Oregon Gov. Tina Kotek has signed a bill that increases the amount a nonprofit hospital can bill a patient, without needing to check first and offer them financial aid if they qualify.
Starting this week, hospitals only have to pre-screen insured patients and proactively offer them free or discounted care if they are billing them for more than $1,500 for a single visit or stay.
Providence Willamette Falls Medical Center, in Oregon City, Ore., Aug. 2, 2023.
Kristyna Wentz-Graff / OPB
That’s three times the previous financial threshold.
The law still requires hospitals to screen and apply discounts before sending any bill to uninsured patients or those on the Oregon Health Plan, Oregon’s version of Medicaid.
The loosening of protections for some working and middle class patients is an unusual example of Democrats in the Oregon Legislature siding with hospitals and agreeing to walk back some of their own regulations adopted in the 2023 session.
That’s when lawmakers required nonprofit hospitals in Oregon to proactively check and see if a patient qualifies for financial assistance before sending them any bill for more than $500 from a single stay or visit. The law made Oregon the first state in the nation to create so-called “presumptive eligibility” for charity care.
Hospital executives said they were struggling to afford and accurately implement parts of the 2023 law, and lobbied for the changes to it in the 2026 short legislative session.
The higher screening threshold was included in House Bill 4040, an omnibus measure that packaged many unrelated pieces of policy together and passed with bipartisan support. Sen. Noah Robinson (R-Cave Junction) cast the only ‘no’ vote.
In an emailed statement, Hospital Association of Oregon spokesperson Lisa Goodman said HB 4040 protects the integrity of Oregon’s financial assistance law.
“This bill is really meant to make sure that Oregonians who need financial assistance have a clear path to access support,” Goodman wrote.
The legislature did not make any changes to who qualifies for charity care. Patients can still get bills for less than $1,500 discounted or waived entirely if they fill out a charity care application and a hospital determines they qualify.
Patient advocacy groups opposed the changes to the law, saying national data shows relatively few people who are entitled to discounted or free care complete the application process, and arguing that offering more charity care had little real impact on Oregon hospitals’ bottom lines.
But with little time for debate, the bill passed in the short session. In a press release after the session, House Democrats touted their record “Protecting Access to Healthcare” and “Lowering Healthcare Costs,” citing bills that shored up funding for Planned Parenthood and eliminated fees for cervical cancer screenings. They didn’t mention HB 4040.
Eli Rushbanks is the General Counsel of Dollar For, a national group that focuses on charity care and medical debt and advocated for Oregon’s presumptive eligibility law.
Rushbanks said, in recent years, his group has gotten traction getting legislatures to hold hospitals to higher standards when it comes to offering charity care to low income patients. That changed with the impending threat of hundreds of billions in cuts to Medicaid, which Congressional Republicans included in their 2025 tax and spending bill.
“Politically, the conversation just paused, kind of overnight because all of a sudden, it seemed like legislatures were afraid to do anything that would even be perceived as hurting hospital finances in this moment,” Rushbanks said.
The American Hospital Association has warned that the Medicaid cuts, which start to take effect next year, could lead to more uncompensated care and could force some hospitals in rural and underserved areas out of business.
Hospital financial aid: an underused way to reduce medical bills
Hospital financial aid, or charity care, is a type of patient assistance hospitals are required to provide to keep nonprofit status with the IRS.
All but two hospitals in Oregon are nonprofits. In exchange for not paying corporate income or property taxes, they have to provide community benefits — including patient assistance.
According to state law, all patients with incomes at or below twice the federal poverty level are entitled to have all of their out-of-pocket costs for hospital care eliminated. The federal poverty level varies based on household size. As an example, a three-person family in Oregon that earns $54,640 or less in annual income wouldn’t owe anything for a hospital stay.
Patients between two and four times the poverty level are eligible for a discount based on their ability to pay. For a family of three, that means a family with income between $54,640 and $109,280 would qualify for a discount.
Federal rules require hospitals to notify patients that financial aid is available and to provide paper and digital applications.
But critics say, in spite of those rules, many patients never learn that charity care is an option. In some states, hospitals even pursue debt collection against patients despite them meeting the criteria for having their bills forgiven.
In Oregon, medical debt is the second most common form of debt listed in court cases, after credit card/bank debt.
Dollar For estimates that hospitals nationwide charge patients for about $14 billion annually that should be waived through financial assistance.
Oregon’s law requiring hospitals to screen patients and apply discounts to bills over $500 went into effect in July 2024. Rushbanks said hospital financial data published by the Oregon Health Authority shows that in its first year, the law was a success. For many patients, it took away the stress of a lingering unpaid bill.
Hospitals increased spending on charity care but, according to Rushbanks, data published by the state suggests that spending didn’t cut into their profits as much as you might think.
Instead, Rushbanks said, it shifted the way they report their losses.
In the first quarter of 2024, hospitals in Oregon reported carrying $122 million in bad debt, meaning money that patients owe but are unable or unwilling to pay. That was the highest amount they reported in 10 years.
Over the course of 2024, as the screening law took effect, Oregon hospitals’ spending on charity care more than doubled. At the same time, the amount of bad debt they were reporting fell by about half.
“It worked really, really well. Charity care numbers went way up, and almost correspondingly bad debt numbers went way down,” Rushbanks said.
Hospital CEOs, meanwhile, said the screening requirement wasn’t working well and was part of a pattern of overregulation that makes it more costly to operate in Oregon than in other states.
The Oregon Health Authority summarized those concerns in a memo last year.
Hospitals said they were working with two companies, the credit reporting giant Experian and the health care payment and tech firm Waystar, to comply with the law and estimate their patients’ income before billing them.
Neither firm has access to income tax records, so they use publicly available data like credit scores and zip codes to predict a person’s ability to pay. According to OHA, hospitals believed the tools were only giving accurate results about 85% of the time, leading some people who would have paid their bills to receive discounts instead.
Some patients were also concerned about their privacy and complained to hospitals and OHA when they learned they’d been prescreened for assistance.
Those concerns ultimately convinced lawmakers to scale back Oregon’s charity care law.
Hospitals are still required to check whether uninsured patients and patients on Medicaid qualify for any discounts or free care before billing them. They also must screen and apply charity care discounts to patients before sending any bills to a debt collector.
