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Aggressive medical debt collection practices by hospitals and health systems have long contributed to economic hardship and instability. These practices are now particularly devastating as so many people are struggling to make ends meet in the midst of the COVID-19 pandemic.
At this time, health care providers should exercise restraint when working with people to resolve medical bills and avoid using extraordinary collection actions (ECAs) such as suing patients, reporting debt to credit bureaus, garnishing wages and freezing bank accounts. The Healthcare Financial Management Association (HFMA) is encouraging such an approach in their newly updated guidelines and best practices for resolving patients’ medical bills.
This guidance encourages all medical providers to provide clear, concise and correct billing information and calls on them to engage in conversations with patients. It is a recommended best practice – we believe, an essential practice – to screen for insurance coverage, claim adjudication or financial assistance before sending out bills. Patients should not bear the burden alone of negotiating bills and finding financial assistance. The best practices emphasize a shared responsibility between providers and patients, urging providers to communicate with patients as early as possible to ensure they are informed and engaged in the process and not hit with surprise medical bills.
Importantly, the guidelines caution providers on the use of ECAs and outline steps that providers should take prior to using them. These steps are outlined in a checklist to ensure that patients are well informed and that all reasonable efforts to resolve a bill have been exhausted prior to pursing ECAs. This is especially critical during the COVID-19 pandemic when it is so vital that people seek timely testing and treatment. The HFMA guidelines include additional precautions providers are encouraged to put in place during times of public health emergency.
The best practices also call on health care providers and hospital administrators to gather data on the use of ECAs, incorporating information on race and ethnicity, to examine whether these actions are disproportionately focusing on patients of color. This is consistent with the Center’s recommendations of actions it is urging health care organizations to adopt to promote racial justice.
Research has shown that debt lawsuits and wage garnishments are more common in Black communities than white ones. Another survey found that 45 percent of Black people reported problems with medical bills compared to 35 percent of white people. By analyzing collection data across race and ethnicity, health care providers will better understand whether their billing and collection practices are exacerbating these racial inequities.
Numerous news stories have exposed the aggressive medical debt collection practices of hospitals and other providers. Some of these stories describe practices that have been seen as predatory, while others border on the absurd and disgraceful, with medical collection lawsuits resulting in patients being arrested for outstanding medical bills as small as $28.
Community Catalyst, through support from the Robert Wood Johnson Foundation, has recently launched a project to leverage the federal nonprofit hospital community benefit obligation to establish practical, consumer-driven and consumer-friendly billing and collection practices. The HFMA guidelines offer a framework and best practices that all health care providers should be expected to adopt. We look forward to working with HFMA and our consumer partner organizations to implement and strengthen these best practices and promote economic security for historically excluded populations.
Mark Rukavina served on the HFMA 2020 Medical Accounts Receivable Resolution Task Force.