LA County partners with hospitals to auto-screen patients for financial aid

California law will mandate presumptive aid screening at all hospitals by next July

LOS ANGELES — The Los Angeles County Department of Public Health is moving this fall to launch a partnership with local hospitals that will automatically screen patients for financial assistance — an approach officials estimate could prevent several hundred million dollars in medical debt annually. The presumptive eligibility system identifies low-income patients and enrolls them in hospital charity care without requiring an application, and it arrives as California prepares to require the practice statewide.

Every Tuesday, Naman Shah sees tuberculosis patients at a small public clinic in Los Angeles’ San Fernando Valley, where he pores over images of battered lungs, listens to labored breathing and checks medications. Shah, a physician and epidemiologist at the Los Angeles County Department of Public Health, has led a county initiative to tackle medical debt since 2023, and previously staffed a rural health clinic in India. The tuberculosis work is part of an initiative dating to the early 20th century to control infections so the disease doesn’t spread. “We like doing things upstream,” Shah said, “meaning before they happen, not after the damage is done.”

Today, Shah and his colleagues are applying the same principle to medical debt. A key part of that effort is a new system to allow every hospital in LA County to easily screen patients for financial aid. The goal: to stop low-income families from getting a bill that buries them in debt.

The scale of medical debt behind the effort is significant. An estimated 100 million U.S. adults carry some form of healthcare debt. In Los Angeles County — the nation’s most populous — public health officials calculate that about 800,000 residents hold medical bills they cannot pay.

“The impacts of medical debt were staggering,” Shah said. “People end up with credit card debt and then a vicious cycle of high interest rates and poverty. People forgo their prescriptions. People forgo appointments. And then you get into worse health.”

Hospitals typically offer financial aid to patients with low incomes, but information about those programs is rarely accessible and the application process is cumbersome. “Most people walk into the hospital and walk out without any knowledge of financial assistance,” said Jared Walker, founder of Dollar For, a nonprofit that helps patients nationwide apply for aid, often called charity care.

The gap costs hospitals as well as patients. Facilities spend real money trying to collect from low-income patients who are unlikely to pay. “They’re turning their wheels trying to collect on debt that isn’t collectable,” said Adena Tessler, regional vice president for the Hospital Association of Southern California.

Presumptive eligibility systems use software to screen patients against publicly available data such as credit history and pre-qualify them for financial aid without an application. Hospitals that have deployed the systems have reported as much as a 50 percent increase in the amount of financial aid they give patients, Shah said.

Under a state law passed last year, every California hospital must begin presumptive eligibility screening by next July. But the systems can be expensive and difficult for smaller hospitals to implement, and only about one in five hospitals in LA County currently use them, Shah said.

Facing its own significant fiscal constraints, LA County could not pay for hospital-level implementation, Shah said. Instead, the public health department set out to convene healthcare and hospital stakeholders. “The beauty of government is not when it always has to do the work,” he said. “We have the ability to make sure that people cooperate.”

The Hospital Association of Southern California, initially wary of the county initiative, came to see improving hospital financial aid programs as beneficial to hospitals, many of which were wasting money on collections. “The billing process is cumbersome and costly,” said Paul Young, a senior vice president with the association. The association agreed to procure a digital presumptive eligibility system and make it available to its members. This bulk-purchasing approach, which Young compared to “a Costco model,” would lower the cost for individual hospitals, he said.

At the same time, L.A. Care — a nonprofit health plan that administers Medicaid coverage for more than 2.5 million low-income county residents — committed $2 million to set up the system. The investment reflected the safety net insurer’s mission to expand access to medical care, said Melanie Fontes Rainer, who leads strategic planning for L.A. Care. “It’s going to make Los Angeles County better,” she said.

Getting the new system up and running by January, as the partners hope, faces headwinds. Hospital officials are still determining how the system will be funded in the long term. It remains unclear how many of the county’s 88 acute care hospitals will adopt the system, even if it is cheaper and easier to access. Partners are also working to improve the data the system relies on, with one goal being to link the screening to California state tax records to provide more accurate income information than the estimated figures current systems use.

Walker, the patient advocate, said the county effort gave him reason for optimism. “I’m optimistic that we can make a better charity care system,” he said. “And the fact that hospitals in LA County are willing to be innovative and creative about ways we can do that is super encouraging.”

For his part, Shah said county public health officials recognize that a better screening system at hospitals won’t by itself eliminate medical debt. But he said the public health department couldn’t ignore a problem that affects more county residents than asthma or tobacco use. “Prevention is our bread and butter,” he said.

This article is part of Hidden Help, an investigative series from Tradeoffs and KFF Health News about how hospitals can protect their patients from the life-altering harms of medical debt.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — the independent source for health policy research, polling and journalism.