Over a decade ago, New York State enacted Manny’s Law, which required New York’s non-profit hospitals to provide hospital financial assistance to low-income patients. The law is named after Manny Lanza, a young New Yorker with a brain condition who died after being precipitously discharged from a hospital because he was uninsured. Under Manny’s Law, hospitals must provide financial assistance to uninsured, low-income patients in exchange for receiving funds from the State’s $1.1 billion Indigent Care Pool. In 2012, the Department of Health began to audit the hospitals’ financial aid programs in response to reports of inadequate compliance.
A Freedom of Information Law request filed with the Department of Health shows that a decade later, hospitals still fail to comply with Manny’s Law—and, in fact, appear to be regressing, with the audit showing that they were less compliant in 2018 than they were the prior two years. The audit includes a list of questions that hospitals can pass or fail, and the chart below shows the total number of failed questions:
What kinds of problems did the audit reveal?
First, the audit found that a decade after the passage of Manny’s Law, many hospitals’ financial aid applications still include impermissible requirements that make it hard for patients to apply. For example, 17% of hospitals audited had incorrectly adopted a “Medicaid denial first” policy. Medicaid applications can take a lot of time to process. Requiring a patient to receive a denial before beginning the financial assistance process causes unnecessary delay for patients. Other impermissible hurdles to hospital financial aid revealed by the audit included requiring patients to provide their: past tax returns (14.3%); monthly bills and other financial obligations (13.1%); and Social Security numbers (12.0%).
Second, the audit found that many hospitals’ financial assistance policies do not protect low-income patients from extraordinary collections actions that are explicitly forbidden under state law because they are so harmful to patients. For example, one in five hospitals said that they allow accelerator clauses that mean missed payments trigger higher rates of interest (20.0%). Interest adds hundreds or thousands of dollars to medical bills that patients are already struggling to pay. (A bill to reform New York State’s onerous 9 percent judgment interest rate awaits Governor’s Hochul’s signature (S55724B/6474B).) Next, the audit reveals that hospitals are allowing collections agencies to pursue their patients without the hospitals’ written consent (9.1%). This means patients are hassled by debt collectors even while they are working on applying for financial assistance or otherwise trying to work with the hospital to pay their bill. Finally, hospitals’ policies do not explicitly prohibit forced sales or foreclosures on patients’ homes (7.4%).
Third, the audit found that hospitals apply asset tests when determining discounts, which is not allowed in almost any other health care affordability program in the state. And hospitals report that they continue to consider assets that the law says they are not allowed to consider, including a patient’s home (10.9%), retirement accounts (9.7%), college savings accounts (8.0%), and cars that anyone in the patients’ immediate family uses for their primary transportation (8.0%). This failure to comply with the law means eligible patients are denied help or are prevented from applying.
These failures to comply have serious consequences for patients who should have been protected by Manny’s Law and offered care at discounted rates. According to a 2019 poll, 45 percent of New Yorkers say they delay or avoid health care altogether because they cannot afford it. Thirty-five percent of New Yorkers say that obtaining necessary health care meant serious financial struggles such as using up all of their savings, being unable to pay for food or heat, and racking up large amounts of credit card debt. Over 52,000 New Yorkers have been sued by hospitals over medical bills they cannot afford over the past five years. Hospitals then place liens on patients’ homes and garnish their wages.
Make Manny’s Law a Reality: Fix the Hospital Financial Assistance Law
What should New York do about this? One simple change is to require hospitals to use one standard application form to be developed by the state. This would obviate the need for the Health Department’s audits of a failing system that lets every hospital design and implement its own policy. Other states already do something like this. For example, Massachusetts uses its state Marketplace to award hospital financial assistance. Advocates have recommended the adoption of a single application form for years and so has the Department of Financial Services Health Care Administrative Simplification Workgroup – a multi-stakeholder group of healthcare experts. It was also proposed in last year’s Patient Medical Debt Protection bill.
After all these years, patients need our healthcare system to be simpler and more accessible. That remains the unfulfilled goal of Manny’s Law. Adopting one uniform statewide Hospital Financial Assistance form, to be used by all of New York’s hospitals, would be an important first step in leveling the playing field between patients and healthcare providers.