written to be clear, concise, and easy to understand.
• Translations. Documents must go into the language of each limited-English group that makes up the lesser of 1,000 people or 5% of the community served.

That last item matters. If a billing office says no policy exists, it does exist. It is supposed to be on the website.

Section 501(r)(5) limits what a charitable hospital may charge a patient who qualifies. Take emergency and medically needed care. The charge cannot top the amount generally billed to people who have insurance for it. For other care covered by the FAP, the charge must be less than gross charges.

Gross charges are the sticker price. Almost nobody pays it. The AGB rule takes that number off the table for patients who qualify.

The IRS allows two ways to set AGB.

The look-back method multiplies gross charges by an AGB percentage. To get that percentage, the hospital takes claims allowed over a prior 12-month period. It divides them by the gross charges attached to them. The hospital picks the claim pool. Choices are Medicare fee-for-service alone, Medicare plus all private insurers, or Medicaid with or without the others. Percentages must be recalculated at least once a year, and the hospital has up to 120 days after that 12-month period ends to start applying the new figure.

The prospective method codes your care as if you were on Medicare fee-for-service or Medicaid. AGB is then set at what that program would allow.

Ask which method your hospital uses and what its current AGB percentage is. Both are specific, answerable questions.

Section 501(r)(6) governs collections, and it runs on dates you can count.

Both clocks start with the first billing statement after discharge.

• 120 days. The hospital must notify you about financial assistance and must not begin extraordinary collection actions for at least 120 days.
• 240 days. You get through this window to submit a FAP application and have it processed.

Extraordinary collection actions, or ECAs, are defined, not vague. The IRS list includes these:

• Selling your debt to another party.
• Reporting bad information about you to credit agencies.
• Delaying or refusing needed care, or demanding payment first, over an unpaid covered bill.
• Legal steps such as liens, foreclosure, wage garnishment, civil suits, and arrests.

Before starting any ECA, the hospital has four duties. It must give written notice that help is available and name the actions it plans. It must include the plain language summary. It must tell you out loud at least 30 days ahead. And it must set a deadline no sooner than 30 days after that notice. If you turn in a complete application, collection must stop while it is processed.

Section 501(r) binds charitable hospitals. It does not govern a for-profit hospital. It also does not cover bills from doctor groups that bill on their own. That holds even when the doctor saw you inside that hospital.

That gap explains a common surprise. The hospital bill gets forgiven. Then a bill still arrives from surgery, anesthesia, pathology, or radiology. Ask which providers bill on their own, then apply to each one.

1. Find the plain language summary on the hospital website. Read the income cutoffs. Many are set as a multiple of the federal poverty level.
2. Ask for the application in writing. Note the date of your first statement after discharge. That date starts both clocks.
3. Apply even if you think you earn too much. Many policies have a second tier of partial discounts above the free-care line.
4. Submit before day 240. A complete application filed in that window must be processed.
5. If a collector calls, say you applied under the hospital FAP. Ask for collection to be paused.
6. Match every bill to its explanation of benefits before you pay. NCI says plainly that it is your right to question your bill.

NCI names groups that help with cancer costs.

• CancerCare, and its A Helping Hand database.
• The Cancer Financial Assistance Coalition database.
• The HealthWell Foundation, for copays, premiums, deductibles, and other out-of-pocket costs.
• The Leukemia and Lymphoma Society, for blood cancers.
• Triage Cancer, and its Cancer Finances tool.
• The Patient Advocate Foundation.

NCI also points you to the hospital financial counselor in the billing office. A social worker can find programs beyond insurance.

• Is this hospital tax-exempt, and where is your FAP posted?
• What income level qualifies for free care, and what qualifies for a discount?
• Which AGB method do you use, and what is the current percentage?
• What date was my first post-discharge statement issued?
• Which providers in my care bill separately from the hospital?
• Will you suspend collection while my application is pending?

For related reading, see Financial Assistance for Cancer, Understanding Your Health Insurance, and Insurance Denials and Appeals.

• IRS — Financial Assistance Policy and Emergency Medical Care Policy, Section 501(r)(4)
• IRS — Limitation on Charges, Section 501(r)(5)
• IRS — Billing and Collections, Section 501(r)(6)
• National Cancer Institute — Managing Cancer Care Costs