Bill pending in Albany would reform the state’s Hospital Financial Assistance Law to make the process of applying for financial aid simpler and more accessible for low-income patients
The New York State Hospital Financial Assistance Law (HFAL) needs urgent reform. A new Community Service Society of New York (CSS) issue brief, “An Ounce of Prevention: Reforming the Hospital Financial Assistance Law Could Save Pounds of Patient Debt,” highlights the failure of the existing law to protect low-income patients and patients of color from medical debt and its long-term impact. The brief reveals how many hospitals fail state audits revealing that they are unable to design and implement an application compliant within existing law. The brief calls for lawmakers to make Hospital Financial Assistance fairer and more accessible by passing the Ounce of Prevention Act (S1366/A6027), which would require one common application and modernize the eligibility rules.
In 2022, CSS found that New York’s nonprofit hospitals had sued more than 54,000 patients in just five years—many of whom should have been eligible for financial assistance. The analysis revealed that hospitals disproportionately sue patients who live in low-income zip codes or zip codes where the residents are mostly people of color.
The current HFAL requires all New York hospitals with funding from the State’s $1.1 billion Indigent Care Pool (ICP) to have a financial assistance application and policy. However, continued lawsuits and aggressive debt collection action against patients show that those eligible for financial assistance were not screened, were unable to complete the application process, or were improperly rejected.
New York’s health care landscape evolved significantly since HFAL was enacted in 2006, rendering the current law outdated and ineffective. For example, the current law only provides very modest discounts to patients with limited means (under 300 percent of the federal poverty level). By contrast, the Affordable Care Act offers financial assistance to people up to 600 percent of the federal poverty level. In addition, the HFAL requires that only the hospital, and not its providers, offer discounts to eligible patients. As private practices increasingly take over critical hospital functions like emergency rooms, uninsured patients increasingly receive undiscounted bills they are unable to pay.
The new brief outlines actionable steps to support low-income patients more effectively by updating HFAL. The authors of the brief recommend requiring a common financial assistance policy across all New York hospitals and providers, aligning the current law with other health care programs by raising its eligibility level and making discounts greater and easier to access. The brief also proposes protecting patients from lawsuits and other aggressive collections actions while they are being screened for financial assistance.
The Ounce of Prevention Act (S1366/A6027), sponsored by State Senator Gustavo Rivera and Assemblymember Amy Paulin, would enact these critical reforms. In March, the “End Medical Debt” campaign, a group of 61 organizations representing patients, religious leaders, labor organizations, people who are older, have disabilities, immigrants and people of color and more, wrote to New York leadership in support of the bill. If the law is passed, New York would follow the lead of several other states, including New Jersey and Illinois, which have recently enacted fairer financial assistance laws.
“The new CSS report aptly calls for the Legislature to pass my Ounce of Prevention Act bill to finally reform our flawed Hospital Financial Assistance Law. With healthcare costs rising, it is critical that our State standardizes financial assistance policies used by hospitals so that more New Yorkers can access the financial help they need to avoid getting into insurmountable medical debt,” said State Senator Gustavo Rivera. “As Chair of the Senate Health Committee, I am committed to eradicating medical debt because no New Yorker should have their lives ruined because they got sick.”
“There is an urgent need to reform hospital financial assistance in order to protect low-income patients from getting into devastating medical debt,” said Assembly Health Committee Chair Amy Paulin. “Enacting the Ounce of Prevention Act, which I proudly sponsor in the New York State Assembly, will go a long way in ensuring a more equitable system that guarantees that low-income patients can access the care they are entitled to without fear of financial hardship.”
“The Ounce of Prevention Act is what we need to address New York’s medical debt crisis,” said David R. Jones, CSS President and Chief Executive Officer. “Providing fairer and more effective financial assistance to low-income patients is the right thing – and the logical thing — to do.”
“The current system of financial assistance simply isn’t working for patients,” said Richard R. Buery, Jr., Chief Executive Officer of Robin Hood, New York City’s largest anti-poverty philanthropy and a funder of the issue brief and previous “End Medical Debt” research reports. “This brief proves that the Ounce of Prevention Act is critical for a fairer, more equitable New York.”
“HFAL was a landmark reform when it was enacted, but it’s not 2006 anymore,” said Elisabeth Benjamin, CSS Vice President of Health Initiatives. “Health care costs are higher than ever, and low-income patients are struggling to pay and getting sued. This report shows that the “Ounce of Prevention Act” would do just that: offer reasonable discounts on care and prevent patients from being sued in the first place.”