Providence to pay $157M after unlawful charges to low-income Washington patients

PORTLAND, Ore. (KOIN) – Providence Health & Services agreed to pay more than $157 million in refunds and debt relief to low-income Washingtonians over unlawful medical charges, Washington State Attorney General Bob Ferguson announced Thursday.

After an agreement was reached in King County Superior Court, Providence must forgive over $136 million in medical debt and more than $20 million in refunds to patients who were billed for services despite Providence knowing the patients qualified for free or reduced-cost care, Ferguson said.

The $157.8 million will go towards refunds, plus interest, and debt forgiveness to nearly 100,000 Washingtonians – and marks the largest resolution of its kind in the United States, Ferguson said.

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Washington state law mandates hospitals to provide medical financial assistance – also known as charity care – to residents based on their income level for insured and uninsured patients. Hospitals are also required to notify patients about financial assistance and must check if they are eligible for discounts on out-of-pocket expenses.

Ferguson filed an enforcement action against Providence for “deceiving patients into believing they had no choice but to pay their medical bill, and unlawfully shifting the burden onto patients to self-identify their eligibility for financial assistance” between 2018 and 2023.

“Providence trained staff to aggressively ask for payment from patients who were likely eligible for financial assistance, or simply billed them without determining if they qualified. In thousands of cases, Providence knowingly sent low-income patients — including Medicaid enrollees — to debt collectors. One of Providence’s own employees warned leadership that the health system’s practices were ‘sending the poor to bad debt,’ Ferguson stated.

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The attorney general’s office says Providence operates hospitals across Washington, with many of the hospitals being the largest or only hospital in the area.

Combined, the hospitals reported over $18 billion in patient service revenues in 2020, Ferguson said.

“Washingtonians concerned about the rising cost of health care should know that my team is fighting to enforce critical protections that improve affordability,” Ferguson said. “We won’t stop. Most Washingtonians are eligible for significant discounts on their out-of-pocket hospital expenses, including co-pays and deductibles. We will ensure that hospitals honor this important law.”

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The resolution requires Providence to pay $20.6 million in refunds with 12% interest on all payments to over 34,000 patients. The healthcare provider is also required to forgive $137.2 million in outstanding medical debt for more than 65,000 patients.

“Serving those in need, regardless of their ability to pay, is at the very heart of Providence’s Mission and values,” said Greg Hoffman, Providence CFO. “Today’s agreement reaffirms our commitment to serving those who are most vulnerable by taking steps to proactively promote the availability of financial assistance and simplify the application process. We have already begun providing payments with interest to individuals and are continuing to review our files to ensure we have not missed anyone. Going forward, these steps will help ensure all patients can spend more time focusing on their health and less time worrying about medical bills or insurance coverage.”

The attorney general’s office says Providence has already forgiven $125.8 million in medical charges as a result of the case and will forgive the remaining $11.4 million after Thursday’s filing.

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Patients receiving refunds will receive approximately $478 on average, officials said – noting individual amounts will vary from $1 up to $293,000.

The average write-off for patients eligible for debt forgiveness will be more than $900, officials said.

Before the resolution, Providence refunded almost $230,000 to 1,497 Medicaid accounts after Ferguson began the investigation.

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Patients who received care from Providence-affiliated hospitals between 2018 and October 2023 will receive a letter from the attorney general’s office regarding the resolution.

Ferguson says patients do not need to contact the attorney general’s office, Providence, or Providence affiliates Swedish Medical Center, and Kadlec Regional Medical Center in order to receive a payment. Patients will receive checks in the email or notices that their accounts were written off, officials said.

If patients have questions on whether they qualify for the resolution, officials say to contact Providence at 855-229-6466.

In addition to the refunds and debt forgiveness, Providence is also required to implement new systems to determine if patients are eligible for financial assistance before attempting to collect payments, Ferguson said.

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Further, Providence owes the attorney general’s office over $4.5 million to reimburse costs of the investigation and fund more consumer protection work.

Providence says in recent years, they have reviewed their financial assistance policies, billing communications, and training materials for revenue cycle caregivers.

Additionally, Providence stated that they have new processes to write off balances on Medicaid accounts and have taken steps to prevent Medicaid patients from being incorrectly sent to collections.

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“Charity care and financial assistance are vital resources for patients who cannot afford health care,” Hoffman said. “Providence is committed to providing support to those who need it most, and we will continually evaluate our efforts and make sure they fully meet the needs of those we serve.”

Ferguson’s office began their investigation in 2020 after receiving complaints about collection practices, his office explained.

The investigation found that Providence trained employees on “aggressive and deceptive collection tactics,” Ferguson’s office said.

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Investigators learned that Providence employees were told to “ask every patient every time” to pay outstanding medical costs, and to not “accept the first no.”

According to Ferguson’s office, Providence sent thousands of patients they identified as “presumptively” qualified for financial aid to debt collectors and that Providence did so because they “knew those patients were more likely to pay their bills if collection attempts continued.”

Overall, Ferguson says Providence’s practices led to over 100,000 violations of Washington’s Consumer Protection Act.

In 2022, Ferguson added Harris & Harris and Optimum Outcomes debt collection agencies to the Providence lawsuit – claiming the companies violated the law by sending letters to patients that excluded legally required disclosures about financial assistance.

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