Hospitals Said They Lost Money on Medicare Patients. Some Made Millions, a State Report Finds.
10/25/2022 10:48:12 AM

CHARLOTTE, N.C. — Atrium Health, the largest hospital system in North Carolina, has declared publicly that in 2019 it provided $640 million in services to Medicare patients that were never paid for, by far the largest “community benefit” it provided that year.

Like other nonprofit hospitals around the nation, Atrium logs losses on the federal health insurance program for seniors and people with disabilities as a community benefit to satisfy legal requirements for federal, state, and local tax breaks.

But for the same year that Atrium’s website says it recorded the $640 million loss on Medicare, the hospital system claimed $82 million in profits from Medicare and an additional $37.2 million in profits from Medicare Advantage in a federally required financial document, according to a report released Oct. 25 by the North Carolina state treasurer’s office.

The lack of clarity about whether health systems like Atrium gain or lose money treating Medicare recipients reflects how loosely the federal government regulates the way hospitals calculate their community benefits.

As a result, the analysis of North Carolina hospitals’ financial data concluded, what taxpayers get from local nonprofit hospitals in return for tax exemptions worth billions of dollars a year is unclear.

“There is no transparency, no accountability, and no oversight,” said North Carolina State Treasurer Dale Folwell, a Republican who is critical of Atrium and other hospitals’ business practices. “With the hospital cartel, it is always profits over people.”

Atrium did not make officials available for an interview. In a statement, spokesperson Dan Fogleman said the hospital system reported $85 million in services to Medicare patients that weren’t paid for in its most recent cost report to the Centers for Medicare & Medicaid Services.

“And, as labor, equipment, supplies and inflation continue to drive health care costs higher, the gap between Medicare payments and costs incurred to deliver the quality care we provide has grown in the post-Covid inflationary environment,” Fogleman said.

More than half of the hospitals in the United States are nonprofits or government-run. The federal government requires them to operate emergency rooms open to all patients regardless of their ability to pay, accept patients insured by Medicare, and use surplus funds to improve facilities and patient care to demonstrate they are giving back to the community.

Even though their tax-exempt status is based on charitable acts, nonprofit hospital systems sat on more than $283 billion in assets from stocks, hedge funds, venture capital, and private equity and other investments in 2019, according to a 2021 KHN analysis of IRS filings.

The hospital systems used most of that to produce income and classified only $19 billion, or about 7% of their total investments, as principally devoted to their nonprofit missions, the analysis found.

The new North Carolina report describes how hospitals’ self-reported Medicare profit margins differed from the financial picture they provided to the public through IRS records, annual reports, and community benefit documents.

Although most hospitals have complained of significant Medicare losses, the analysis of data from more than 100 North Carolina hospitals found that most made profits on Medicare from 2015 to 20

Courtesy: Kaiser Health News