Despite growing evidence of the harm caused by medical debt, hundreds of U.S. hospitals maintain policies to aggressively pursue patients for unpaid bills, using tactics such as lawsuits, selling patient accounts to debt buyers and reporting patients to credit rating agencies, a Kaiser Health News investigation shows.
The collection practices are commonplace among all types of hospitals in all regions of the country.
Individual hospital systems have come under scrutiny in recent years for suing patients. But the Kaiser Health News analysis shows the practice is widespread, suggesting most of the nation's approximately 5,100 hospitals serving the general public have policies to use legal action or other aggressive tactics against patients.
At the same time, a majority of hospitals scrutinized by Kaiser Health News effectively shroud their collection activities, publicly posting incomplete or in many cases no information about what can happen to patients if they can't pay.
These are among the findings of an examination of billing and financial aid at a diverse sample of 528 hospitals across the country. Over the past year, Kaiser Health News investigated each of these hospitals, reviewing thousands of pages of policies and other documents. The reporting also included thousands of telephone and email inquiries and interviews to obtain and clarify how hospitals handle patients with unpaid bills.
Some hospitals did not respond to multiple requests for information. But Kaiser Health News was able to gather details about most. From them, a picture emerges of a minefield for patients where a trip to the hospital can not only produce jaw-dropping bills but also expose patients to legal risks that jeopardize their livelihood. Among the findings:
-- More than two-thirds sue patients or take other legal action against them, such as garnishing wages or placing liens on property.
-- A similar share of the hospitals report patients with outstanding bills to credit rating agencies, putting patients' credit scores and their ability to rent an apartment, buy a car or get a job at risk.
-- A quarter sell patients' debts to debt collectors, who in turn can pursue patients for years for unpaid bills.
-- About 1 in 5 deny nonemergency care to people with outstanding debt.
THINKING TWICE BEFORE GOING TO THE DOCTOR
The impact of these collection practices can be devastating.
Across the U.S. health care system, medical debt is taking a fearsome toll on patients, forcing more than half of adults with health-related debt to make difficult sacrifices, including taking on extra work, changing their living situation or delaying their education, a Kaiser Family Foundation poll conducted for this project found.
Basit Balogun was a freshman at Lafayette College in Pennsylvania when a heart attack caused by a previously undetected birth defect landed him in the hospital. Because his insurance had lapsed, Balogun, whose family is from Nigeria, was hit with bills amounting to tens of thousands of dollars.
When he couldn't pay, the hospital reported him to a credit agency, which he discovered only after he'd graduated and was trying to rent an apartment in New York City. "I kept getting rejected and rejected," Balogun said. "I was desperate."
Balogun, a prize-winning student, landed a job at banking giant Goldman Sachs and used his signing bonus to begin paying down the debt. Five years later, he's still making payments. Now Balogun said he thinks twice before going to the doctor.
HOLES IN THE CHARITY CARE SYSTEM
Many hospital officials say they are obligated to collect what patients owe.
"We don't want to promote the concept that medical bills just go away, especially for those who are able to pay," said Michael Beyer, who oversees patient accounts at Sanford Health, a South Dakota-based nonprofit organization with clinics and hospitals across the U.S. and abroad.
Hospital leaders also stress the industry's commitment to helping low-income patients and others who can't pay their bills.
Charity care is offered at most U.S. hospitals. And nonprofit medical systems must provide financial aid as a condition of not paying taxes, a benefit that saves the industry billions of dollars annually.
At many medical centers, however, information about financial assistance is difficult or impossible to find. About 1 in 5 hospitals researched by Kaiser Health News, including public university systems in five states, don't post aid policies online.
SENT TO COLLECTIONS OR SUED
In many cases, patients who should qualify for assistance are instead targeted by bill collectors, whether by accident or by design.
"Every week or so, we get a call from someone who should have qualified for aid, but they weren't enrolled," said Michele Johnson, executive director of the nonprofit Tennessee Justice Center.
A 2019 Kaiser Health News analysis of hospital tax filings found that nearly half of nonprofit medical systems were billing patients with incomes low enough to qualify for charity care. Earlier this year, Washington state sued hospitals belonging to the nonprofit giant Providence after uncovering that the system trained its collectors to aggressively pursue even patients who should have qualified for aid.
Credit reporting, a threat that is supposed to induce patients to pay, is the most common collection tactic, Kaiser Health News' analysis and other data shows. Fewer patients are actually taken to court.
But more than two-thirds of policies obtained by Kaiser Health News allow hospitals to sue patients or take other legal actions against them, such as garnishing wages or placing liens on property.
Patients at public university medical systems in at least 23 states, including Colorado, Georgia, Minnesota, Tennessee and Wisconsin, can be sued. In several states, including North Carolina, Ohio and New York, public university systems refer patients to other state agencies for legal action or withholding tax refunds.
Hospitals with policies allowing them to sue patients tend to have only slightly higher profits than those that don't sue, Kaiser Health News found by comparing financial data that hospitals submit annually to the federal government.
BARRING AGGRESSIVE COLLECTIONS
A few hospitals have barred all aggressive collections. That can make a difference for patients, data suggests. A recent analysis by the Consumer Financial Protection Bureau found that while medical debt is widespread across the Appalachian region, one notable exception is Western Pennsylvania.
Residents there have fewer past-due medical bills on their credit reports than the national average. This region is dominated by the Pittsburgh-based UPMC hospital system, which prohibits aggressive collection actions, including reporting patients to credit agencies. Residents there have fewer past-due medical bills on their credit reports than the national average.
In neighboring West Virginia, by contrast, the incidence of medical debt is more than 50% above the national average, the Consumer Financial Protection Bureau found. That state's largest hospital system -- operated by West Virginia University -- not only reports patients to credit agencies but will also sue patients, garnish their wages and place liens on property.
Elected officials in some states have begun to put limits on hospital bill collecting. In 2021, Maryland barred hospitals from placing liens on patients' homes and protected low-income patients from wage garnishments. California recently restricted when hospitals could sell patient debt or report patients to credit bureaus.
But these states remain the exception. And hospitals that have voluntarily given up aggressive collections are in the minority: Just 19 of the 528 hospitals researched by Kaiser Health News have publicly posted policies barring "extraordinary collection actions."
The researchers who worked on this story were KHN writer Megan Kalata and Dr. Margaret Ferguson, Anna Back, and Amber Cole, who were students at the Milken Institute School of Public Health at George Washington University.
KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.
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ABOUT THIS PROJECT
“Diagnosis: Debt” is a reporting partnership between Kaiser Health News and National Public Radio exploring the scale, impact and causes of medical debt in America.
The series draws on original polling by the Kaiser Family Foundation, court records, federal data on hospital finances, contracts obtained through public records requests, data on international health systems and a yearlong investigation into the financial assistance and collection policies of more than 500 hospitals across the country.
Additional research was conducted by the Urban Institute, which analyzed credit bureau and other demographic data on poverty, race and health status for Kaiser Health News to explore where medical debt is concentrated in the U.S. and what factors are associated with high debt levels.
The JPMorgan Chase Institute analyzed records from a sampling of Chase credit card holders to look at how customers’ balances may be affected by major medical expenses. And the CED Project, a Denver nonprofit organization, worked with Kaiser Health News on a survey of its clients to explore links between medical debt and housing instability.
Kaiser Health News journalists worked with Kaiser Family Foundation public opinion researchers to design and analyze the “KFF Health Care Debt Survey.” The survey was conducted Feb. 25 through March 20, 2022, online and via telephone, in English and Spanish, among a nationally representative sample of 2,375 U.S. adults, including 1,292 adults with current health care debt and 382 adults who had health care debt in the past five years. The margin of sampling error is plus or minus 3 percentage points for the full sample and 3 percentage points for those with current debt. For results based on subgroups, the margin of sampling error may be higher.
Reporters from Kaiser Health News and National Public Radio also conducted hundreds of interviews with patients across the country; spoke with physicians, health industry leaders, consumer advocates, debt lawyers and researchers; and reviewed scores of studies and surveys about medical debt.