Non-profit Healthcare Providers Under Scrutiny for Billing and Collection Practices

For some time now, healthcare providers have been dealing with declining reimbursements from third-party payers and a higher portion of patient responsibility as a part of their total accounts receivable. As the reimbursement challenges grow and operating margins shrink, healthcare’s bottom lines have felt the squeeze. Though this alone is enough to cause sleepless nights for revenue cycle professionals, there is now a new front that those in the non-profit healthcare world are having to face. Lately, non-profit healthcare providers have come under increased scrutiny by public media and consumer advocates for their billing and collection practices.

The beginnings of this movement trace back to a series of ProPublica articles titled “Unforgiven: The Transformation of Consumer Debt.” In their series, ProPublica reported on several non-profit and public healthcare providers across the country, citing their treatment of lower-income patients and their reliance on lawsuits to compel the payment of medical debt. It was enough, at the time, that the investigation prompted further scrutiny by Senator Charles Grassley, causing one hospital system in Missouri to overhaul its financial assistance policy and forgive the debts of thousands of former patients.

More recently, ProPublica and other consumer advocacy outlets have cited the following hospitals for their billing and collection practices: Methodist Le Bonheur Healthcare in Memphis, Tennessee; St. Francis Health System in Oklahoma; Carlsbad Medical Center in Carlsbad, New Mexico and; Virginia’s non-profit Mary Washington Hospital.

The one that has drawn the most attention lately is a report from Kaiser Health News and The Washington Post on how Virginia’s state-run University of Virginia Health System (UVA) sued patients more than 36,000 times over six years, seeking a total of more than $106 million in unpaid bills. In response, Senate Finance Committee Chairman Charles Grassley (R-Iowa) sent a letter demanding answers to questions about UVA’s billing practices, financial assistance policies, and even its prices. The Finance Committee oversees federal tax laws, and Kaiser Health News reported that Grassley wrote that it is “my job to make sure that entities exempt from tax are fulfilling their tax-exempt purposes.”

In his seven-page letter, Grassley asks 19 detailed questions on various topics, including the system’s charity care (free or discounted care provided to low-income patients), debt collection policies, and its rationale for the litigation threshold of $1,000, enacted in 2017. Grassley asks specific questions about UVA’s list of standard prices for procedures and equipment, commonly known as the “chargemaster,” as posted on its website. Here is a copy of his letter to UVA.

Grassley has a longstanding interest in nonprofits in general and nonprofit hospitals in particular. In February of this year, Grassley wrote a letter to IRS Commissioner Charles Rettig to request data on nonprofit hospitals’ compliance or lack thereof with congressionally established standards for community benefits under 501(r). Even though the letter questions only UVA Health System, it sends a signal that the Senate will be paying attention to an issue that affects all state-run and nonprofit health systems.

The reality for those of us in the ARM industry who serve non-profit healthcare providers is that the attention to billing and collection practices—our own as well as those of our clients—is not going away on the part of consumer advocates. To protect the integrity and future of our industry, we will need to better educate and work with our clients on what is reasonable and effective in today’s consumer-oriented climate.