Are Texas nonprofit hospitals providing adequate charity care?
When Deborah Hernandez went to the hospital in December of 2023 with abdominal pain, she wasn't expecting a cancer diagnosis or what would become a year-long struggle to pay down the resulting debt.
But doctors told her she had ovarian cancer and needed 14 rounds of chemotherapy. So, she quit her job at the elementary school where she worked with special education students.
"Any school kid's going to carry a lot of germs," Hernandez said. "I couldn't go to work because I didn't have the white cells to fight off germs."
That left her without a paycheck, relying solely on Social Security to cover her expenses.
"I have to sit and think, who am I going to pay," Hernandez said. "I have to keep the lights on, the water running and the gas on. What do I do after that? If the money runs out, it just runs out.
When the I-Team first spoke with Hernandez, she told us her medical bills had soared past $300,000. Medicare was covering much of it, but she still faced out-of-pocket expenses, including a $315 bill from Texas Health Harris Methodist Hospital in Fort Worth.
Hernandez faxed a charity care application to the hospital for relief. She says a few days later, someone from the hospital called her to tell her she shouldn't have faxed in the application and to let her know it was denied.
"It's a big stress," Hernandez said. "There will be times when I wake up in the middle of the night and be like, how am I going to get out of this debt?"
How charity care is supposed to work
Nearly one in four Texans struggles with medical debt. Charity care is supposed to offer help. In exchange for massive tax breaks, nonprofit hospitals are supposed to assist patients who can't afford to pay their bills.
Texas nonprofit hospitals receive over $1.8 billion in tax benefits annually, according to IRS data. In return, according to the Texas Hospital Association, the state's 127 nonprofit hospitals provided $9.1 billion in community benefits in 2022. That amount includes $576 million more in charity care than what hospitals say is the common industry standard.
Texas is one of the five states that sets a minimum community benefit. And the Texas Hospital Association says that while Texas "boasts one of the most stringent charity care laws in the nation," the state's hospitals "go well beyond" legal obligations.
But in recent years, the system has come under scrutiny.
System under scrutiny
The CBS News Texas I-Team reviewed more than half a dozen independent reports on charity care provided by nonprofit hospitals. Some, including one from the Baker Institute, found that Texas nonprofit hospitals "provide relatively high levels of charity care compared to the rest of the country."
Others came to a different conclusion. "Nonprofit hospitals enjoy the benefits of tax-exempt status while not providing a proportional amount of community benefit through charity care," a report by the Texas Public Policy Foundation found.
"They'll make it seem like everything is hunky-dory," said Tanner Aliff with the Paragon Health Institute. "There are just a few researchers, myself included, that would want to challenge that."
Aliff has studied nonprofit hospitals for years. He says the hospitals' self-reported numbers can be misleading because of what hospitals consider community benefit. Community benefit spending doesn't just include helping patients with their bills. It can also mean funding research, community outreach programs or educational campaigns that Aliff says are really just marketing.
A 2020 federal government audit highlighted how "the law is unclear what community benefit activities hospitals should engage in to justify their tax exemption." Five years later, Congress has still not passed legislation to clarify.
"There is a huge kind of black box around charity care and community benefit around hospitals right now," Aliff said. "And that's where a lot of folks here in Texas want to get to the heart of, because we are hearing horror stories throughout the state of nonprofits not living up to their charity mission."
Texas Rep. Tom Oliverson filed a bill in the Texas House that would prevent hospitals from pursuing debt collections on any patients until the hospital verifies that the patient is not eligible for charity care. As it stands now, nonprofit hospitals are only required to post that they offer charity care by putting up a sign in the lobby and by taking out an ad once a year in the newspaper.
A resolution for Hernandez
For more than a year, Hernandez has been stressed about her unpaid medical bills. But just days after the I-Team reached out to the Texas Health Harris Methodist Hospital, she received a letter from the hospital saying it had taken a look at her request for charity care, and this time approved it.
"I can actually go to sleep at night now, where I would lay awake at night or I'd wake up at two in the morning," Hernandez said. " So, yeah, that's a big relief."
In an email, a Texas Health spokesperson wrote that the hospital proactively assesses patients for charity care, even in cases where a financial assistance application has not been completed.
