In 2021 Rochelle Hinkle had just retired from a career as a TARC bus driver and was adjusting to life on a fixed income.
Then, the medical bills started piling up.
On top of treatments for chronic health problems like carpal tunnel and diabetes, Hinkle, 52, needed expensive iron infusions and spent months in an air cast healing a broken toe.
Hinkle had insurance through her pension plan, but it didn’t cover all the costs from Norton Healthcare. A balance of $1,456 lingered.
“I was just kind of stuck between a rock and a hard place, trying to figure out where I was going to come up with this money to pay the bill,” Hinkle said in an interview with the Kentucky Center for Investigative Reporting.
Hinkle stressed over the debt, but then she found a potential lifeline on the back of a bill. There, in the fine print, Norton laid out its financial aid policy, known in the healthcare industry as charity care. According to the hospital’s policy, Hinkle was eligible for totally free care.
Norton, like just about half of the hospitals in the U.S., is a charitable organization, meaning they don’t pay most state or federal taxes. Hospitals are supposed to provide community benefits, including charity care, in return for this tax exemption.
But experts and healthcare advocates say hospitals aren’t great at connecting people who are eligible for charity care with the assistance. And there’s little enforcement from the government agencies tasked with holding hospitals accountable to ensure they’re providing access to financial assistance programs. In turn, people who can’t pay their medical bills fall behind, their debt builds and — oftentimes — the hospitals sue to collect payments that, according to their own policies, should have been forgiven.
Hinkle says she applied for Norton’s charity care program in 2018 and 2021, but got rejected both times. The reason: Norton said her assets and income as a TARC driver put her above the charity care threshold. But Hinkle was retired by 2021 and wasn’t making that kind of money anymore.
Hinkle said she tried to call the hospital and submit documentation proving she had retired, was disabled and eligible for financial aid, but nothing worked. She still owed Norton money.
“Being on a fixed income and then having to pay for medical bills, it's just disheartening,” Hinkle said. “You decide, am I going to eat? Or am I going to pay a bill?”
She knew what could come next. Norton had already sued Hinkle three times for unpaid bills, each lawsuit resulting in a judgment that allowed the hospital to garnish money straight from Hinkle’s paychecks.
While Norton garnished her wages, Hinkle said she fell behind on other bills and skipped appointments with specialized doctors because she couldn’t afford the copay.
A powerful tool
No hospital system in Louisville has sued to collect medical debt with the regularity of Norton Healthcare. Norton filed 8,730 lawsuits in Jefferson County District Court, which handles debt collection cases for amounts under $5,000, between January 2017 and October of this year, according to a KyCIR review of court records. For comparison, Baptist Healthcare filed 1,164 cases and the University of Louisville filed 21 cases during that same period.
Court is a powerful tool for debt collectors. There, they can win the right to garnish wages, levy bank accounts or place liens on property.
Melissa Weinstein, an attorney with the Legal Aid Society, a nonprofit that represents people with financial issues such as medical debt or filing for bankruptcy, said she’s represented at least 11 clients sued by Norton over the past four years.
The first step Weinstein will usually take with a new client struggling with medical debt is to check if they’ve applied for charity care.
Most hospitals offer charity care to people living at or below 300% of the federal poverty level, about $90,000 a year for a family of four. Norton currently offers charity care at the 350% mark. The Legal Aid Society represents people with an income at or below 200% of the federal poverty level. By that measure, Weinstein figures all of her clients should be eligible for charity care.
“Most people don't pay their bills not because they don't want to, but because they can't afford it,” Weinstein said.
In August she won a procedural judgment against Norton in Jefferson District Court when she argued the hospital violated federal laws by not properly vetting a patient for charity care before taking that patient to court.
The basis of Weinstein’s argument was that Norton’s policy and tax documents say they will fully vet patients for charity care before they file a lawsuit for unpaid bills.
“And the fact that they aren't doing this is deceptive and misleading,” Weinstein said.
Norton officials told KyCIR they stopped filing new collection lawsuits that same month.
“As we've evaluated the effectiveness of that, and what we're really accomplishing there, we just determined that that was a practice that we would suspend and stop doing,” said Norton's vice president and chief financial officer Adam Kempf.
Existing cases continue, however. And many patients, including Hinkle, have already paid thousands of dollars to the hospital despite being eligible for charity care under the hospital’s own policy.
What is Charity Care
Since the passage of the Affordable Care Act in 2010, nonprofit hospitals are required to, at minimum, maintain a charity care policy and refrain from lawsuits to collect debts until a patient has been screened for charity care.
Other than that, the federal charity care law is broad, with no federal eligibility requirements. So, hospitals set their own.
Some states,such as California and Washington, have passed laws setting minimum eligibility requirements and requiring hospitals to screen patients for charity care before starting the billing process.
In Kentucky, there is no state law governing charity care. As a result, patients’ access to charity care varies, said Chloe Atwater, a health law fellow at the Kentucky Equal Justice Center.
“Policies are all over the place,” Atwater said.
Access to care is especially needed here in Louisville. The Centers for Disease Control and Prevention called Louisville the 5th most unhealthy city in the nation due to high rates of heart disease and diabetes. Nearly 95,000 people live in poverty in Louisville and medical debt falls hardest on communities of color — where according to the Urban Institute 38% of residents have medical debt in collections, double the number of the city, as a whole.
But Atwater said there’s little oversight to ensure hospitals are actually following through on their obligations to provide free care to people who qualify.
“What’s so frustrating about charity care is there’s this really robust regulation, the obligation to have a charity care policy in place and not to engage in extreme collection tactics until you have successfully screened someone,” Atwater said. “These things are very clear, yet this is still an area where you see basically no enforcement from the federal government.”
An April 2023 report by the federal auditors with the Government Accountability Office found that while the Internal Revenue Service is tasked with making sure hospitals report some kind of community benefits — like charity care — to justify their tax benefits, the IRS could not define specific activities that fall under community benefits. Because of this “ambiguity”, the GAO said, a hospital could report itself as exempt from taxes “while spending little to no money on charity care or other community benefit activities.”
The GAO recommended Congress pass a law defining what activities count towards community benefits, but that has so far not happened.
Because of these ambiguous definitions and weak oversight, it can be difficult to determine if hospitals are actually following their own charity care policies or if the community benefits they provide are worth the tax breaks.
Researchers at The Lown Institute, a nonprofit think tank focused on healthcare issues, determined that the tax benefits nonprofit hospitals receive are often larger than the community benefits they purport, a gap researchers call the “fair share deficit.” Kentucky hospitals receive $349 million more in tax benefits than they report in community services, according to the Lown Institute.
Norton was not included in the Lown Institute’s original analysis, but Judith Garber, a senior policy analyst at the institute, said Norton’s deficit is “quite large.” In a separate analysis of Norton’s tax filings, done at KyCIR’s request, Garber found that, between the years 2019 and 2021, Norton spent $259 million less on community services than they received in tax exemptions.
According to Garber, U.S. hospitals spend on average about 2.35% of their total operating expenses on financial assistance. Norton's rate is 0.75%, about the average for hospitals in Kentucky.
“There’s not a lot of argument about the fact that hospitals gain a lot of benefit out of their tax breaks. It’s pretty widely accepted,” Garber said. “But there is a debate about what should you count in terms of what the meaningful community benefits are.”
Kate Eller, Norton’s director of internal communications and public relations, said in an email that Norton’s goal is to provide financial assistance to every patient who qualifies. Eller said the hospital benefits the community in other ways, too.
“Norton Healthcare supports our community through charitable giving through educational support, charity care, community service activities, community cancer initiatives and sponsorships. In addition, Norton Healthcare supported more than 300 community organizations with more than 220,000 hours of leadership guidance,” Eller said.
'Patients just don’t know’
The biggest problem with charity care is that patients don’t even know it exists, according to Ge Bai, a professor of accounting at Johns Hopkins Bloomberg School of Public Health.
“This is a very prevalent issue,” Bai said. “Hospitals are required to have standards for eligibility, but they don’t do a good job informing patients, so a lot of patients fall through the cracks.”
Federal charity care laws require hospitals to inform patients about the policy, but hospitals decide how to do it.
Often it’s a simple sign hung in a waiting room, or fine print on the back of bills, Bai said. It can be easy for patients to miss the opportunity.
Best practice, according to Bai, is to screen every patient for charity care upfront, before billing starts. Locally, only the University of Louisville healthcare system does that. The hospital provides an application with the initial patient paperwork.
“It's just kind of built into our mission and in our DNA that we know that a lot of people that come to us are going to need some sort of financial assistance,” said Ken Marshall, U of L Health chief operating officer. “The earlier you can get that started the better it is on the patient and the better it is for us.”
Baptist and Norton Healthcare both say they provide information about charity care in the first bill patients receive.
Kempf, with Norton, said they have signs hung in offices, and hospital officials put out a press release and held a press conference this past January announcing changes to its charity care policy.
Bai said Norton’s policy follows the charity care rules, but doesn’t seem to provide the kind of clear, proactive communication that patients actually need.
“The most common complaint I’ve heard is regarding informing patients,” Bai said. "These patients just don’t know.”
Hinkle said she didn’t know anything about charity care until she squinted to read the fine print on the back of her bill — in hopes of finding relief from the mounting debt. Then came the slog of gathering and submitting the swath of required documentation needed to apply.
“At first I was kind of intimidated because they want so much information,” Hinkle said. “They want checks, bank stubs, just proof of everything.”
She said the employees of the local public library started recognizing her once she learned she could fax documents from there for free.
As her application was processed, the debt to Norton still hung over her head. Hinkle said she started feeding her dog frozen peas and green beans.
“Because it was cheaper than dog food,” she said.
Months passed and she said she started losing hope.
“I had just sort of given up,” Hinkle said. “They’d have to take me to court. I just didn’t have the money.”
Then Hinkle saw a WAVE 3 News segment about Dollar For, a nonprofit patient advocacy group that helps people apply for charity care.
Hinkle filled out Dollar For’s screening application on her phone. Within weeks the organization had helped her get the charity care she was eligible for; her debt was cleared.
Jared Walker started Dollar For in 2012 in Portland, Oregon after watching family members struggle with similar medical debts. His mission: raise money to help people pay off their bills. At the time, Walker hadn’t even heard of charity care.
“I spent years paying medical bills for low income families that would have been eligible for these programs,” Walker said. “So once I found out about charity care and financial assistance, I felt like a chump. Because I was like, why am I paying these bills?”
Walker said the organization essentially asks hospitals to adhere to their own policies.
They’ve assisted over 14,000 people nationwide, including 49 people from Louisville, Walker said. In all, the group has helped clear about $233,000 in debt from area hospitals.
But Walker said his organization still has about $700,000 in charity care applications pending at Louisville area hospitals. In fact, Walker said Dollar For has a lower success rate in Louisville than elsewhere in the country, with no good explanation as to why.
“Hospitals are not great at this across the board, but we are definitely seeing longer wait times and hospitals not being responsive to us more so here in Louisville,” Walker said. “We're trying to figure that out. Why aren't hospitals approving these? And why is it taking so long? Why is it so hard to get on the phone with somebody in the financial assistance department?”
Dollar For was able to help Hinkle, but Walker said many of the people sued by Norton would likely be eligible for free or discounted care.
“They're being sued for bills that should have been written off by the hospital,” Walker said.
Hinkle’s debt
Hinkle has been back in the hospital recently, and believed Norton had already processed her for charity care — once again with Dollar For’s help. Following her release and her initial conversations with billing agents, Hinkle’s balance with Norton was only $10.
On October 23, while being interviewed for this story, Hinkle’s Norton MyChart application sounded a notification: A new bill from Norton. Hinkle now owed the hospital $405 for her stay earlier this year.
Hinkle called customer service at Norton, who told her she still qualified for charity care. Norton’s representative told her not to pay the bill at that moment but to check back later to make sure it was taken care of by charity care. About a week later, the bill had grown to nearly $700.
“I'm going to try not to worry about it because with my health, I just don't need to be stressed out,” Hinkle said. “You want stuff to not be hanging over your head when you think you got everything under wraps. Then something else pops up.”
