December 23, 2008
Hospital Debt Collection Practices
One of the major points of friction in tax-exemption for nonprofit hospitals over the past decade has been the hospitals' use of aggressive debt collection techniques. Aggressive debt collection is what first brought Provena-Covenant hospital in Urbana, IL to the attention of the local property tax board, and ultimately played a significant role in the decision of that board to recommend revocation of Provena's state property tax exemption. Then there's the tale of Quentin White, who had paid Yale-New Haven Hospital for over 20 years for the debt from his late wife’s medical care. Despite paying almost $16,000 on a $19,000 bill over the years, the debt ballooned to nearly $39,000 after the payments because of the compound interest charges (over 10%) by the hospital. At one point, the hospital placed a lien on the White’s home and nearly cleaned out his bank account.
Now comes an in-depth examination of the debt collection practices of Maryland hospitals by the Baltimore Sun. In an article released over the weekend, the Sun found
• Hospitals filed more than 132,000 debt collection suits in the past five years, winning at least $100 million in judgments.
• Hospitals sometimes added annual interest at twice the rate allowed for other types of debts.
• Hospitals placed liens on houses 8,000 times in the past five years.
• Maryland lacks uniform standards to determine who qualifies for reduced-price or free hospital care.
• The state doesn't closely monitor hospitals' debt collection practices.
• A majority of Maryland's hospitals have received surpluses from free and unpaid care in recent years, though they are supposed to break even in the long run.
It is surely the case that hospitals have some cases that call for debt collection; some people can afford to pay their bills and choose not to. But as the Sun story found, debt collection practices by nonprofit hospitals are often poorly supervised and lack sufficient internal controls. The Provena case in Illinois and the Quentin White case in Connecticut led to state legislation regulating hospital collection practices. In 2006, California passed similar legislation, and attorney generals across the country have opened investigations into hospital billing practices. The wave of bad publicity and legislative and regulatory efforts has led some (maybe many) nonprofit hospitals to re-examine their debt collection practices - but perhaps self regulation is simply not enough. Will Maryland be next on the legislation list? Will Senator Grassley pursue federal standards on debt collection as a limit on 501(c)(3) status for nonprofit hospitals? Stay tuned . . .
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A friend of mine is facing this same problem right now - the hospital where his late wife got treatment has been sending him a bill for about $15,000 for the past 3 years. When they first talked to the hospital about treatment, they were told that they were in-network with my friend's insurance (Blue Cross), and that everything will be covered. But after the fact Blue Cross says that was not true. Though they paid a large chunk of the charges, there is still a large amount leftover for non-covered practices and co-insurance.
My friend kept calling the hospital over the past 3 years and they say they will forgive part of his charges and/or negotiate with the insurance company - but apparently they are not doing anything at all. He keeps getting only customer service reps who keep saying they have to look things over and will get back to him, but they never do get back to him.
Today he got a new bill that ups it to $25,000, because Blue Cross determined that the hospital had overcharged them for certain things. They have not gone into collections yet, but we don't know if/when this will happen. The hospital is in IL, and my friend lives in NV.
Is there ANYONE we can go to to help resolve this? If it's something a lawyer should get involved in, what kind of lawyer should my friend get. Etc. (We've already written to the hospital's administration to ask for an ombudsman but have not yet heard back).
Posted by: O.P. | Jan 12, 2009 8:00:18 AM