Atrium made millions on Medicare patients

By Fred Clasen-Kelly

Kaiser Health News

Atrium Well being, the most important hospital system in North Carolina, has declared publicly that in 2019 it offered $640 million in companies to Medicare sufferers that had been by no means paid for, by far the most important “group profit” it offered that yr.

Like different nonprofit hospitals across the nation, Atrium logs losses on the federal medical insurance program for seniors and folks with disabilities as a group profit to fulfill authorized necessities for federal, state, and native tax breaks.

However for a similar yr that Atrium’s web site says it recorded the $640 million loss on Medicare, the hospital system claimed $82 million in earnings from Medicare and an extra $37.2 million in earnings from Medicare Benefit in a federally required monetary doc, in response to a report released Oct. 25 by the North Carolina state treasurer’s workplace.

The shortage of readability about whether or not well being methods like Atrium achieve or lose cash treating Medicare recipients displays how loosely the federal authorities regulates the best way hospitals calculate their group advantages.

In consequence, the evaluation of North Carolina hospitals’ monetary knowledge concluded, what taxpayers get from native nonprofit hospitals in return for tax exemptions value billions of {dollars} a yr is unclear.

“There is no such thing as a transparency, no accountability, and no oversight,” mentioned North Carolina State Treasurer Dale Folwell, a Republican who’s essential of Atrium and different hospitals’ enterprise practices. “With the hospital cartel, it’s at all times earnings over individuals.”

Atrium didn’t make officers out there for an interview. In a press release, spokesperson Dan Fogleman mentioned the hospital system reported $85 million in companies to Medicare sufferers that weren’t paid for in its most up-to-date value report back to the Facilities for Medicare & Medicaid Providers.

“And, as labor, tools, provides and inflation proceed to drive well being care prices increased, the hole between Medicare funds and prices incurred to ship the standard care we offer has grown within the post-Covid inflationary atmosphere,” Fogleman mentioned.

Greater than half of the hospitals in the US are nonprofits or government-run. The federal authorities requires them to function emergency rooms open to all sufferers no matter their skill to pay, settle for sufferers insured by Medicare, and use surplus funds to enhance services and affected person care to show they’re giving again to the group.

Regardless that their tax-exempt standing is predicated on charitable acts, nonprofit hospital methods sat on greater than $283 billion in property from shares, hedge funds, enterprise capital, and personal fairness and different investments in 2019, in response to a 2021 KHN analysis of IRS filings.

The hospital methods used most of that to supply revenue and categorised solely $19 billion, or about 7% of their complete investments, as principally dedicated to their nonprofit missions, the evaluation discovered.

The brand new North Carolina report describes how hospitals’ self-reported Medicare revenue margins differed from the monetary image they offered to the general public by way of IRS information, annual stories, and group profit paperwork.

Though most hospitals have complained of great Medicare losses, the evaluation of knowledge from greater than 100 North Carolina hospitals discovered that the majority made earnings on Medicare from 2015 to 2020.

IRS audits are supposed to guard the general public from fraud and abuse, however the system has main gaps, mentioned well being economists and federal watchdog teams.

Federal regulation requires the IRS to evaluate group profit actions a minimum of as soon as each three years. But the company didn’t “have a well-documented course of to make sure that these actions are being reviewed,” mentioned a 2020 report from the Authorities Accountability Workplace.

In response to GAO suggestions, IRS leaders up to date the system final yr to assist make sure the company may establish circumstances through which hospitals had been suspected of not assembly necessities.

The IRS referred practically 1,000 hospitals nationwide to its audit division for violations of the Reasonably priced Care Act from 2015 to 2019, however the IRS couldn’t establish in the event that they had been associated to group advantages, the GAO mentioned.

The tax company has no authority to find out what actions hospitals should carry out to adjust to the regulation, the GAO mentioned. An evaluation of IRS knowledge discovered 30 hospitals that reported no spending on group advantages in 2016, “indicating potential noncompliance,” the report mentioned.

“Maybe that is the results of the IRS being underfunded,” mentioned Vivian Ho, a well being economics professor at Rice College in Houston, who labored on the North Carolina report. “They don’t have the sources to rethink what data they need to search.”

It’s essential that the federal government collects correct data from hospitals as a result of the information impacts all sufferers, Ho mentioned.

Federal regulation forbids IRS staff from discussing tax data submitted to the company by individuals or organizations, IRS spokesperson Anthony Burke mentioned in response to questions on how successfully the federal government displays hospitals.

Hospitals have lengthy used what they report as losses on Medicare to justify charging sufferers with non-public insurance coverage increased costs. In line with a examine released in 2021 by the Rand Corp., a nonprofit analysis group, hospitals throughout the nation cost non-public insurers greater than what they obtain from Medicare for a similar companies.

Within the Reasonably priced Care Act, federal lawmakers mandated that to keep up their tax-exempt standing, nonprofit hospitals should conduct a group well being wants evaluation, keep a written monetary help coverage, set billing and collections limits, and set a restrict on costs.

In written responses to KHN, the North Carolina Healthcare Affiliation, which lobbies on behalf of hospitals, mentioned hospitals offered $1.2 billion in charity care in 2020. It added that these group advantages can embody numerous completely different actions, comparable to protecting the hole between how a lot a process prices and what a supplier is reimbursed, volunteering by workers, and paying for medical outreach applications.

“Offering care to susceptible populations is a part of their nonprofit mission,” the assertion mentioned.

Atrium spends hundreds of thousands of {dollars} per yr to offer care to individuals who want behavioral well being care “however don’t have any security web — even from the state,” the affiliation mentioned.

Fogleman, the Atrium spokesperson, mentioned an advisory fee has persistently informed Congress that Medicare funds don’t cowl the total prices of companies at most hospitals, together with Atrium’s.

In North Carolina, giant hospital methods obtained $1.8 billion in tax breaks in 2020, in response to the state treasurer’s workplace.

The identical yr, lobbyists for North Carolina hospitals reported collectively dropping $3.1 billion on Medicare, in response to the workplace’s report. Different knowledge reveals they made $87 million in revenue.

From 2015 to 2020, the report concludes, 35 hospitals posted earnings from Medicare every year.

Different hospitals listed within the report didn’t reply to requests for remark.