There hospitals go again: UVA Health backpedals on draconian debt collection

uvahealthlogo-300x108Is a public pillorying the only way to stop big hospitals from pursuing patients for medical debt with the zeal of demons from the underworld?

The University of Virginia Health System — an enterprise that racked up an $87 million operating profit on revenue of $1.7 billion in the fiscal year ending in June and that holds stocks, bonds and other investments worth about $1 billion — has become the latest institution to get a journalistic blaming and shaming for extreme debt collection practices that would make proud Inspector Javert in Les Miserables.

The independent, nonpartisan Kaiser Health News Service and the Washington Post deserve credit for their investigation into UVA avariciousness. As KHN reported of the state operation:

  • Over six years ending in June 2018, the health system and its doctors filed 36,000 lawsuits against patients seeking a total of more than $106 million, seizing wages and bank accounts, putting liens on property and homes and forcing families into bankruptcy.
  • It sued patients for as much as $1 million and as little as $13.91, and garnished thousands of paychecks, largely from workers at lower-pay employers such as Walmart, where UVA took wages more than 800 times.
  • It seized $22 million over six years in state tax refunds owed to patients with outstanding bills, most of it without court judgments, under a program intended to help state and local governments collect debts.
  • It sued about 100 patients every year who also happened to be its employees and filed thousands of property liens over the years, from Albemarle County all the way to Georgia.
  • It dunned some former patients an additional 15% for legal costs, plus 6% interest on their unpaid bills, which over years can add up to more than the original bill.
  • It has the most restrictive eligibility guidelines for patient financial assistance of any major hospital system in Virginia. Savings of only $4,000 in a retirement account can disqualify a family from aid, even if its income is barely above the poverty level.
  • It routinely billed uninsured patients for far more than what a typical insurance company would have paid.

If you’ve hung around young people, you’ve undoubtedly heard their expression, cadged from street ball players who chuck up wild shots: My bad! That’s the non-apology apology they call out. And UVA offered its uncomfortable equivalent when confronted with its abusive conduct toward those for whom it provides medical care.

Doug Lischke, the health system’s chief financial officer, told KHN that UVA will reverse its practices, increase its financial assistance, give bigger discounts to the uninsured, and “reduce our reliance on the legal system.” KHN quoted him, thusly:

“’This will have a huge impact on patients to the good.’ The changes will ‘positively, drastically reduce the legal process’ of lawsuits, garnishments and property liens. ‘We believe this is much more generous than what we’re doing now.’ Lischke called the new policy ‘a first step’ that could later include financial assistance beyond what was announced … UVA also plans to ask the Virginia General Assembly to change a state law requiring state agencies, including health systems, to ‘aggressively collect’ unpaid bills and charge 6% interest on the balance, he said.”

KHN reporters Jay Hancock and Elizabeth Lucas also noted this:

 “[I]ndependent experts said the new UVA policy … still leaves numerous patients exposed to lawsuits and crippling bills … By leaving family assets vulnerable and not fully discounting sticker-price charges, the new UVA guidelines remain ‘very tough on the poor and near-poor who have managed to amass anything of value that will help them with the daily costs of life,’ said Sara Rosenbaum, a health policy professor at George Washington University.”

The health system also is still figuring what it will do with hundreds of pending debt collection lawsuits that will go to court before its planned changes take effect, likely on Jan. 1. KHN found that UVA “sues so many patients that District Court Judge William Barkley doesn’t announce the cases as he takes the bench each Thursday in the historic brick courthouse in Charlottesville. On this day, he waves a thick stack of litigation at defendants, asking, ‘Is anybody here for a hospital case?’ Nobody needs to ask which hospital.”

Hancock and Lucas contrasted the UVA practices with others in the state, reporting:

“Though there is no national data on hospital debt collection, UVA’s pursuit of patients goes beyond that of a number of institutions. Johns Hopkins Hospital in Baltimore has sued patients 240 times a year on average, according to a May report in The Baltimore Sun. UVA, by comparison, often sues that many former patients in a week and averages more than 6,000 cases annually, court data show. Private, nonprofit Yale New Haven Health System files liens only if a bill is over $10,000 and then only if the property is worth at least $300,000, a spokesman said. Falls Church, Va.-based Inova Health says it does not file liens on patient homes or garnish wages. Tenet Healthcare, a national, for-profit chain whose stock trades on Wall Street, says it does not sue uninsured patients who are unemployed or who lack significant assets other than their house.”

Whoa, though, before anyone sings the praises of hospitals and their mercies, ProPublica — a Pulitzer Prize-winning site that has done its own deep dig with partner news organization MLK50 on the harsh collection practices of a Tennessee health system — reported that, alas, institutions across the country have a long and bad history of extreme debt collections. These harsh practices seem to be put in check only when journalists report on the outrageous conduct.

ProPublica’s offenders list includes: Methodist Le Bonheur Healthcare in Memphis; Mary Washington Hospital in Virginia (as reported by NPR); Saint Francis Health System and dozens of Oklahoma hospitals (investigated by The Oklahoman); and Carlsbad Medical Center in New Mexico (the New York Times).

The site also notes that it investigated an institution now called Mosaic Life Care, which, under pressure from Sen. Chuck Grassley, the influential Iowa Republican, forgave debts it had sued for and that affected thousands of patients. The Wall Street Journal gets a nod for its 2003 work on how Yale-New Haven Hospital chased after a widower over his late wife’s two decades old medical bills.

ProPublica reported that Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, expressed official anger at hospitals’ overzealous debt collections, telling an industry group: “We are learning the lengths to which certain not-for-profit hospitals go to collect the full list price from uninsured patients. This is unacceptable. Hospitals must be paid for their work, but it’s actions like these that have led to calls for a complete Washington takeover of the entire health care system.”

Here’s another trenchant issue with hospitals and medical debt, as ProPublica reported:

“There is no federal law mandating that nonprofit hospitals provide a specific amount of charity care, nor is there readily accessible data measuring how aggressively each hospital pursues patients for unpaid bills. But consumer advocates say the revelations in recent coverage on hospitals’ litigation practices are troubling. [This is especially so because nearly] half of the nation’s 6,200 hospitals are nonprofits, meaning they are exempt from paying most local, state and federal taxes in return for providing community benefits.”

Grassley already has called on the Internal Revenue Service, asking whether nonprofit hospitals provide the community benefits — especially charitable care — to justify the tax breaks they enjoy.

It’s also worth noting that, as nonprofits for not-for-profit institutions, hospitals need to put excess returns they make (aka profits) back into their businesses. This has meant that the fattest cats in the fancy suits (top administrators) get paid handsomely. Shiny new buildings sprout like daisies in a wild field after a spring rain. Institutions add lots of support but not care giving staff, especially paper pushers who create mountains of bumpf related to bill collection. And institutions somehow keep packing in big, expensive, and trendy equipment like giant scanning devices or complex surgical robots.

In my practice, I see not only the harms that patients suffer while seeking medical services, but also their struggles to access and afford safe, efficient, and excellent medical care. Their medical challenges rise exponentially by the day due to the soaring cost, complexity, and uncertainty of treatments and prescription medications, too many of which prove to be dangerous drugs.

Isn’t it past time that patients — we taxpayers and voters — demand that hospitals stop getting bigger and flashier and worry ever more about getting better, especially in how they treat us, not only with medical care but also in reasonable and civil fashion when it comes to how much we owe. If a dozen MBA-holding vice presidents and directors, with their six-figure pay, disappeared from the UVA so the state’s top-ranked hospital treated hundreds of regular employees with greater respect and not just as debt-owing scofflaws, wouldn’t that be beneficial to Commonwealth taxpayers?

Doctors and hospitals should make a decent dollar for their work, with so many providing life changing and lifesaving services. But as the dollar-loving Wall Street adage says of investors, bulls and bears may prosper but pigs get led to slaughter. Politicians and regulators — despite the clout of hospitals and their big and growing employment base — need to step up their oversight and prevent even the whiff of patient debt gouging by important medical institutions across the country.

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