Heartland Regional Medical Center, on the eastern edge of St. Joseph, Mo., is one of the nonprofit hospitals suing patients and seizing wages for medical treatments – despite the fact that some patients’ incomes would have allowed them to be qualified for their bills to be forgiven.
Thousands of people around St. Joseph are dealing with this process, and NPR took a closer look at how this could be possible.
Some nonprofit hospitals around the country don’t ever seize their patients’ wages. Some do so only in very rare cases. But others sue hundreds of patients every year. Heartland, which is in the process of changing its name to Mosaic Life Care, seizes more money from patients than any other hospital in Missouri. From 2009 through 2013, the hospital’s debt collection arm garnished the wages of about 6,000 people, according to a ProPublica analysis of state court data.
After the hospital wins a judgment against a former patient in court, it’s entitled to take a hefty portion of the patient’s paychecks going forward: 25 percent of after-tax pay. For patients who are the head of household, if they tell the hospital or court that information, the hospital can seize only 10 percent of each paycheck. But Heartland, through the debt collection company Northwest Financial Services, often sues both adults in a household — garnishing one at the 10 percent rate and the other at the full 25 percent of their pay. The hospital also charges patients 9 percent interest, the maximum allowed under state law.
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Keith Herie was working as a truck driver making about $30,000 a year in 2005 when his wife Kathleen’s appendix burst (she’s a stay at home mom), leaving them with a $14,000 hospital bill. This was incredibly hard for the family with their finances, and just months after this, Heartland expanded its charity care policy. But the issue is that even though they would have qualified based on their income, the change wasn’t retroactive.
As a result the hospital is taking 10% of Herie’s paycheck now, and 25% of Kathleen’s income from a new job following the situation. The full amount they owe now includes legal fees, which adds up to $18,000. The whole process isn’t just a financial nightmare because of the lost money, it’s affected their credit, which affects every other bill for the family.
“It’s like a never never plan,” Herie said. “You’re never going to get rid of it and you’re never going to get ahead of it.”
Heartland made $605 million in gross revenues last year, and $45 million of that was profit. “We’ve been very successful in terms of being profitable and being a good community asset,” said Tama Wagner, chief brand officer for Heartland.
In recent years, the hospital has made its charity care policy more generous. Heartland’s policies state that anyone making less than three times the poverty line can qualify to be billed at a reduced rate, similar to what an insurance company pays, and then get that amount cut in half. If they make less than twice the poverty line, the entire bill is forgiven. The hospital makes every effort to let patients know that they may qualify for help, Wagner says. “Financial counselors are available if a patient asks for that.” But if patients don’t utilize those resources, she says, the hospital must take action.
“No one goes into this with the goal or the desire to ruin someone’s life,” Wagner says. “But at the same time, the services were rendered, and we have to figure out how to get them paid for.”
Asked why the hospital sues more patients than any other in the state, Wagner said, “I don’t know.”
With this standard, patients must be so poor in order to avoid being sued. Even someone who makes near minimum wage is subject to this process. But the Affordable Care Act could make a difference.
If a nonprofit hospital gets too aggressive with debt collection these days, “they’re putting at risk their federal tax exemption,” says Mark Rukavina. He runs Community Health Advisors, a consulting firm that helps hospitals comply with the Affordable Care Act. The ACA actually sets a new and higher standard for debt collection.
“The statute is quite clear,” Rukavina said. “It says nonprofit hospitals should not engage in extraordinary collection actions before making a reasonable effort to determine whether someone is eligible for financial assistance.”
