CHARLOTTESVILLE — UVa Health System, which sues thousands of patients each year, seizing wages and home equity to collect on overdue bills, said Friday it would increase financial assistance, give bigger discounts to the uninsured and “reduce our reliance on the legal system.”
“This will have a huge impact on patients to the good,” Doug Lischke, the health system’s chief financial officer, said in an interview. The changes will “positively, drastically reduce the legal process” of lawsuits, garnishments and property liens. “We believe this is much more generous than what we’re doing now.”
Lischke called the new policy “a first step” that could later include additional financial assistance. UVa also plans to ask the Virginia General Assembly to change a state law requiring state agencies including health systems to “aggressively collect” unpaid bills and charge 6% interest on the balance, he said.
But independent experts said the changed policy, which comes on the heels of a Kaiser Health News investigation published in The Washington Post detailing UVa’s aggressive collection practices, still leaves numerous patients exposed to lawsuits and crippling bills. KHN found that UVa sued patients more than 36,000 times over six years ending in June 2018, sending many families into bankruptcy. And it routinely billed uninsured patients for far more than what a typical insurance company would have paid.
By leaving family assets vulnerable and not fully discounting list-price charges, the new guidelines remain “very tough on the poor and near-poor who have managed to amass anything of value that will help them with the daily costs of life,” said Sara Rosenbaum, a health policy professor at George Washington University.
The amended policy loosens qualifications for financial assistance, awarding aid to families with income of up to 400% of the federal poverty level, or $103,000 for a family of four. Until now, families making more than half that much were ineligible for assistance — the most restrictive rules of any major hospital system in Virginia, the KHN analysis found.
“While these changes represent a step in the right direction, it’s unfortunate that UVa, a public institution, insists on still suing patients,” said Marty Makary, a surgeon and researcher at Johns Hopkins Medicine who studies hospital debt collection. “In my conversations with UVa surgeons, they are appalled by the practice of their center in suing patients and want it to stop.”
The changes take effect Jan. 1 but officials said they are “committed to working with anyone who currently has an outstanding balance or debt that they are struggling to pay.”
The health system has not decided what to do about patient lawsuits in the pipeline, Lischke, said. Online court records show there are hearings scheduled for hundreds of UVa Medical Center cases over the next few weeks.
Mary Washington Healthcare of Fredericksburg, criticized earlier this summer for a far smaller number of lawsuits, said it would suspend suing patients and try to eliminate current garnishments. Methodist Le Bonheur Healthcare in Memphis, another on a growing list of hospitals called out for aggressive collections, said it would suspend all court activity for a month.
UVa will apply the new financial assistance and charging policies to patients treated in July 2017 or later, Lischke said. That means patients on current payment plans could have payments eliminated or adjusted. But there will be no refunds of payments already made, he said.
Taken together the changes will cost UVa “millions to tens of millions,” he said declining to give a more precise figure.
UVa began reviewing its billing and collections policies after being informed of KHN’s findings in August. It examined policies of neighbor hospitals such as Mary Washington, as well as of other major academic medical centers, Lischke said.
Previously just $4,000 in a retirement account could bar UVa patients from financial help, no matter how low their income. Now patients can have at least $50,000 in savings beyond the value of their home and car, and still get assistance if they meet the income test, UVa said.
The nonprofit health system, a taxpayer-supported state agency, also said it would grant discounts of 40% to uninsured patients to better reflect the lower rates negotiated and paid by insurance companies. Until now, uninsured patients got only 20% off the list or “chargemaster” price, plus another 10% to 15% if they paid promptly, which few were able to do.
Shaving 40% from list prices, which are used as a starting point for insurer negotiations, puts the bills for uninsured patients more in line with those who are covered by commercial health plans, Lischke said.
But Rosenbaum said that is not enough of a discount. She recommended the uninsured be billed at Medicare payment levels, which can be as much as 75% or more off the hospital’s list prices. The total of UVa’s cash revenue from all health plans and government programs is 70% below its list prices, financial forms filed with the Department of Health and Human Services show.
“Even a 40% write-off of charges remains a brutal exposure” for the uninsured, she said. “How could they possibly remain tied to their chargemaster and keep a straight face?”
As part of its ongoing review of billing and collections, UVa will consider further lowering charges to the uninsured — perhaps to Medicare levels, Lischke said. The new policy also does nothing for those who were sued and garnished for treatment before July 2017.
So far the health system’s announcement also doesn’t help the 20 UVa students reported by KHN to have “active holds” on their enrollment this semester because they owe money to UVa Medical Center. UVa treats unpaid hospitals bills the same as unpaid tuition.
UVa has not approached legislators yet about changing billing laws but hoped to have next year’s General Assembly consider it.
“I am hopeful that we are able to influence a change to not only the Debt Collection Act” requiring aggressive collection “but also the state indigent care guidelines,” Lischke said.