Hospitals in the U.S. are threatening patients with debt or threaten credit

Medical Debt Relief for Penelope Wingard and Other Black Patients in the Intensive Cancer Care System: The Impact of Collections on Credit Reporting

After a year of chemotherapy and radiation, doctors told Penelope Wingard in 2014 that her breast cancer was in remission. She’d been waiting for this good news and had been praying. It meant she no longer qualified for the Medicaid program in North Carolina that provided temporary coverage for patients undergoing active breast cancer treatment.

She says she has over $50,000 in medical debt. It’s not just for cancer care, but also bills for unrelated health problems that developed in the following years.

Consumer advocates were excited when the credit agencies decided to help patients like Wingard with medical debt. Changes aren’t enough to assist her and other black and low income patients who are often hit hardest by medical debt.

If you owe less than $500 and go to collections, your credit report will be taken away by the three credit reporting agencies. This doesn’t wipe out what people owe, but the idea is to remove the black mark of collections from their credit so they can more easily reach milestones like qualifying for a car or home loan.

Medical Debt Ignored Her Credit Its Like Youre Being Punished For Being Sick: The Case of a Low-Income, Low-Energy Woman

The changes, which go into full effect in 2023, are expected to benefit an estimated 16 million Americans. But a federal report released this summer suggests those may not be the people who need it most.

“Although the credit reporting companies have trumpeted this as a big change, the fact is they’re just removing the small stuff,” says Ryan Sandler, a co-author of the report and senior economist with the Consumer Financial Protection Bureau. “They don’t seem to be doing as well as press releases would like them to be doing.”

It’s believed that the population that’s going to have all their collections removed is likely to live in high-income neighborhoods.

Many people with insurance are more likely to be richer and white than other people because of collections under $500.

Wingard, a low-income woman with no children and no public insurance in her state, doesn’t qualify for it because North Carolina didn’t expand Medicaid.

She has worked in a variety of jobs, but none of them came with health insurance benefits. Wingard says she tried to buy private insurance on the marketplace several years ago, but her monthly premium would have been more than $200, which she can’t afford.

Wingard had a mammogram to check for cancer recurrence in February. Ahead of the appointment, she contacted a local nonprofit that agreed to cover the cost. But a few weeks after the procedure, Wingard received a bill for nearly $1,900. There was some miscommunication between the nonprofit and the hospital, Wingard says. While she tried to resolve the issue, the bill went to collections. It’s more than $500, so it won’t be removed even when the new credit agency policies take full effect next year.

Source: https://www.npr.org/sections/health-shots/2022/10/06/1126787264/medical-debt-ruined-her-credit-its-like-youre-being-punished-for-being-sick

Bank Cards, Loans, and Insurance: Asking for Help to Fix a Broken Kitchen or Buying a New Appliance for a Loss

Her fridge and stove have both been broken for more than a year. She can’t qualify for a loan to replace them, so instead of making baked chicken from her favorite family recipe, she often settles for a can of soup or fast-food chicken wings instead.

In emergencies — such as when she needed to repair a broken tooth this fall — Wingard borrows from family. But it’s not easy to ask for money, she says. “It makes you feel worthless, like you can’t do anything.”

For Wingard, it has hurt her ability to get a job. She says two employers told her that poor credit shows up as a red flag on background checks and has led her to be turned down for positions.

The Biden administration has advised federal lenders to no longer consider medical debt when evaluating loan applications and has asked the Consumer Financial Protection Bureau to investigate whether medical debt should ever appear on credit reports.

Wingard is ready for swifter and stronger change. She wants to organize a march on Washington to demand relief from medical debt and universal insurance to save money in the future.

“For a million people to gather up there and say we need better health care, I think that’d be history-making,” she says. “Maybe then they’ll recognize we need help.”

Court actions against a college student who sued a New Jersey hospital for a heart attack caused by a baby’s absence — the case of Balogun

The collection practices are commonplace among all types of hospitals in all regions of the country, including public university systems, leading academic institutions, small community hospitals, for-profit chains, and nonprofit Catholic systems.

Hospitals with policies that allow them to file lawsuits tend to have higher profits than hospitals that don’t, according to data from hospitals submitted to the federal government.

At the same time, a majority of hospitals scrutinized by KHN effectively shroud their collection activities, publicly posting incomplete or in many cases no information about what can happen to patients if they can’t pay.

The policy of the University of Mississippi Medical Center was made public after a public records request was filed. Many hospitals prominently place a link to pay a bill on their websites but then require people to click through many pages to find out more.

People don’t know what will happen to them. It can be terrifying,” said Tracy Douglas, a consumer attorney at Bet Tzedek Legal Services in Los Angeles. An older woman Douglas had worked with was afraid to seek financial assistance from a hospital because she worried that the hospital would seize her home if she couldn’t pay.

Basit Balogun was a freshman at Lafayette College in Pennsylvania when a heart attack caused by a previously undetected birth defect landed him in the hospital. His insurance had been renewed but it expired and he was hit with a huge bill.

When he couldn’t pay, the hospital reported him to a credit agency, which he discovered only after he’d graduated and was trying to rent an apartment in New York City. The man recalled how he kept getting rejected. “I was desperate.”

The prize-winning student, who received a signing bonus when he was hired into Goldman Sachs, decided to pay down the debt by using his bonus. Five years later, he’s still making payments. Now Balogun said he thinks twice before going to the doctor.

Nick and Elizabeth Woodruff had their faith damaged by hospital debt collectors. Nick was sued by Our Lady of Lourdes Memorial Hospital in Binghamton, New York, where he’d received care for a dangerous foot infection.

Elizabeth, a social worker, said she was taken aback by how callous the hospital had been.

Ascension spokesperson Nick Ragone told KHN that the chain, America’s second-largest Catholic system, “ceased taking legal action against patients for unpaid bills starting in October 2019.” But New York court records show that Lourdes continued to file legal actions against patients until at least 2021.

Hospital leaders also stress the industry’s commitment to helping low-income patients and others who can’t pay their bills. ” Hospitals are doing lots,” said Melinda Hatton, general counsel at the American Hospital Association. “Is it perfect out there? No. But I think they should get credit for trying pretty hard.”

Many patients were confused and weren’t eligible for aid with large bills. A 2019 KHN analysis of hospital tax filings found that nearly half of nonprofit medical systems were billing patients with incomes low enough to qualify for charity care.

Applying for aid can also be extremely complicated, requiring patients to produce exhaustive amounts of personal financial information, KHN found. Standards vary widely, with aid at some hospitals limited to patients with income as low as $13,590 a year. People making a lot more can get assistance at other hospitals.

Visitors to the website of Opelousas General Health System in Louisiana who click on the “Patient Resources” tab can learn that the Lil’ General Café serves panini and pancakes, but they won’t find any information about getting help with medical bills.

About two-thirds of the hospitals researched by KHN require patients to report their assets, sometimes in great detail. The policy of Centura-St. Anthony Hospital says it may count social media accounts as assets if they are used to help pay bills. Other hospitals ask patients to report the make, model, and year of cars they have.

Bankruptcy and Credit Reporting: How Hospitals Sue Patients for Debts or Damage Their Credits, Or Why They Shouldn’t Have a Lien on Their Home Because They Got Sick

“Every week or so we get a call from someone who should have qualified for aid, but they weren’t enrolled,” said Michele Johnson, executive director of the nonprofit Tennessee Justice Center.

In 2017, the state also successfully sued CHI Franciscan, another Catholic system that authorities found wasn’t properly offering charity care. To settle that case, CHI Franciscan, now part of the mammoth CommonSpirit Health chain, provided more than $40 million in debt relief and refunds and helped patients repair their credit, according to the state attorney general’s office.

Credit reporting, a threat that is supposed to induce patients to pay, is the most common collection tactic, KHN’s analysis and other data shows. There are more patients who are taken to court.

Half of the hospitals earning top spots on the U.S. News & World Report’s annual scorecard are medical centers.

Hospitals that sell patient accounts oftenpackage a group of outstanding bills and sell them to debt-buying companies for a small percentage of what is owed. Debt buyers keep what they can make.

A few hospitals have barred all aggressive collections, including two of California’s leading academic medical centers at UCLA and Stanford University. Both the University of Vermont Medical Center and Ochsner Health have New Orleans ties.

That can make a difference for patients, data suggests. According to the Consumer Financial Protection Bureau’s analysis, while medical debt is common across the Appalachian region, it is uncommon in western Pennsylvania.

Mark Rukavina, who spent decades at the nonprofit Community Catalyst working to expand protections for patients with medical debt, said that is why federal action is needed to rein in hospitals and other medical providers everywhere.

“Nobody should be denied care because they have an outstanding medical bill,” he said. “Everyone should not have a lien on their home because they got sick.”

Source: https://www.npr.org/sections/health-shots/2022/12/21/1144491711/investigation-many-u-s-hospitals-sue-patients-for-debts-or-threaten-their-credit

Health Care Debt in America: The Case for Consumer Protection and Better Medical Payments from the U.S. Government to End Medical Debt Collections

Researchers who worked on this story include KHN writer Megan Kalata and Dr. Margaret Ferguson, Anna Back, and Amber Cole, who were students at the Milken Institute School of Public Health at George Washington University.

KHN is a national newsroom that writes about health issues. KFF’s operating programs include Policy Analysis and Polling, as well as KHN. KFF is an endowed nonprofit organization providing information on health issues to the nation.

Dozens of advocates for patients and consumers, citing widespread harm caused by medical debt, are pushing the Biden administration to take more aggressive steps to protect Americans from medical bills and debt collectors.

The federal government should bar nonprofit hospitals from selling patient debt, and denying medical care to people with past-due bills, according to the advocacy group KHN.

Among the more than 50 groups supporting the initiative are national advocates such as the National Consumer Law Center, the Arthritis Foundation, and the Leukemia & Lymphoma Society.

Nationwide, 100 million people have health care debt, according to a KHN-NPR investigation, which has documented a crisis that is driving Americans from their homes, draining their savings, and preventing millions from accessing care they need.

While credit reports show some of the debt on its face, it is often hidden by credit card balances, loans from relatives or payment plans to hospitals and other medical providers.

New York, California, Colorado, Maryland, and other states enacted laws that expanded consumer protections and increased financial aid for patients. Credit reports for some medical debt would no longer be included by the three largest credit agencies by July last year.

Millions of Americans are vulnerable to financial ruin if they become ill or injured, and many consumer and patient advocates say the actions are important. In a letter to the agency, the groups said that it was critical that they take additional action.

There is a group asking the bureau to eliminate deferred interest on medical credit cards. This arrangement is common for vendors such as CareCredit, whose loans carry no interest at first but can exceed 25% if patients don’t pay off the loan in time.

Collection industry officials have lobbied against broader restrictions on credit reporting, saying limits would take away an important tool that hospitals, physicians’ offices, and other medical providers need to collect their money and stay in business.

Brown, a past president of ACA International, the collection industry’s leading trade association, warned that more medical providers would also start demanding upfront payment, putting additional pressure on patients.

Standards for Charitable Care and Uniform Applicability in Non-Profiting Hospitals: a Comment on ‘A Common Standard for Charity Care’

Standards also vary widely, with aid at some hospitals limited to patients with income as low as $13,590 a year. At other hospitals, people making five or six times that much can get assistance.

The groups are asking the IRS to issue rules that would set common standards for charity care and a uniform application across nonprofit hospitals. Current rules for charity care don’t apply to public hospitals.