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The Challenge of Unsponsored Charity Care

MD Anderson Backgrounder 04/01/2010

The University of Texas MD Anderson Cancer Center has a long tradition of providing care for low-income residents of Texas. A supplemental financial assistance program provides coverage for care delivered at MD Anderson to cancer patients who meet residency and financial eligibility requirements. Additionally, the institution participates in the Texas Medicaid program that provides state and federal support for certain low-income persons. The care MD Anderson provides to these patients is referred to as Unsponsored Charity Care.

How is Unsponsored Charity Care (UCC) defined?

UCC is defined as charges written off that fall into three categories: (1) charges for services associated with care for indigent patients; (2) the shortfall between the charges for providing services to patients on state-sponsored Medicaid and the amount actually reimbursed by the program; and (3) charges for services to patients who become medically indigent during treatment due to the loss of insurance, assets or income.

UCC is calculated using a formula developed by the Texas Legislature. UCC does not include managed care or contractual discounts (except Medicaid) or unpaid balances on patient accounts (bad debt).

At the direction of the Texas Legislature, a new methodology to standardize reporting across providers was recently adopted by the Texas Health and Human Services Commission. However, the specific elements of the methodology are under review and refinement by the Commission. In the absence of the new standard, MD Anderson continues to prepare a report using the UCC legislative definition that was applied in the past.

Who is eligible to receive UCC?

MD Anderson’s supplemental financial assistance program eligibility requirements are based on policies established by The University of Texas System. Eligibility requirements include U.S. citizenship or designated legal status, Texas residency, low income and limited financial assets.

How much UCC does MD Anderson provide?

In FY09, approximately $267 million in unsponsored charges for UCC (legislative definition) was recorded for MD Anderson patients. A total of 7,458 patients — or 7.5% of all MD Anderson patients in FY09 — received UCC. About 39% of UCC patients during FY09 were Harris County residents, another 18% came from the seven surrounding counties and 43% came from other Texas counties. In the last decade (FY00-FY09), MD Anderson has recorded almost $2 billion in Unsponsored Charity Care charges.

How is UCC funded?

UCC is covered by a combination of revenue sources that support the overall operating budget. These include state funds (approximately 6% of total institutional revenue), which support education, research and prevention in addition to patient care, as well as funds generated from patient revenue, contracts and philanthropy.

How else does MD Anderson help address UCC in Harris County?

In addition to the UCC patients whose care is received at MD Anderson, and in response to the large proportion of charity patients from Harris County, MD Anderson funds placement of physicians in medical oncology and gynecologic oncology at the Lyndon B. Johnson (LBJ) General Hospital operated by the Harris County Hospital District (HCHD) to provide cancer care for Harris County residents served there. In FY09, MD Anderson funded 17 part-time clinical faculty members, 18 medical oncology fellows and five research nurses to staff oncology services at LBJ, without cost to HCHD. The estimated annual value of professional services provided is $1.6 million.

The medical oncology service at LBJ treated 516 new patients and recorded approximately 5,000 patient clinic visits in FY09. The gynecology oncology service provided more than 1,100 patient clinic visits and treated 115 new patients during the same period.

Many HCHD patients who require radiation therapy are treated at MD Anderson under the supplemental financial assistance program. In addition, other HCHD patients are referred to MD Anderson for specialized services based on their clinical needs. These patients may include children and adolescents with cancer, adults with complex and uncommon malignancies such as leukemia, pancreatic cancer and sarcomas, and candidates for blood and marrow transplantation services.

Who decides which HCHD patients go to MD Anderson?

Uninsured patients with cancer from Harris County may be referred to LBJ or oncology services at Ben Taub General Hospital (BTGH), which is staffed by faculty from Baylor College of Medicine (BCM), for initial screening. They are then triaged to one of the county hospitals or to MD Anderson, if our specialized services are needed. Patients may be referred to MD Anderson for specialized services at any time during the course of their treatment.

Medical directors of oncology services at MD Anderson, LBJ and BTGH regularly review where HCHD-eligible cancer patients should receive therapy and follow-up care. Patients with cancer also have the opportunity to participate in clinical trials of new therapies offered by MD Anderson faculty at LBJ or the BCM faculty at BTGH when appropriate.

How does MD Anderson manage the cost of UCC?

MD Anderson values the opportunity to provide cancer care for Texans, and believes that close monitoring of our resources is necessary to safeguard our ability to fulfill the mission of eliminating cancer through clinical care, research, education and prevention.

An advisory committee assesses the financial impact of health care trends that affect UCC, explores ways to furnish efficient services to financially disadvantaged patients, and provides input to MD Anderson leadership on these issues. In addition to the HCHD program, MD Anderson has taken steps to more efficiently manage UCC. Some recent examples:

  • Established a Case Management Program to help facilitate the delivery of care at MD Anderson and the transfer of patients back to their medical home when care is completed. More than 300 patient appointments are now monitored per month.
  • Enhanced a Pharmacy Patient Assistance Program to identify pharmaceutical company programs that can supply needed drugs to indigent patients. More than 4,400 patients were assisted in FY09.
  • Set up an Alternative Coverage Program, which in FY09 helped nearly 1,700 patients obtain coverage under Medicaid for which they were eligible.

In addition, MD Anderson supports programs focused on prevention and early detection of cancer provided with HCHD. These include mobile mammography and gynecologic oncology services to perform screening tests and provide treatment for cervical cancer.

What future steps might be considered to manage UCC costs?

Providing care to uninsured and low-income patients is a tremendous challenge for medical institutions throughout Texas. This challenge is magnified in the field of cancer because treatments often are intense, lengthy and costly. Currently, there is no limit on the number of patients or the amount of resources that can be expended by MD Anderson on care for patients meeting the supplemental financial assistance eligibility requirements. In addition to providing care for those who otherwise cannot afford it, MD Anderson must continue to fund programs in research, education and prevention to fulfill its mission of eliminating cancer. Increasing limitations on revenue from governmental programs such as Medicare and Medicaid, as well as limits on eligibility for commercial managed care insurance, create a difficult environment in which to provide charity services.

Not all steps to manage UCC can be accomplished by MD Anderson alone. Some options would require involvement of other government entities and/or changes in state or federal laws, such as:

  • Modifying Medicaid eligibility standards so that patients with confirmed cancer diagnoses who meet income guidelines could become immediately eligible for Medicaid.
  • Establishing agreements with outlying counties and other agencies to develop local triage systems that expand charity cancer services at other sites and facilities.
  • Working with community stakeholders to explore collaborative opportunities to build local capacity for cancer care, prevention and screening for low-income populations.

What lies ahead?

An estimated 5.9 million Texans — 24% of the state’s population — are without health insurance, the highest percentage of uninsured citizens in the country. Texas also leads the nation in residents who are classified as the “working uninsured,” estimated at 4 million individuals.

The population of Texas is expected to increase to 25 million in 2010 and to 51.7 million by 2040. Texans 65 or older likely will comprise 15.9% of the state’s population by 2040, compared to 9.9% in 2000. As a result, the population 65 years or older that was nearly 2.1 million in 2000 could grow to 8.2 million by 2040. Since approximately 77% of all cancers occur in people over age 55, the prevalence of cancer in Texas is predicted to soar dramatically during this period.

© 2014 The University of Texas MD Anderson Cancer Center