Hospital Group Mum As Members Pursue Patients With Lawsuits And Debt Collectors
Atlantic Health System, whose CEO is the American Hospital Associationâs chairman, has sued patients for unpaid bills thousands of times this year, court records show, including at the systemâs Morristown Medical Center. (Photo by Ekem via Wikimedia Commons)
The American Hospital Association, the biggest hospital trade group, says it promotes âbest practicesâ among medical systems to treat patients more effectively and improve community health.
But the powerful association has stayed largely silent about hospitals suing thousands of patients for overdue bills, seizing homes or wages and even forcing families into bankruptcy.
Atlantic Health System, whose CEO is the AHAâs chairman, Brian Gragnolati, has sued patients for unpaid bills thousands of times this year, court records show, including a family struggling to pay bills for three children with cystic fibrosis.
AHA, which represents nearly 5,000, mostly nonprofit hospitals and medical systems, has issued few guidelines on such aggressive practices or the limited financial assistance policies that often trigger them.
In a year when multiple health systems have come under fire for suing patients, from giants UVA Health System and VCU Health to community , it has made no concrete move to develop an industry standard.
âThere could be a broader message coming out of hospital leadershipâ about harsh collections, said Erin Fuse Brown, a law professor at Georgia State University who studies hospital billing. âIt seems unconscionable if they are claiming to serve the community and then saddling patients with these financial obligations that are ruinous.â
Nonprofit hospitals are required to provide âcommunity benefit,â including charity care in return for billions of dollars in government subsidies they get through tax exemptions. But the rules are lax and vague, experts say, especially for bill forgiveness and collections.
The Affordable Care Act requires nonprofit hospitals to have a financial assistance policy for needy patients but offers no guidance about its terms.
âThere is no requirementâ for minimum hospital charity under federal law, said Ge Bai a health policy professor at Johns Hopkins. âYou design your own policy. And you can make it extremely hard to qualify.â
Practices vary sharply, a review of hospital policies and data from IRS filings show. Some hospitals write off the entire bill for a patient from a family of four making up to $77,000 a year. Others give free care only if that family makes less than $26,000.
The law does not substantially limit harsh collections, either. only that nonprofit hospitals make âreasonable effortsâ to determine if patients qualify for financial assistance before suing them, garnishing their wages and putting liens on their homes.
Gaping differences in both collections and financial assistance show up in the policies of health systems represented on AHAâs board of trustees.
This year, AHA board chairman Gragnolatiâs Atlantic Health System, in northern New Jersey, sued patients for unpaid bills more than 8,000 times, court records show.
Atlantic Health sued Robert and Tricia Mechan of Maywood, N.J., to recover $7,982 in unpaid bills for treatment of their son Jonathan at the systemâs Morristown Medical Center.
Three of the Mechansâ four children have cystic fibrosis, a chronic lung disease, including Jonathan, 18. Tricia Mechan works two jobs â full time as a manager at Garyâs Wine & Marketplace and part time at Loweâs â to try to pay doctor and hospital bills that pile up even with insurance.
âI have bill collectors call me all the time,â Tricia Mechan said. âYouâre asking me for more, and all Iâm doing is trying to get the best care for my children. I didnât ask to have sick children.â
She closed a savings account and borrowed money to settle Jonathanâs bill for $6,000. Another son with cystic fibrosis, Matthew, owes Atlantic Health $4,200 and is paying it off at $25 a month, she said.
Marna Borgstrom, CEO of Yale New Haven Health, also sits on AHAâs board. Yale almost never sues families like the Mechans.
âI have not signed off on a legal action since 2015â against a patient, Patrick McCabe, the systemâs senior vice president of finance, said in an interview. âPeople are coming to us when they are at their most vulnerable, and we truly believe we need to work with them and not create any additional stress that can be avoided.â
Yale has treated Nicholas Ruschmeyer, 30, a Vermont ski mountain manager, for recurring cancer. He has been careful to maintain insurance, but a few years ago the hospital performed a $12,000 genetic test that wasnât covered.
âYale completely absorbed the cost,â said his mother, Sherrie Ruschmeyer. Yale is âwonderful to work with, not at all aggressive,â she said.
Atlantic Health bars families from receiving financial assistance if they have more than $15,000 in savings or other assets. Yale never asks about savings. Even families who own homes without a mortgage qualify if their income is low enough.
Atlantic Healthâs policies including seizing patient wages and bank accounts through court orders to recoup overdue bills. Yale says it does not do this.
In some ways, Atlantic Healthâs policies are more generous than those of other systems.
It forgives bills exceeding 30% of a familyâs income in many cases, the kind of âcatastrophicâ assistance some hospitals lack. It also bills many uninsured patients only slightly more than Medicare rates. Thatâs far less than rates charged by other hospitals in the same situation that are substantially higher than the cost of treatment.
âAtlantic Health Systemâs billing policy complies with all state and federal guidelines,â said spokesman Luke Margolis. âWhile we are willing to assist patients no matter their financial situation, those who can pay should do so.â
After a reporter inquired about its practices, Atlantic Health said it âis actively engaged in refining our policies to reflect our patientsâ realities.â
AHA also is considering changing its position on billing in the wake of recent reports on aggressive and ruinous hospital practices.
Previously AHA said billing offices should ,â without giving specifics, and treat them with âdignity and respect.â Queried this month, association CEO Rick Pollack said, âWe are reevaluating the guidelines [for collections and financial assistance] to ensure they best serve the needs of patients.â
Kaiser Health News found that the University of Virginia Health System sued patients 36,000 times over six years, taking tax refunds, wages and property and billing the uninsured at rates far higher than the cost of care. Richmond-based VCU Healthâs physicians group sued patients 56,000 times over seven years, KHN also found.
In Memphis, Methodist Le Bonheur Healthcare over five years, ProPublica reported. In South Carolina, hospitals have been from patients and their families, an examination by The Post and Courier showed.
In response, VCU pledged to stop suing all patients. UVA promised to , increase financial assistance and consider further steps. Methodist erased debt for 6,500 patients and said it would overhaul its collections rules.
Yaleâs less aggressive policies also came in response to journalism â a on how the system hounded one family. Yale still sends overdue bills to collections, McCabe said. But it balks at the last, drastic step of asking a court to approve seizing income and assets.
For patients with unpaid bills, he said, âif youâre willing to play a game of chicken, you will win.â
Hospitals say they see more and more patients who canât pay, even with insurance, as medical costs rise, family incomes plateau and out-of-pocket health expenses increase. In particular, they blame widespread high-deductible coverage, which requires patients to pay thousands before the insurance takes over.
âMore consumers pay far more with fewer benefits,â Pollack said.
Some states go beyond federal rules for charity care and collections. In California, patients with an income of less than $90,000 for a family of four must be eligible for free or discounted care. New Jersey requires Atlantic Health and other systems to give free care to patients from families of four with income less than $51,000.
The National Consumer Law Center, a nonprofit advocacy group, that standard for large medical facilities. Its also would require substantial discounts for families of four with income below $103,000 and relief for patients with even higher incomes facing catastrophic bills.
The AHA should consider similar changes in its own guidelines, NCLC attorney Jenifer Bosco said.
âI would be interested in seeing them taking a more active role in creating some standard for hospitals about whatâs too much,â she said. âWhatâs going too far? Given that this is a helping profession, what would be some appropriate industry standards?â
KHN senior correspondent Jordan Rau contributed to this report.