PHOENIXVILLE, PA — A new state review of Phoenixville Hospital’s financial reporting reveals data errors, disqualified claims, and eligibility questions that could directly impact the facility’s share of Pennsylvania’s 2026 Tobacco Settlement payments — a multi-million-dollar statewide program supporting hospitals that provide uncompensated care.
According to a report released by Pennsylvania Auditor General Timothy L. DeFoor, state auditors examined Phoenixville Hospital’s uncompensated care data, extraordinary expense claims, and inpatient day counts covering fiscal years 2023 and 2024. The findings, outlined in a letter to the hospital’s chief financial officer, show that only two of four high-cost claims initially submitted by the hospital qualified for extraordinary expense reimbursement. The remaining claims were deemed ineligible because they were not classified as true self-pay cases.
Extraordinary expense claims — cases where uninsured patients incur unusually high costs — are a key factor in determining whether a hospital qualifies for additional payments under the Tobacco Settlement Act. Phoenixville Hospital’s two validated claims exceeded $136,000 each, clearing the threshold for the 2026 settlement year. Two others, with charges of $319,609.99 and $153,997.20, were rejected after auditors determined they were incorrectly categorized.
The report also highlights discrepancies in day-count data submitted on the hospital’s MA-336 Cost Report for fiscal year 2023. Auditors found reporting errors in Phoenixville Hospital’s total inpatient days and Medical Assistance (MA) days, requiring corrections to classifications across multiple insurers and managed care plans. For example, total inpatient days were understated by 176 days, and several MA categories required adjustments due to payer-class changes.
State officials warned that failure to correct these discrepancies could jeopardize the hospital’s eligibility for extraordinary expense payments. The Pennsylvania Health Care Cost Containment Council (PHC4) will provide Phoenixville Hospital with instructions for making required revisions during the self-verification process. Any uncorrected ineligible claims, the report states, may lead to the hospital being ruled ineligible for the extraordinary expense payment method for the upcoming settlement year.
DHS will ultimately determine each hospital’s eligibility once statewide audits are completed. Facilities qualifying under both the uncompensated care and extraordinary expense methods will be allowed to choose the most advantageous formula for determining their 2026 subsidy.
The Auditor General’s office emphasized that Phoenixville Hospital may still submit additional high-cost uninsured claims — labeled “additional claims” — through October 31, 2025, if the hospital believes they meet the eligibility threshold of $116,696.01.
The full report is a matter of public record and has been distributed to state officials, Phoenixville Hospital leadership, and Tower Health representatives.
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