WMC amps up collections efforts

By Evan Goodenow
The Winchester Star, August 10, 2018

The cure for medical debt remains elusive, but Winchester Medical Center is trying to find it one unpaid bill at a time.

The hospital expanded its collection efforts for lawsuits involving unpaid bills of $25,000 or more through lawsuits filed in Frederick County and Winchester circuit courts this year.

In Winchester Circuit Court, 53 lawsuits have been filed this year compared to a total of 33 in the last three years.

In Frederick County Circuit Court, 21 lawsuits have been filed this year compared to 20 in the last three years.

The 74 lawsuits filed from May 25 through the end of July seek about $3.8 million in payments. The lowest amount sought is $25,435 and the highest is $204,937. The average lawsuit total was $51,613.

Matthew Toomey, vice president of financial services for Valley Health System — the six hospital, nonprofit chain that includes WMC — said the majority of lawsuits the hospital has filed involve less than $25,000 and are filed in Frederick and Winchester general district courts. He said the flurry of lawsuits involving lawsuits of $25,000 or more isn’t part of a tougher collection strategy, but a response to increasing patient debt.

Toomey said the increase in debt is partially related to a delay in imposing a 40 percent tax on expensive employer-sponsored health care plans known as the “Cadillac Tax.” The tax was a part of former President Barack Obama’s health care law — also known as “Obamacare” or the Affordable Care Act — designed to pay for covering more poor people. Congress has blocked passage, contributing to steep increases in health care deductibles.

Tracking down the people who owe may be challenging. The Star visited several of the addresses listed for debtors. There was no home located at one of the addresses. Another was for a low-rate motel where the manager said the person being sued had checked out.

One listed address turned out to be a local business. At another, a resident said the person listed in the lawsuit had moved out.

Although the collection efforts could lead to people having their wages garnished, Toomey said the hospital and Valley Health — which had an approximately $40.3 million surplus in 2016 and paid president and CEO Mark H. Merrill about $2.3 million in total compensation that year — aren’t trying to punish people who legitimately can’t afford to pay their bills.

WMC, which had about $592 million in net patient revenue in 2017, provided about $38 million in charity care last year, according to hospital spokeswoman Carol S. Weare. Toomey said the lawsuits are a last resort after lengthy collection attempts against people who can afford to pay at least a portion of their bills.

He said four months elapse before a patient’s account is turned over to a bill collection agency. The agency spends between six months and a year attempting to collect before a lawsuit is filed.

Toomey said most of the people sued are uninsured or under-insured, and the bills are for a serious illness. He said the hospital tries to work with patients.

Toomey emphasized that lawsuits involve just a fraction of patients. The 455-bed hospital had 392,637 visits last year.

They people being sued are patients who haven’t sought help through the hospital’s financial assistance program and haven’t replied to repeated requests to work out a payment plan.

“We do have folks who we’ve tried to work something out and we can’t come to an agreement, but that really is the rarity,” Toomey said. “If the patient can talk to us and cooperate with the financial assistance process, then we can help them out. That’s the opportunity we’re looking for.”

Astronomical medical costs leading to unpaid bills at the hospital are a national problem. In a nation with a for-profit health care system, medical debt and uncompensated medical care — defined as unpaid bills, charity care and below-cost Medicare and Medicaid reimbursements — are common.

Nationally, 18 percent of Americans have medical debt in collection, according to the Urban Institute, a nonprofit research group. It’s also 18 percent in Virginia and 21 percent in Frederick County.

The expansion of Medicaid in Virginia through “Obamacare” approved this year by state lawmakers is expected to help hospitals recoup some costs and reduce debt, but uncompensated care continues to plague hospitals. In 2016, the cost of uncompensated care nationally was $38.3 billion, according to the American Hospital Association, a hospital-lobbying group. That was up nearly 23 percent from $31.2 billion in 2006 and 112 percent from $18 billion in 1996.

Medicare reimburses about 88 percent of costs in Virginia and Medicaid reimburses 71 percent, according to Julian Walker, a spokesman for the Virginia Hospital & Healthcare Association, which lobbies for state hospitals including Valley Health. Federal taxpayers will cover 93 percent of the cost of Medicaid expansion in Virginia this year with the percentage dropping to 90 percent in 2020.

Walker said Virginia hospitals had $543 million in unpaid bills in 2016. State hospitals also provided $607 million in charity care for patients who couldn’t afford to pay.

Federal law since 1986 requires hospitals to provide emergency care regardless of a patient’s ability to pay. Walker said most hospitals go months before charging interest on unpaid bills and hiring collection agencies to recoup costs.

“Generally speaking, hospitals are lenient and offer lenient payment plans often without interest,” he said. “Even when interest is applied, that interest is at a pretty low percentage.”

Statewide, an average of 63 percent of patients are either uninsured or under-insured Under-insured patients include people on Medicare and Medicaid. Virginia’s Medicare shortfall, the difference between reimbursement and actual cost, increased from $668 million to $909 million from 2015 to 2016, a 36 percent increase. Walker said it’s too early to tell what Trump administration cuts to “Obamacare” will do to hospitals like WMC, but hospitals and patients are already hurting from medical debt.

Patients who have health care have to pay higher premiums and co-pays. Businesses and local governments also must pay more to cover health care costs of their employees. “It can have a downstream economic effect on many sectors of society and the economy,” Walker said.

Toomey and Walker wouldn’t comment on whether lowering the eligibility age for Medicare or a “Medicare for All,” single-payer national health care plan would decrease costs and debt. However, Dr. Steffie Woolhandler, co-founder of Physicians for a National Health Care Program, says it would.

In a single-payer system, people’s paychecks would be taxed through deductions the way Social Security payments are. The current for-profit system involving insurance companies and high administrative costs would be eliminated.

Woolhandler — a primary care physician at Hunter College, part of the City University of New York network of schools — said the higher taxes people would pay would be far less than co-payments, deductibles and premiums they currently pay. Costs would also decrease as more people seek preventative care rather than waiting until they get really sick.

Woolhandler said studies have shown that fear of accumulating medical debt delays sick people from seeking treatment. She cited a National Institutes of Health study published in 2010 by the Journal of the American Medical Association that found uninsured and under-insured patients experiencing heart attack symptoms waited longer to seek treatment than insured people. Woolhandler said medical debt fears would end under single-payer.

“There wouldn’t be any medical debt per se, because there wouldn’t be any payment at the time of use, but you would have to pay your taxes. In Canada, I guess you could still get in trouble for not paying your taxes, but they’ll still let you go to the doctor for free,”Woodlander said. “[Single-payer] is not really a terribly radical idea. It’s the sort of thing they do all over the world: Canada, Western Europe, Australia, but in this country it seems like a big change.”

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