Four years ago, Oregon hospitals faced criticism from state authorities and patient advocates for making it difficult for patients to apply for and receive financial aid. In response, the state enacted a law requiring hospitals to proactively screen patients and provide financial assistance to those who qualify.
The law, which took effect in July 2024, mandates that hospitals automatically screen patients and give financial aid to those who qualify, without requiring an application. According to Democratic Oregon state Sen. Lisa Reynolds, who introduced the legislation, hospitals will inform patients that they have their back during a scary time in their life due to illness or injury.
Early Success in Oregon
Oregon Health & Science University’s hospital, one of the largest in the state, saw a significant increase in patients automatically qualifying for financial assistance. In the early months of the new law, 64% of patients qualified, up from 12% previously. The hospital’s spending on financial assistance also increased, with $39 million spent on help for insured patients in the first year under the law, about five times as much as in previous years.
Oregon Law Sparks National Interest
The law’s success in Oregon is being closely watched by other states, which are considering similar approaches to reduce medical debt. North Carolina, California, and Delaware are among the states that have implemented or plan to implement presumptive eligibility, which allows hospitals to automatically grant financial aid to patients who qualify.
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Research has shown that hospital financial aid spending varies widely, and that nonprofit hospitals, which account for about half of the sector, often fail to provide adequate financial assistance to low-income patients. Reynolds stated that hospitals have been on the winning side of this deal for a long time, enjoying millions of dollars in tax breaks that are supposed to be spent on poor people who cannot afford their care or copayments, but this has not been the case.
Early evidence suggests that Oregon’s law is having a positive impact, with hospitals’ spending on free and discounted care increasing to 2.7% of all operating expenses, on average, from 1.4% previously. This brings hospitals in Oregon closer to the national average for nonprofit hospitals, which was about 2.4% from 2021 to 2024, according to an analysis by Johns Hopkins University researcher Hossein Zare.
Lawmakers Adjust Screening Requirements
Lawmakers in Oregon are continuing to monitor the law’s impact and make adjustments as needed. In April, the state enacted a new law to ease the screening requirement, raising the monetary threshold for a single visit from $500 to $1,500. Reynolds agreed to the rollback, saying that she wanted hospitals to have some relief as they fine-tuned their screening process.
Despite the challenges, hospitals in Oregon are seeing the benefits of the new law. Lawrence Furnstahl, then OHSU’s chief financial officer, said that the automatic screening often wiped out or reduced what patients owed, including for large deductibles that patients have to meet out-of-pocket before insurance will kick in. As a result, patients are receiving more financial assistance, and hospitals are seeing a reduction in bad debt.
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OHSU spent about $64 million on free and discounted care in the first year under the new law, about 1% of what it spent on operations that year. The hospital’s experience is being closely watched by other hospitals in the state, which are facing similar challenges in implementing the new law.
Hospitals Fine Tune Screening Processes
As the law continues to be implemented, hospitals are working to fine-tune their screening processes. OHSU studied economic data for Oregon’s residents and reported that about 57% likely had incomes that qualified them for its financial assistance, slightly under the 64% of patients who were receiving help.
This data suggests that the hospital’s screening process was largely accurate, but some people who didn’t qualify for help may have received financial assistance. To address this issue, lawmakers raised the monetary screening threshold for a single visit to $1,500, while keeping the Medicaid or uninsured requirement in place.
Challenges Ahead
Despite the progress made, hospitals in Oregon are facing increasing financial stress. The Hospital Association of Oregon expects the state’s uninsured rate to climb to 10% or higher in coming years, up from about 3% before the screening law passed. This could lead to further financial strain on hospitals, which are already struggling to cope with the costs of providing free and discounted care.
