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Hospital Group Sued Over Charity Billing Practices

— Lawsuit alleges hospitals misled thousands of low-income patients eligible for financial aid

Ƶ MedicalToday
A photo of the Providence Regional Medical Center Everett in Everett, Washington

On paper, Providence hospitals provide affordable care to low-income patients. "We use our voice to advocate for vulnerable populations and needed reforms in health care," .

However, a lawsuit from Washington's Attorney General against the large healthcare organization painted a very different picture, one of profits at the expense of needy patients and a culture of aggressive billing tactics so pervasive that one employee used a giant dollar sign as a Halloween costume.

According to the by the state, the hospital group intentionally withheld financial aid information from low-income patients eligible for charity care under the state's and their own policy, instead pushing for payments in full, billing repeatedly, sending their accounts to collections, and plunging patients into medical debt.

Providence Health & Services, the largest healthcare provider in Washington, runs . These include Swedish Hospital at First Hill, the largest hospital in the state, and affiliate Kadlec Regional Medical Center.

According to the complaint, the hospital group sent 46,783 accounts to debt collection agencies over unpaid balances totalling over $53 million for patients making 151-200% of the federal poverty level.

"Providence's acts and practices exploit the power and knowledge imbalance between Providence and its patients for its own financial gain," the complaint read.

Under , each hospital must "make a reasonable effort" to screen patients for charity care eligibility under both the law and their own charity care policy before attempting to collect payment from them.

According to the complaint, "Rather than screening patients for charity care eligibility, Providence trains and encourages its agents to create the impression that all of its patients are obligated to pay for their care regardless of their income level. Even when Providence identifies charity care qualified patients, it sends many of their accounts to Debt Collectors in hopes that it can extract some payment from patients Providence knows cannot afford to pay."

A slide from a Providence hospital staff training, shared with the by the state attorney general, exposes one tactic used to extract payment from patients before offering financial aid: "Don't accept the first No." Employees were trained to ask for full payment using the phrase "How would you like to pay today?" then ask for 50% of the balance, then offer to set up a payment plan -- all without discussing financial assistance.

This drive to extract payment from patients was so pervasive, the lawsuit holds, that an unabashedly ruthless corporate culture was built around it. A consulting firm called McKinsey & Company helped them implement a push for direct payments known as "RevUp," in which scripted interactions with patients and training were pointedly geared toward generating revenue. "Collections while providing excellent service is your job," read one staff training document.

Conversation scripts were carefully crafted to defer the disclosure of charity care availability until the last possible moment, asking for payment in full and then a commitment to pay, followed by offers of payment plans, the lawsuit says. Employee teams had collection targets and their progress was measured publicly, with results considered in annual reviews.

Then there were the office Halloween costumes, with one employee carrying a giant dollar sign with the training mantra "How?" and another in a wrestling costume as "RevUp Ricky."

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Although charity care was technically available for Providence patients, the lawsuit says management actively concealed its existence from low-income patients.

A statement from Providence countered that its "threshold for charity care eligibility is at least two times more generous than Washington state standards." Washington state law states that anyone below 100% of the federal poverty threshold ($13,590 for a single person) is eligible for free care, with those who make up to 200% of the poverty level ($27,180 for a single person) eligible for a discount.

Providence Kadlec Regional Medical Center's , last revised in 2020 (the attorney general [AG]'s office first raised concerns in 2018, according to the hospital's statement) does indeed set a more generous threshold for charity care: patients making less than 300% of the federal poverty level qualify for free care, and those making between 301%-350% are eligible for a 75% discount from the original charges.

"When the AG's office first raised their concerns with us two years ago, we cooperated fully and in good faith. That is why it is inconceivable that the AG has chosen now to file this complaint," the statement continued.

But the lawsuit alleges that the hospital system did not comply with its own policy or state policy to inform patients of this aid prior to asking for payment in full. The organization allegedly obscured this option at the time of admission, after care was delivered, and even after patients couldn't pay bills. In fact, they say, the hospital system even identified these eligible low-income patients themselves in the lead up to debt collections.

Though eventually striking some accounts as "presumptive charity care," the complaint says, Providence would wait until the last moment to determine their eligibility and write off charges. They later stopped doing this for insured patients with outstanding payments, the suit says, sending the accounts straight to debt collectors, including for patients under 200% of the federal poverty level.

"These practices subject some of the most low-income and vulnerable Washingtonians to aggressive attempts to collect payment by Debt Collectors," the complaint said.

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    Sophie Putka is an enterprise and investigative writer for Ƶ. Her work has appeared in the Wall Street Journal, Discover, Business Insider, Inverse, Cannabis Wire, and more. She joined Ƶ in August of 2021.