Charity Care

West Virginia non-profit hospitals enjoy billions in tax exemptions. In return, the social contract demands they provide meaningful charity care to struggling families. The data shows they are not holding up their end of the bargain. This brief examines the evidence — from IRS filings, Medicare cost reports, and federal subsidy data — and proposes enforceable reforms to restore the broken compact between hospitals and the communities they serve

The Medical Debt Crisis in West Virginia

West Virginia carries one of the heaviest medical debt burdens in the nation. Roughly 13.3% of adults report carrying medical debt, compared to 8.6% nationally. In rural Appalachia, the problem is worse: nearly one in four residents has a medical debt in collections — far above the national rate of 17%. Yet West Virginia’s uninsured rate (5.9%) is actually below the national average (8.0%). The crisis is not driven by lack of coverage — it is driven by hospital billing and collection practices. Non-profit hospitals pursue wage garnishments, bank account seizures, and property liens against patients who, by the hospitals’ own financial assistance policies, should have had their bills forgiven. These burdens compound existing hardship: 36.2% of WV residents live below twice the federal poverty line. Carrying medical debt more than doubles the likelihood of falling behind on a mortgage, auto loan, or student loan

What the Data Shows: WV Hospital Charity Performance

Analysis of three independent federal datasets — the NASHP Hospital Cost Tool, IRS Form 990 Schedule H filings, and CMS IPPS FY2024 data — reveals a consistent pattern across West Virginia’s dominant hospital systems.

Key findings from this data:

• No WV non-profit hospital provides more than 2.5% of expenses as charity care — even the most generous system (Davis) falls far short of the 5% floor required in Texas.
• Cabell Huntington’s 13:1 bad-debt-to-charity ratio means it pursues collections 13 times more often than it forgives care — even for patients its own policy classifies as charity- eligible.
• Non-profits charge commercial payers ~300% of Medicare rates, but high commercial prices have zero correlation (r = −0.09) with charity care spending.
• Operating profitability (r = −0.07) also has no relationship with charity generosity. Profitable hospitals are no more charitable than struggling ones.
• Government hospitals provide $23,500 in charity per $1M revenue vs. $6,500 for non- profits — despite smaller budgets.

The Broken Social Contract

58% of U.S. community hospitals are non-profits. In exchange for exemptions from federal, state, and local taxes — worth an estimated $28 billion annually — these hospitals are supposed to provide charity care to financially disadvantaged patients. This is the foundational social contract of non-profit hospital status. That contract has eroded. In 1969, the IRS replaced its explicit free-care requirement with a vague “community benefit” test, allowing hospitals to count research, staff training, and marketing as “benefits.” Today, hospitals report spending less than 1% of operating expenses on actual charity care — yet claim billions in community benefit. The Lown Institute found that 80% of non-profit hospitals spent less on meaningful community investment than the value of their tax breaks, leaving a national “fair share deficit” of $25.7 billion in 2021. The GAO confirmed the IRS lacks clear standards to hold non-profits accountable — reviewing hospitals only once every three years at most. “For every $100 hospitals received, less than $1 is returned to struggling patients in the form of free or discounted care. That imbalance reveals how little communities receive compared to the immense tax privileges hospitals enjoy.” — Jessica Dobrinsky, Who’s Caring for West Virginia? (2025)

The FAP-Eligible Bad Debt Problem

Hospitals’ own IRS filings reveal they identified thousands of patients as eligible for financial assistance — then sent them to collections anyway. At Cabell, FAP-eligible bad debt ran at 253% of charity care. This is not a capacity failure; it is a compliance failure.

Federal Subsidies Miss the Mark

CMS IPPS data show only three WV hospitals (WVU Ruby, CAMC, Cabell) qualify for DSH safety-net payments — yet these same urban systems report the lowest charity care ratios. Rural and Critical Access hospitals serving the poorest populations receive no DSH support.

Five Recommended Actions For West Virginia

• Establish a Hard Charity Care Floor (Texas-Style): Set minimum 5% of Net Patient Revenue in charity care at cost. Condition all state and local tax exemptions on meeting this threshold. Require corrective action plans after two consecutive sub-floor years.
• Mandate Pre-Billing Screening (Oregon-Style): Require universal charity care eligibility screening before any collections activity. Mandate presumptive eligibility for patients on SNAP or WIC. Prohibit Extraordinary Collection Actions until screening is complete.
• Stop Converting Eligible Patients into Bad Debt: Require hospitals to report FAP-eligible bad debt alongside charity care. If >50% of bad debt is FAP-eligible while charity care is under 3%, trigger financial penalties or partial loss of tax benefits.
• Repeal Certificate of Need (CON) Laws: Fully repeal WV’s CON law to open the market to community-focused and faith-based providers. Pair repeal with charity care floors and debt-collection protections.
• Strengthen Debt Collection Guardrails: Prohibit lawsuits for medical debts under $500 and ban wage garnishments and property liens for FAP-eligible patients. Impose a 120-day waiting period before any collection activity. Ban debt sales unless the buyer agrees to charity care standards.

IMPLEMENTATION & ENFORCEMENT

• Assign enforcement to the WV Department of Health in coordination with the State Tax Department.
• Require public posting of annual hospital compliance reports and corrective action plans.
• Establish civil penalties and loss of state tax exemption for repeat or willful violations.
• Model reporting requirements on Maryland Md. Code Ann., Health-Gen. §19-303(c): annual itemized community benefit reports including mission, initiatives, costs, and effectiveness measures.
• Model collection protections on Oregon H.B. 3076 (2019) and Texas H.B. 3708 (2025) administrative penalty frameworks.