Medical Debt Collection Harms Patient Finances

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When Mark Marcott went to SSM Health St. Mary’s Hospital in Madison for serious side effects of a medication in November 2019, he said he was told the services would be covered even though he didn’t have health insurance after recently losing a job.

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Mark Marcott
“It was stressful to know I had a huge debt and then the pandemic hit, which made it even more difficult to be gainfully employed,” said Marcott, 52, of Madison, who started working at the state Department of Natural Resources this April.

Medical debt collection, a complex process and significant cause of personal bankruptcy, is receiving renewed attention because of the financial challenges of the COVID-19 pandemic. Some health systems, including UW Health, Froedtert Health and Advocate Aurora,  stopped such actions early last year as the pandemic hit, but it’s not clear how long the reprieve will last.

“We will reevaluate our situation once (the federal government) declares we are no longer in a pandemic,” said Tom Russell, a spokesperson for UW Health, which stopped such lawsuits in late March 2020.

Marcott was assisted by ABC for Health, a nonprofit, public interest law firm in Madison. In a recent report reviewing 5,023 lawsuits to collect unpaid medical bills by five health systems in Wisconsin from 2017 to 2019, the firm found that health systems were always represented by attorneys, but less than 1% of patients were.

Bobby Peterson
“The average person has no understanding of what their legal rights are,” said Bobby Peterson, executive director of ABC for Health. “They’re stressed out by bills. They’re stressed out by illness. They’re not in the best shape to try and figure this out.”

SSM Health paused medical debt legal actions in the spring of 2020, spokesperson Lisa Adams said. The pause remains in place at Dean Medical Group, but earlier this year SSM Health hospitals resumed “limited legal actions in order to preserve our rights,” Adams said.

UnityPoint Health-Meriter “paused legal remedies on past-due accounts during the pandemic,” but recently started again “in very limited cases,” spokesperson Leah Huibregtse said.

ABC for Health’s study, released last month, found that the five health systems evaluated sought $10.4 million in medical debt over the three years, receiving judgments in 4,110 cases. UW Health, one of the systems, sought nearly $1.4 million in 932 cases and received judgments in 751.

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Another report last month by Johns Hopkins University, using different methods, said Wisconsin hospitals filed 17,908 medical debt collections actions from January 2018 to July 2020, with UW Hospital filing 96 and St. Mary’s filing 44. Johns Hopkins also published related data in partnership with Axios.

The Johns Hopkins researchers, who have compiled similar reports for a few other states, found that the amount of money hospitals retrieve through collections represents a fraction of a percent of their revenue, said Christi Walsh, clinical director of research at Hopkins.

“They don’t really need this money,” Walsh said. “You’re highly impacting someone’s life and for you as a hospital, it is really nothing.”

Hospital assistance
Hospitals say they try to help patients sign up for coverage, such as Medicaid, disability insurance or marketplace plans through the Affordable Care Act. They offer charity care — free or discounted care for patients with low incomes who qualify — providing $217 million in such assistance based on the cost of care in 2019, or 0.9% of revenue, according to the Wisconsin Hospital Association.

The same year, the state’s hospitals reported $236 million in bad debt, which occurs when patients not approved for charity care don’t pay their bills.

“UW Health makes every effort to determine a patient’s ability to pay and the payment options available to them … before considering any bad debt collection agency options to recover the cost of provided care,” said Russell of UW Hospital.

“We do have many payment and financial assistance options available to our patients,” said Adams of St. Mary’s. “If a patient has a specific concern about their ability to make a payment, they should contact our customer service team who can work with them on an appropriate resolution.”

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In 2019, UW Health reported $16.4 million in charity care and $15.5 million in bad debt. St. Mary’s had $4.8 million in charity care and $2.4 million in bad debt. Meriter had $3 million in charity and $3.9 million in bad debt.

Peterson said hospitals need to do more to connect vulnerable patients with coverage. “You can’t just tell a patient who has mental health issues to go down to the county and apply,” he said. “It’s not going to happen.”

For some patients, the consequences of medical debt are far-reaching, Peterson said. “You’re in an electronic debtor’s prison,” he said. “You can’t get credit. You can’t get a car. You might not get a job or an apartment because you have a poor credit report.”

Sarina Benford
Sarina Benford, 32, of Madison, noticed her credit score dropped 50 points this spring after two unexpected medical bills totaling more than $1,000 appeared on her report, including one from April 2020, when she went to Meriter’s ER.

After years of poor credit, the mother of two, who works as a sales manager at a hotel, was trying to improve her score.

ABC for Health helped her get the bills covered through BadgerCare, the state’s main Medicaid program. “It was a little frustrating to have to go through it and figure it out,” Benford said.

Meriter tries to help patients obtain BadgerCare if they qualify, Huibregtse said.

Industry snapshot
In the ABC for Health study, UW Health filed fewer medical debt lawsuits than La Crosse-based Gundersen Health System, which had 1,841, and Children’s Hospital of Wisconsin near Milwaukee, with 1,337. UW Health filed more than St. Louis-based Ascension, which has a dozen hospitals in Wisconsin and had 131 lawsuits. Advocate Aurora, based in Milwaukee and Illinois, is so large that researchers stopped looking for cases after March 2017, when it had 731 lawsuits.

The health systems were selected because they represent the industry as a whole, Peterson said. Some cases by Meriter, which formed a joint operating agreement with UW Health in July 2017, may be included in those for UW Health, he said.

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ABC for Health did not include St. Louis-based SSM Health, which owns St. Mary’s hospitals in Madison and Janesville, along with St. Clare Hospital in Baraboo and other facilities. The firm has a contract to work with SSM Health in Wisconsin to help patients find coverage and avoid medical debt, Peterson said.

The average amount sought in all of the cases was $2,364, ABC for Health found. The largest judgment was nearly $223,000 in a Gundersen case in Buffalo County. The largest UW Health judgment, for nearly $33,000, involves a Madison woman who didn’t respond to requests for comment.

Larger cases may not appear because they end up in bankruptcy, Peterson said.

Johns Hopkins study
According to the Johns Hopkins report, Advocate Aurora filed 6,974 lawsuits against patients during the study’s time period and Froedtert filed 4,496, with the two systems accounting for more than half of all actions statewide.

Advocate Aurora stopped filing lawsuits for unpaid medical bills and dropped active cases in February 2020, spokesperson LeeAnn Betz said. Froedtert stopped filing claims in small claims court in March 2020, a policy that will remain “indefinitely,” spokesperson Stephen Schooff said. Ascension stopped in October 2019, spokesperson Caryn Kaufman said.

The Johns Hopkins report includes liens, which Peterson said ABC for Health didn’t include because hospitals typically file those to recover medical costs in settlements involving accidents or injuries.

Walsh, of Johns Hopkins, said liens can still be “predatory” and lead to “price gouging” because hospitals often don’t submit the bills to insurance plans first, which can result in discounts.

Reports on medical debt collection practices have led several hospitals around the country — including VCU Health, part of Virginia Commonwealth University, and the University of Virginia Health System — to end the actions, Walsh said.

“We have seen that successfully happen,” she said. “It’s possible to stop.”