In addressing high charity care with low reimbursements, a hospital may pursue which action?

• A. Reduce marketing expenses
• B. Increase charity care spending
• C. Pricing adjustments and payer contract negotiations
• D. Stop accepting government programs

Answer: (C)

When charity care is high and reimbursements are low, the strongest move is to optimize what you charge and secure better payment terms from payers. Pricing adjustments mean updating the chargemaster to reflect true costs and typical market rates, setting prices that better correlate with the value and cost of services, and applying charity policies consistently. This helps ensure the amounts billed are aligned with actual costs and likely reimbursements, reducing the gap created by low reimbursements.

Payer contract negotiations aim to lift the rates and terms you receive from insurers and government programs, including clearer payment terms and appropriate coverage. By negotiating higher rates and more favorable terms, the hospital can improve net revenue per service, making it easier to cover charity care costs without simply cutting expenses.

Other options don’t address the underlying revenue issue: cutting marketing reduces spend without solving low reimbursement; increasing charity care spending deepens the financial strain; and stopping government programs isn’t viable since many patients rely on them and hospitals rely on those payments.