Providence Health System Refunds Medical Bills

Feb. 8, 2024
After a Washington state lawsuit, Providence Health is refunding low-income residents' medical bills and erasing medical debt

Gene Johnson wrote for the Associated Press (AP) on Feb. 1 that Providence Health is settling Washington state’s allegations of overcharging patients and using aggressive collection methods. Providence is erasing $137 million in outstanding debts and refunding about $21 million in medical bills paid by low-income Washington state residents. Attorney General Bob Ferguson “filed an enforcement action against Providence for deceiving patients into believing they had no choice but to pay their medical bill, and unlawfully shifting the burden onto patients to self-identify their eligibility for financial assistance. This created barriers to affordable care for thousands of the most vulnerable Washingtonians,” per a press release on Feb 1 by the Office of the Attorney General (AG) of Washington State.

The suit was filed in 2022. Erica Zucco with King 5 News wrote on Jan. 26, 2023, that “36,000 patients that were eligible for charity care were wrongfully sent to debt collectors.” Dave Muoio reported on Feb. 2 for Fierce Healthcare that the “[s]uit alleged that, between 2018 and 2023, Providence had trained its staff to “aggressively” seek payments from or begin billing those who likely would have qualified for financial assistance.”

“Providence had already refunded nearly $230,000 to about 1,500 Medicaid accounts and forgiven $125.8 million of the outlined medical debt prior to Thursday’s settlement and court filing. However, Ferguson’s office noted that those actions came after it had filed the lawsuit in early 2022 amid investigative media reports and lawmaker scrutiny,” Muoio wrote. Providence will also pay $4.5 million for legal fees and costs of the charity care law enforcement to the attorney general’s office.

In the news release of the Washington State Office of the Attorney, it was stated that many of the hospitals of Providence “are either the largest or the only hospital in the area. Swedish First Hill and Providence Sacred Heart are among the largest hospitals in the state, with more than 600 beds.” “The average payment to patients receiving refunds is approximately $478. Individual amounts will vary widely, ranging from less than $1 up to $293,000. The average write-off for patients still awaiting debt forgiveness from Providence will be more than $900….[w]rite-offs will range from under $1 up to $262,000. Together, the refunds and debt relief will help 99,446 individuals,” per the news release.

“Washingtonians concerned about the rising cost of health care should know that my team is fighting to enforce critical protections that improve affordability,” Ferguson said. “We won’t stop. Most Washingtonians are eligible for significant discounts on their out-of-pocket hospital expenses, including co-pays and deductibles. We will ensure that hospitals honor this important law.”

“In all, Ferguson asserts that Providence’s deceptive and unfair practices amounted to more than 100,000 violations of the state Consumer Protection Act,” stated in the news release by the Office of the AG.

July 1, 2022, a new law went into effect, strengthening Washington state’s medical financial assistance law.  “Now, approximately half of all Washingtonians are eligible for free or reduced-cost hospital care. Washingtonians up to 300 percent of the federal poverty level are now eligible for free care at the state’s large health care systems and large, urban hospitals — representing approximately 80 percent of the licensed beds in the state,” per the news release.

“Hospitals — especially nonprofits like Providence — get tax breaks and other benefits with the expectation that they are helping everyone have access to affordable health care,” Ferguson said at a news conference. “When they don’t, they’re taking advantage of the system to their benefit.”

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