Better Solutions for Healthcare

ProPublica: Nonprofit Hospital Almost Never Gave Discounts to Poor Patients During Collections, Documents Show

By Wendi C. Thomas

December 4, 2020

MEMPHIS, Tennessee — Memphis’ largest health care system almost never gave patients discounts based on their income even as it pursued thousands for overdue bills in the last several years, according to new information released this week.

Since 2014, Methodist Le Bonheur Healthcare, a nonprofit, collected just over $169 million from more than 977,000 patients with bills at least 30 days past due, but only 1% of those received financial assistance during the collections process, the hospital reported in a lengthy response to a query from Sen. Charles Grassley, R-Iowa, who chairs the Senate Finance Committee.

The hospital also disclosed that employees at its now-shuttered collection agency were given financial incentives based on the money they recouped from patients. Workers received a 10.75% commission on amounts collected over $30,000 per month, the hospital’s response said.

Methodist’s aggressive collection practices caught the attention of Grassley last year, after an investigation by MLK50: Justice Through Journalism and ProPublica.

In a letter Grassley sent Wednesday to the Senate Finance and Judiciary committees, he noted that the health care industry has protested that the tax code that guides tax-exempt hospitals’ charity care and collection practices, Section 501(r), is too strict.

But his inquiry into the billing practices of Methodist and the University of Virginia Medical Center, which was the subject of a similar investigation last year by Kaiser Health News, “unfortunately has shown that, if anything, the requirements of 501(r) need to be strengthened rather than softened.”

He noted that Methodist and UVA are far from the only two hospitals that have engaged “in billing and debt-collection practices that defy the spirit” of the tax code.