Hospital financial assistance programs are designed to protect patients from crushing medical costs, but gaps in how those programs are applied mean many low-income patients are still left with bills they cannot afford, according to a published report.
A recent KFF Health News investigation highlighted how patients who qualify for full financial assistance at a hospital may still be billed thousands of dollars by physicians who provide treatment but are not covered under the hospital’s charity care policy. The result is a growing disconnect between the relief hospitals advertise and the reality patients face.
Where the system breaks down: Nonprofit hospitals are required to maintain financial assistance programs in order to keep their tax-exempt status. For-profit hospitals are not obligated to do the same, though many offer some level of charity care. Eligibility is typically determined by income levels and can cover all or part of emergency and medically necessary treatment.
But these policies don’t always extend to the physicians working inside hospital walls. Doctors in specialties such as emergency medicine, anesthesiology, radiology, and pathology are often independent contractors, meaning their services are excluded from hospital financial aid. A June 2025 Lown Institute analysis found these exclusions are widespread and a common source of unexpected bills.
Adding to the challenge, nonprofit hospitals have considerable leeway in defining what counts as “medically necessary” care. While the IRS requires emergency and medically necessary services to be included, some hospitals have begun narrowing those definitions, excluding procedures such as cancer biopsies, cardiac valve replacements, or kidney stone removals.
Growing risks ahead: The problem may worsen. Federal policy changes are projected to push more than 14 million people out of health insurance coverage over the next decade. Many of these individuals will rely on discounted care and may discover that crucial provider services are not included.
Some states have stepped in. Colorado’s Hospital Discounted Care law, enacted in 2022, requires hospitals and licensed providers practicing in them to extend financial assistance to qualifying patients. The law caps monthly payments, ensures discounts up to 250% of the federal poverty level, and forgives debts after three years. Early reports suggest it has been a “game changer” for patients.
Still, in much of the country, patients remain exposed. As hospitals brace for more uncompensated care, experts warn that charity care could become a target for cost-cutting. “In that environment, charity care will be a burden,” said Ge Bai, a professor at Johns Hopkins University.
For healthcare providers, revenue cycle managers, and debt collectors, the widening gap between hospital policies and physician billing poses both a financial and reputational risk. With patient trust already fragile, providers who fail to coordinate financial assistance may see more bills go unpaid—and more scrutiny from regulators and lawmakers looking to close these loopholes.
