The Midland Group

An interesting development in the state of Washington could have implications for hospitals throughout the nation depending on the outcome of a lawsuit. The suit was filed by the Seattle-based law firm Phillips Law Group seeking class action status, claiming a collection agency systmatically engaged in "the unfair, deceptive and misleading practice of telling patients that they owe the full charges shown on hospital billing statements, without informing them that they may be entitled to charity care that reduces the hospital debt or eliminates it entirely depending on a patient's income level."

In the state of Washington, individuals and families with annual incomes below 100 percent of the federal poverty level are automatically considered charity care patients, assuming they are not eligible for other public or private health coverage. Various levels of discounts are also available, according to the statute, for patients whose annual incomes fall under 300 percent of the federal poverty level. The lawsuit alleges that the collection agency had an obligation to inform patients of the availability of charity care, which would absolve them of all or part of their medical obligation. However, the lawsuit goes on to allege that the agency did not inform patients of their charity care eligibility and went as far as telling patients they were not eligible for charity care.

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Did the agency assume the patient was not eligible for charity care by virtue of the fact that the account was referred to the agency in the first place? Did hospitals eliminate patients for charity care consideration because patients did not produce the necessary documentation to verify income? It is hard to know. However, any hospital business office employee will testify to the fact that charity care applications are freely given to patients but are returned far less often. What do you do with an account that doesn't return an application?

With hospital non-profit status and charity care levels receiving so much publicity (most of it negative) in the last year, it is unlikely that lawmakers will consider unreturned charity applications as valid documentation that a patient is not eligible for charity care. Thus, hospitals will need to continue to shore up their processes and procedures, including payment plan administration and financial counseling.

The Midland Group administers a patient payment plan that helps hospitals identify patients who may qualify for charity care. To learn more about this plan and what it can do for your hospital, click here.