Carilion Clinic's board of directors on Monday revamped its charity care policy, resulting in deeper discounts for some patients and a likely increase in the amount of charity care provided by the region's largest health care provider.

The changes will apply retroactively to all unpaid medical bills dating to Oct. 1, Carilion spokesman Eric Earnhart said.

"We expect it will result in more charity care, particularly in light of the current economic situation," Earnhart said. "It's hard to put a dollar figure on the expected increase, but it could be in the millions."

Carilion's charity care program provided about $42 million in free treatment in fiscal year 2007.

The decision follows a drastic change in Carilion's approach for collecting on unpaid medical bills. For five months Carilion has all but stopped suing its former patients for thousands of unpaid medical bills.

Since the beginning of Carilion's fiscal year, which started Oct. 1, the health care system put on hold filing warrants in debt cases in Roanoke General District Court. The decision resulted in no cases being filed until Jan. 5.

Even when Carilion resumed filing lawsuits in January, the number of cases was dramatically reduced.

To date Carilion has sued 25 patients this year for unpaid medical bills, leaving about 6,900 bills in limbo as the board considered the charity care policy revisions.

Those 25 cases involve patients who earn more than 400 percent of the federal poverty level, or at least $41,600 for a single person in 2008. Charity care applies only to those earning up to four times the federal poverty level. Uninsured patients with income levels greater than 400 percent may be eligible for a prompt payment discount on their account balance, according to the new policy.

Highlights of the new charity care policy include:

• Patients with a bill of $1,500 or less and an annual income at or below the federal poverty level -- $10,400 for a single person in 2008 -- will be automatically considered charity care. Previously an application had to be filed.

• The amount of equity in real estate allowed for those seeking charity care increased from $30,000 to $100,000.

• Anyone earning between 101 percent and 200 percent of the federal poverty guideline will no longer have the entire balance forgiven. Instead the bill will be reduced by 75 percent, or capped at 10 percent of the family's income, whichever is the greater discount.

Earnhart said the changes, and specifically those revisions for home equity values, reflected the economic and health care coverage situations facing patients.

"It reflects the current reality, particularly in the current economy, that people may have higher equities yet still be in difficult financial circumstances," Earnhart said.

Still while recognizing the economic pressures, Earnhart said, "We believe that it is important for people who can pay, to pay something, otherwise the cost is shifted to other payers."

Carilion reworked how discounts apply to all potential charity care patients:

• Bills of anyone earning between 201 percent and 250 percent of the federal poverty guideline will be reduced by 70 percent, or capped at 15 percent of the family's income, whichever is greater. The discount was 75 percent.

• Bills of anyone earning between 251 percent and 300 percent of the federal poverty guidelines will be reduced by 55 percent, or capped at 20 percent of the family's income, whichever is greater. The discount was 50 percent.

• Bills of anyone earning between 301 percent and 350 percent of the federal poverty guidelines will be reduced by 40 percent, or capped at 25 percent of the family's income, whichever is greater. The discount was 25 percent.

• Bills of anyone earning between 351 percent and 400 percent of the federal poverty guidelines will be reduced by 25 percent, or capped at 30 percent of the family's income, whichever is greater. The discount was 15 percent.

The changes in policy and court filing practices follow public criticism of the extensive debt collection practices by a nonprofit earning tens of millions of dollars in tax breaks.

While Carilion officials began work on revising the system's charity care policy in January 2007, Earnhart said the public outcry "likely accelerated our timetable to implement the change."

Before October, court officials scheduled one day a week just for Carilion. When filings fell off completely, court officials stopped that practice.

Since 2003, Carilion has accounted for 40 percent of judgments filed in small claims court. The health care system obtained about 33,000 judgments during that period, according to an analysis of court records.

Ron Albright, the chief clerk of Roanoke General District Court, said Carilion officials told him last fall there would be a lull in the number of cases filed.

Albright said the lull does not appear to have affected the total caseload of his court, which also handles traffic and misdemeanor criminal cases.

Carilion's caseload slowdown was the result of switching over to a new accounting system that taps into the databases of the credit reporting agency TransUnion, Earnhart said. Carilion is using data from TransUnion to identify patients who would likely qualify for charity care but have not applied or provided the financial information necessary to qualify.

So far Carilion has applied the TransUnion database only to those at or below 100 percent of the federal poverty guidelines. That equates, for 2008, to a single person earning $10,400 or less a year and a family of four with an income of up to $21,200.

As a result of using TransUnion, Carilion has written off 19,652 bills for a total of $7 million, Earnhart said.

In the past those bills likely would have been sent to collections.

"It's very likely by the end of the year the number of cases we will file will be less," Earnhart said.

The TransUnion technology is being used by about 100 hospital systems nationwide, said Marty Callahan, vice president of health care information solutions for TransUnion.

It works by taking financial data from the credit database and conducting an analysis to project an estimated minimal income, family size and other information needed to determine charity care. The system is also set up to flag patients who might qualify for Medicaid but aren't enrolled or those who might be eligible for other discounting services.

TransUnion tailors its system to the needs of individual hospitals, Callahan said.

"We think we're kind of at the jumping off point where the adoption will take off considerably in the next two years," he said.

Staff writer Laurence Hammack contributed to this report.