Providence Erases Or Refunds $158M In Medical Bills

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Dive Brief:

• Providence will refund payments and forgive outstanding medical debt for nearly 100,000 low-income Washington residents to settle a 2022 lawsuit alleging the health system skirted its charity care obligations, according to a Thursday announcement from Washington Attorney General Bob Ferguson.
• The Renton, Washington-based operator will refund approximately $20 million to over 30,000 patients who were billed improperly and forgive $137 million for more than 65,000 additional patients, in what the AG called the “largest resolution of its kind in the country.”
• The settlement is the latest win for the AG, who has successfully brought other health systems into compliance with the state’s charity care law, which offers reduced or free medical care for approximately half of Washingtonians based on financial status. 

Dive Insight:

The AG began investigating the 14-hospital system in 2020. Between 2018 and 2023, Ferguson found Providence trained staff to “aggressively” ask for payment from patients who were likely eligible for financial assistance, telling employees not to “accept the first no” from patients who said they couldn’t pay collections.

One of Providence’s own employees told leadership that the health system’s practices were “sending the poor to bad debt,” according to the settlement.

Since Ferguson filed suit in 2022, Providence has faced investigations from the New York Times and Oregon’s Department of Justice’s consumer protection division. As pressure mounted, Providence refunded nearly $230,000 to 1,497 Medicaid accounts, according to the settlement. 

However, the AG noted patients only received refunds after the state filed their lawsuit.

In a statement posted to Providence’s website, the nonprofit said it will make information about its charity care processes more clear.

“Charity care and financial assistance are vital resources for patients who cannot afford health care,” said Providence chief financial officer Greg Hoffman. “Providence is committed to providing support to those who need it most, and we will continually evaluate our efforts and make sure they fully meet the needs of those we serve.”

Though one in three U.S. adults struggle with unpaid medical debt, Washington is in the minority of states with broad charity care protections on the books. 

Prior to 2022, that obligation extended to cover families that made up to 200% of the federal poverty level. However, state lawmakers strengthened charity care requirements in July 2022 to cover approximately half of Washingtonians, according to the AG. Nonprofit hospitals now must provide free care for those who earn up to 300% of the federal poverty level and discounted care up to 400%. 

Obligations may extend even further depending on the outcome of ongoing litigation. The state recently clarified the law’s language to include non-residents, however the state’s hospital lobby has pushed back against that update. Hospitals sued in October to block the interpretation, stating that it would overburden nonprofits and make the state a target of “medical tourism.” 

Ferguson has made charity care enforcement a priority. His office has recouped $205 million in debt forgiveness and refunds for residents, including a November $13.4 million settlement with PeaceHealth.