Tagged Investigation

UVA Will Cut Back On Lawsuits Against Patients In Wake Of KHN Investigation

UVA Health System, which sues thousands of patients each year, seizing wages and home equity to collect on overdue medical 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 financial assistance beyond what was announced Friday. 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 new UVA policy, which comes on the heels of a Kaiser Health News investigation 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 for more than $106 million, 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 sticker-price charges, the new UVA 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, KHN found. Except in “unusual circumstances,” UVA won’t sue patients unless balances are more than $1,000 and families make more than 400% of the poverty guidelines, the health system said in a written statement.

“While these changes represent a step in the right direction, it’s unfortunate that UVA, a public institution, insists on still suing patients,” said Dr. 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 a UVA statement said the health system is “committed to working with anyone who currently has an outstanding balance or debt that they are struggling to pay.”

UVA 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 or with judgments against them could have bills eliminated or adjusted. But there will be no refunds of payments already made, he said.

The policies also apply to patients treated after July 2017 with judgments against them but no payment plan, he said. 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 revising its billing and collections policies after being informed of KHN’s findings in August. It examined policies of neighboring hospitals such as Mary Washington as well as 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 as long as 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 the uninsured to better reflect lower rates negotiated and paid by insurance companies. Previously, uninsured patients got only 20% off the sticker price plus another 10% to 15% if they paid promptly, which few could.

Shaving 40% from “chargemaster” prices used as a starting point for insurer negotiations puts bills to the uninsured in line with what a commercial health plan would pay, Lischke said.

That’s not enough, Rosenbaum said. She recommended they be lowered further to Medicare levels, which can be 75% off or more.  The total of UVA’s cash revenue from all health plans and government programs is 70% below chargemaster, 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 doesn’t help the 20 UVA students reported by KHN to have “active holds” on their enrollment this semester because they owe money to the UVA Medical Center. UVA treats unpaid hospital 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.

Gov. Ralph Northam, a physician who is close to Dr. L.D. Britt, a Norfolk surgeon and professor who is chairman of the health system’s board, has said nothing publicly beyond his Monday statement that “I am glad to hear the UVA Health System is in the process of changing their policies and practices.”

UVA Suspends Medical Lawsuits In Wake Of KHN Investigation

CHARLOTTESVILLE, Va. — Under pressure after Kaiser Health News reported Monday that it sues thousands of patients a year and sends many into bankruptcy, University of Virginia Health System suspended about a dozen patient lawsuits Thursday and said it will announce changes to its billing and collections policy Friday.

At a weekly session at the Albemarle County Courthouse often dominated by UVA hospital litigation, UVA lawyer Melissa Riley said cases due to be heard Thursday would be withdrawn while the system takes a broader look at its long-standing practice of aggressive debt collection.

The move affects only those cases and changes nothing for thousands of patients who have already lost court judgments to UVA or face other pending lawsuits. And those cases could be refiled later.

“The university is conducting a review and may announce changes to its policies tomorrow,” Riley said.

Several patients in the courtroom and District Court Judge William Barkley said they had no comment.

UVA sued more than 36,000 patients over six years for unpaid bills for more than $106 million, KHN found.

It also seized some $22 million in patients’ state tax refunds, mostly outside the judicial process, as part of a program to help state and local governments collect debts. And it frequently billed uninsured patients for far more than what a typical insurance company would have paid.

Top officials at the health system’s quarterly board meeting Thursday morning were set to discuss billing and collections in a closed session but had little to say about the matters beforehand.

“I’m very concerned” about what KHN reported “and I’m very sympathetic” to patients caught in litigation, said James Murray, a venture capitalist who as rector serves as the head of the UVA Board of Visitors, its governing body.

As usual, the board met in UVA’s classical Rotunda, designed by Thomas Jefferson. UVA is taxpayer- and state-funded. A KHN reporter objected to the closed session, arguing that matters potentially affecting hundreds of thousands of UVA patients should be discussed publicly.

“We’re not going to discuss it in open session,” said Pamela Sutton-Wallace, the UVA Medical Center CEO who will step down in November, the university disclosed Tuesday.

Instead the board, led by L.D. Britt, a surgeon and professor at Eastern Virginia Medical School in Norfolk, celebrated a profitable fiscal year and UVA Medical Center ranking again as U.S. News & World Report’s top hospital in Virginia.

Unaudited results presented Thursday showed UVA Medical Center, the core of UVA Health, made an $87 million operating profit on revenue of $1.7 billion in the fiscal year ending in June and held stocks, bonds and other investments worth about $1 billion.

As part of its investigation into billing practices, KHN reported that UVA has the least generous patient financial assistance guidelines of any major hospital system in Virginia. Savings of only a few thousand dollars in a 401(k) account can disqualify even families with very low incomes from UVA aid.

CEO Sutton-Wallace is moving to New York-Presbyterian Hospital in November to become a senior vice president, UVA Health announced Tuesday. Her departure “is in no way related” to the billing and collections problems, UVA President James Ryan said in a message to employees.

New York-Presbyterian did not respond to multiple requests for comment.

Data editor Elizabeth Lucas contributed to this report. 

Virginia Governor And UVA Vow To Revamp Practice Of Suing Patients As CEO Exits

Gov. Ralph Northam and the president of the University of Virginia committed to changing UVA Health System’s collections practices a day after Kaiser Health News detailed its aggressive and widespread pursuit of former patients for unpaid medical bills.

At the same time, the health system announced the departure of CEO Pamela Sutton-Wallace, who will leave in November to join New York-Presbyterian Hospital as a senior vice president.

Her exit “is in no way related” to the billing and collections problems, James Ryan, UVA’s president, said in a message to employees Tuesday.

UVA sued former patients for unpaid bills more than 36,000 times over six years, seeking repayment of over $106 million and often pushing families into onerous payment plans or bankruptcy, according to KHN’s investigation, published with The Washington Post.

Both Ryan and Northam expressed ignorance about UVA practices that were an open secret in Charlottesville, with hundreds of medical lawsuits filed each week.

Northam “was only just made aware of these practices,” said spokeswoman Alena Yarmosky, adding that he “is not involved” in day-to-day university operations.

Northam, a pediatric neurologist who oversees UVA’s board and often speaks about the need for affordable health care, said he is “absolutely concerned” about what the health system has been doing.

“I am glad to hear that UVA Health System is in the process of changing their policies and practices,” Northam said Tuesday in a prepared statement. He declined to offer remedies or agree to an interview.

Ryan said in a tweet late Monday that he had asked Sutton-Wallace last month to look into collection and litigation practices. KHN informed UVA of its findings on Aug. 1.

Fixing the problem “is complicated” in part because “we are legally obligated as a state agency to collect debts,” he said. “But we have discretion within those legal constraints to make our system more generous and more humane.”

Ryan and Sutton-Wallace also declined interview requests through spokesmen.

The health system is making a “comprehensive review” of its indigent care and financial assistance policies and will announce changes by the end of the week, said spokesman Eric Swensen.

“I learned about our aggressive billing and collection practices within the medical center a little over a month ago,” Ryan said in his tweet. “Part of striving to be both a great and good university is honestly facing problems you encounter and doing what you can to address them.”

The departure of Sutton-Wallace, named CEO five years ago, leaves the prestigious medical system with two top vacancies. Richard Shannon, executive vice president for health affairs, left in May.

UVA health system, which is taxpayer-supported and state-funded, is the latest medical center to face withering scrutiny over patient collections as insurance coverage continues to leave consumers financially vulnerable — despite passage of the Affordable Care Act in 2010.

High-deductible health plans, unaffordable premiums, short-term insurance that doesn’t cover preexisting illness and narrow provider networks all expose patients to unexpected bills of thousands or hundreds of thousands of dollars.

In recent months, journalists and academics have exposed collections practices in Baltimore, Memphis and New Mexico and at another Virginia hospital. A top federal health care regulator made a pointed reference to the coverage in a speech to hospital executives on Tuesday.

“We are learning the lengths to which certain not-for-profit hospitals go to collect the full list price from uninsured patients,” Medicare administrator Seema Verma said in a speech before members of the American Hospital Association. “These hospitals are referring patients to debt collectors, garnishing wages, placing liens on property and even suing patients into bankruptcy.”

Phil Galewitz and Emmarie Huetteman contributed to this report.