Since then, the IRS has released long-awaited rules designed to address such aggressive debt collection against the poor. Largely because these new rules fill a void — there were hardly any rules at all — patient advocates agree they are a major step forward.
Even so, they have easily exploitable gaps. It remains up to each hospital, for example, to decide which patients the new rules should apply to. And because the rules only apply to hospitals that have been granted tax-exempt status by the IRS, they don't apply to for-profit hospitals or most public hospitals. ProPublica reported last month that public hospitals can be even more aggressive in collecting debt than nonprofits.
Most hospitals in the U.S. are charitable organizations. They don't pay taxes because they are supposed to be a key part of the safety net for the nation's poor patients. In theory, patients who aren't covered by Medicaid and can't afford insurance — or who are underinsured and can't afford their out-of-pocket costs — can receive necessary care from a nonprofit hospital without facing financial ruin. Each hospital is required to offer services to lower-income patients at a reduced cost and to have a financial assistance policy that states who qualifies for aid, known as "charity care."