State Attorneys General Against Medical Debt
Amidst discussions around what can be done to protect patients against medical debt, many states are taking actions into their own hands. Last month, the Washington state attorney general expanded the lawsuit against hospitals to include two additional debt-collecting agencies. He is charging these hospitals and debt collection agencies for violating Washington’s Collection Agency Act and Consumer Protection Act. California and Minnesota attorneys general are taking patient protections seriously, as well, with action against and agreements with hospitals.
What is financial assistance/charity care?
Financial assistance, also known as charity care, is free or discounted care that hospitals provide to patients who cannot afford the price of health care services. Nonprofit hospitals make up about 3,000, or close to 50%, of hospitals in the U.S. and are required by federal law to provide charity care to maintain their tax-exempt status. The Joint Committee on Taxation estimates that the total amount of tax relief for nonprofit hospitals equated to $24.6 billion, yet only a small percentage of the net income of these hospitals goes to their financial assistance. The federal requirements include having written policies that must be publicized widely throughout the hospitals and including it in discharge paperwork and follow-up bills to the patients. The criteria of who qualifies for financial aid polices varies state to state. It is well documented that patients are not well-informed of financial assistance. A 2015 study showed that only 44% of hospitals informed patients of financial assistance prior to collecting unpaid medical bills. The Consumer Financial Protection Bureau has been active in protecting patients against medical debt; how it is accrued, the effects of it and how to prevent it. They released this report further explaining financial assistance in medical care.
Washington state Attorney General Bob Ferguson has a history of defending patient’s rights to charity care. In February, he filed a lawsuit against 14 hospitals affiliated with the Providence and the Swedish hospital systems for failing to providing millions of dollars in charity care for Washingtonians. This is the third lawsuit of this kind he has filed, joining two from 2017. On Aug. 9, he extended it to two collection agencies for collecting on $470 million of medical debt while violating Washington law to inform patients of financial assistance programs. Washington has robust financial assistance laws that require every hospital in the state to provide free care up to patients earning up to 300% of the federal poverty level (FPL) and discounted care for patients earning up to 400% of the FPL. This lawsuit alleges that these hospitals and collections agencies failed to inform the patient of their qualifying for financial assistance and aggressively pursued collection for medical payments, violating the Consumer Protection Act. AG Ferguson is fighting for refunds with interest to patients wrongly charged, along with civil penalties.
Attorney General Rob Bonta of California is warning hospitals of the consequences on noncompliance with California’s charity care laws. He sent letters to all hospitals after increasing reports from patients saying they were not informed of financial assistance policies in language they can understand. California law requires patients who are within 400% of the FPL to receive free or discounted care, regardless of immigration status. The California Hospital Association claims they are unaware of any noncompliance. Along with the letter to the hospitals, AG Bonta issued a consumer alert to inform Californians of their rights to free or reduced medical care.
Last year, Attorney General Keith Ellison entered into an agreement that includes all 128 non-profit hospitals and one for-profit system in the state. The agreement is for five years and designed to protect Minnesota patients against aggressive and unfair billing practices and to provide more discounted services for patients. The Minnesota Office of the Attorney General started making Hospital Agreements in 2005, but this is the first year in which a for-profit system is joining it. This agreement puts requirements on how much a hospital can charge a patient without insurances, what actions must be taken to collect medical bills, and prevents hospitals and collection agencies from reporting the medical debt to credit reporting agencies.
We need both state and federal actions to combat medical debt and hold hospitals accountable to their patients. On the state level, advocates can urge their attorneys general to ensure patients’ rights are protected. On the federal level, Community Catalyst is currently circulating a petition to the Biden administration calling on them to put stronger protections in place. Please sign here.