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Spokane, Washington  Est. May 19, 1883
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Providence plans to reimburse Medicaid recipients who were mistakenly charged for care

Providence Sacred Heart Medical Center is seen on July 13, 2021. Providence will reimburse Medicaid patients whose accounts were sent to debt collection agencies as part of an “unintended error,” the system announced last week as it fights a lawsuit filed by the state Attorney General’s office over charity care issues and a New York Times investigation targeting its billing practices.  (Jesse Tinsley/THE SPOKESMAN-REVIEW)
Providence Sacred Heart Medical Center is seen on July 13, 2021. Providence will reimburse Medicaid patients whose accounts were sent to debt collection agencies as part of an “unintended error,” the system announced last week as it fights a lawsuit filed by the state Attorney General’s office over charity care issues and a New York Times investigation targeting its billing practices. (Jesse Tinsley/THE SPOKESMAN-REVIEW)

Providence Health & Services will reimburse the hundreds of Medicaid patients whose accounts were sent to debt collectors when they didn’t pay, the Renton, Washington-based health care provider with hospitals in Spokane announced last week.

Citing an “unintended error,” Providence’s chief financial officer said in a statement the nonprofit would be reaching out to the roughly 760 low-income patients who should have qualified for charity care but wound up being billed. The reimbursement will include interest.

“We deeply regret that this happened and are reaching out to those who were affected and issuing repayment, including interest,” Greg Hoffman, Providence’s chief financial officer, said in a statement sent to The Spokesman-Review, along with answers to questions prompted by a New York Times investigation published last week that found patients who should have received free or discounted care were given demands for payment.

Neither Providence nor the Washington Attorney General’s Office provided an exact number of affected patients at Providence Sacred Heart or Holy Family hospitals in Spokane, two of the largest health care facilities in the region. The Washington Attorney General’s Office in February sued Providence, alleging it had denied free and discounted medical care to low-income patients in violation of state law. That included not only Medicaid patients, but households making less than 200% of the federal poverty level who should have been entitled to what’s known as “charity care” under a state law that existed between 2018 and 2021, when the alleged violations occurred.

The law has since been amended to require Providence, and other similarly sized hospital systems, to provide free or reduced cost care to patients making less than 400% of the federal poverty level. That means individual patients who make less than $54,360 annually, or a family of four earning less than $110,000, are entitled to a discount.

“Our policy exceeds those requirements,” Providence said in a statement.

The lawsuit by the state Attorney General’s Office alleges that starting in 2018, Providence sent the accounts of more than 44,000 patients making between 151% and 200% of the federal poverty level to a debt collection agency in violation of what was state law. The amount of the charges was nearly $477 million across the system, which operates hospitals in Alaska, Washington, Oregon, Montana, California and Texas.

“Providence’s practices subjected some of the most low-income and vulnerable Washingtonians to aggressive attempts to collect payment by (debt collectors),” the lawsuit alleges.

To support their claims, the attorney general’s office filed with the court emails between senior staff in December 2019 in which one financial counselor raises concern about billing practices.

“We are sending the poor to bad debt and not treating them the same as other patients that would be uninsured for the days of admit prior to Medicaid (eligibility),” the counselor wrote.

Providence is fighting the lawsuit, which was filed in King County, calling it “a gross distortion of who and what (Providence) and their caregivers are, and what they do.”

The health care system said in its statement in response to questions about billing practices that it does not engage in “aggressive tactics such as reporting accounts to credit rating agencies and garnishing wages.” The system also said it includes on every bill information about how to apply for financial assistance, also in accordance with state law.

“In alignment with our heritage, values and mission, the Providence family of organizations continues to be here for everyone, regardless of their ability to pay,” Hoffman said in his statement.

The New York Times story included testimonials from five patients, including a former employee, who said they were billed despite being eligible for discounted care. They also interviewed two former employees who said they were pressured to collect payments from impoverished patients.

Providence said it was unable to discuss the cases of four of the five patients with reporters, because Providence had not obtained a necessary waiver from the patient to discuss their private health information.

“Providence is also reaching out to each of the patients featured in the article to talk with them about their experience and ensure they have the financial assistance they need,” Hoffman said in his statement.

Providence provided charity care to 266,000 patients, totaling $1.2 billion in uncompensated costs in 2021, the provider said in its statement. Providence Sacred Heart Medical Center posted a $57 million loss in the first quarter of 2022, according to a recent Health Department report.

A hearing in the state’s lawsuit against Providence is scheduled in a King County courtroom Oct. 28.

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