Across the country, a reckoning is taking place over medical debt stemming from hospital visits.
From the story of a nonprofit hospital in Tennessee that brought more than 8,000 lawsuits in five years, to countless true tales of patients with five-figure debt after an emergency, the practice of hospitals either directly suing patients or sending them to collections agencies has stoked a heated debate. Patient advocates argue that hospital debt collectors gouge patients and put them further into financial ruin through collections and court-ordered wage garnishment, while some hospitals say they need funding to operate and offer payment agreements to individuals struggling with finances.
In Nevada, collection agencies often sue locals as a result of hospital medical debt, said Sophia Romero, an attorney with the Consumer Rights Project at Legal Aid Center of Southern Nevada. Overall, an estimated 21 percent of the state population has some form of medical debt in collections, according to D.C.-based think tank the Urban Institute, compared with 16 percent of the national population. For communities of color in Nevada, it’s 26 percent.
Lawsuits that Romero has seen locally, which are generally brought about by debt collectors rather than the hospitals themselves, have ranged from about $1,000 to $15,000, with an average of roughly $2,500. The median amount in overall medical debt in Nevada is nearly $775, compared to $694 nationally, according to the Urban Institute.
Nevada’s laws such as the hospital collections statute provide some relief to individuals facing mounting hospital debt. They outline protections for debtors including that those agencies collecting on behalf of a hospital must bill the insurance, waiting 30 days prior to billing a patient directly, Romero said. The law also requires those agencies to obey the federal Fair Debt Collection Practices Act. State homestead law also now protects up to $605,000 equity in a Nevadan’s home against general creditor claims including from unpaid medical bills. The amount protected was increased by legislation that went into effect in October.
Romero said she’s hopeful that surprise billing legislation passed in Nevada and signed by the governor in May will be of help to many.
But she’s also witnessed an ethical gray area in efforts to convince local patients to pay debt stemming from hospital bills.
Some collection agencies working for hospitals and other individual providers take Medicaid patients to court for overdue bills that should be billed to their insurance. Romero said these cases can violate state law, and she’s seen them happen “occasionally.”
Julie Schoolmeester, a representative of the Nevada Department of Health Care Financing and Policy, agreed via email that it “does happen that hospitals refuse to bill Medicaid and then pursue individuals and that is in contravention of NRS 449A.”
“If a hospital doesn’t do a prior authorization or a final claim, Medicaid would have no way of knowing that services were provided,” she said via email.
Schoolmeester also cited the division’s Medicaid Services Manual on proper procedure in that case, which states, “If a provider has billed a Medicaid recipient erroneously, the provider must refund the money to the recipient and bill Medicaid for the amount.”
She suggested individuals having trouble with billing reach out to the Office of Consumer Assistance. Medicaid patients can reach out to program administration.
In cases in which Romero gets involved, if a collection agency is suing a patient who had some form of medical coverage and was erroneously sent to a debt collector, “once we raise a valid defense or file an appropriate counter-claim, the underlying lawsuit will be dismissed,” Romero said.
But that outcome requires individuals to seek out legal advice or challenge the debt collections agencies on the validity of the debt.
Amy Shogren, a representative of the Nevada Hospital Association, declined to comment on the reasons a local hospital might choose to contract with debt collectors. Shogren said she doesn’t believe the association gathers data on the specific debt collection procedures used by hospitals and that they’d likely vary according to institution.
The Valley Health System, which operates six hospitals in Southern Nevada, offers a charity care program and works with patients to establish payment plans if they can’t afford their bills, said Gretchen Papez, director of PR and media relations.
“If, after 180 days (six months) from the date on the first hospital billing statement they receive, there is no mutually agreed upon formal payment plan arranged, or the amount isn’t paid in full, their bill will go to a collection agency,” she said via email.
At county-run hospital University Medical Center, balances over $15 are sent to collections on day 121 after the first billing statement, if “payment isn’t received, a payment plan isn’t established and/or if a patient is on a payment plan and misses two or more installments,” according to an email from Chief Financial Officer Jennifer Wakem.
The hospital has financial counselors to assist patients in locating financial help, whether it’s through Medicaid, Social Security Disability, charity, Clark County Social Services, Medicare supplemental coverage, Clark County discounts or other programs.
However, the hospital said neither it nor the collection agency have an estimate of how many people went to court last year as a result of medical debt from UMC. Safeguards exist to ensure Medicaid patients aren’t sent to collections, but “it can still happen if the patient does not inform us of the coverage and/or if retro eligibility is obtained and we are not notified,” Wakem said.
If a Nevadan does go to debt collection for hospital bills, Romero suggests seeking legal representation and careful assessment of any paperwork before signing.
Some patients will sign paperwork they believe to be the structuring of a payment plan, when really, those papers are confession of judgment forms, indicating the patient has accepted liability and consented to pay.
That is a frequent occurrence in Southern Nevada, Romero said.
“I can’t even emphasize how much that happens,” she said. “People think they’re signing a payment plan when really they’re signing a confession of judgment.”