Providence Health System is refunding nearly $21 million in medical bills to low-income Washington residents and forgiving $137 million in outstanding debt for tens of thousands of other residents to settle the state’s…
The state argued that the health system’s practices violated Washington’s charity care law, which is considered one of the strictest laws in the country. It requires hospitals to notify patients that financial assistance is available and screen them to see if they qualify for discounts before trying to charge them.
Ferguson said Providence trains its staff not to accept when patients say they can’t pay their bills.
“Hospitals — especially nonprofits like Providence — receive tax breaks and other benefits with the expectation that they will help everyone get affordable health care,” Ferguson said at a news conference. “If If they don’t, they will use the system to their advantage.”
The law was recently expanded and now covers about half of residents, making them eligible for free or reduced-price care at the state’s hospitals, according to Ferguson’s office. It applies to out-of-pocket hospital expenses, including out-of-pocket expenses and deductibles.
Those with incomes up to four times the federal poverty level may qualify for assistance. For example, a family of four making $120,000 a year may qualify for a 50% discount, depending on the hospital.
In a statement posted on Providence’s website, the organization said it is streamlining how it provides financial aid information to patients and working to make the application process clearer.
“Charity care and financial assistance are vital resources for patients who cannot afford health care,” said Providence Chief Financial Officer Greg Hoffman. “Providence is committed to providing services to those who need it most. people to provide support, we will continually evaluate our efforts and ensure they fully meet the needs of the people we serve.”
Ferguson, a Democrat running for governor, said the state has eliminated about $125 million in medical debt after Providence filed its lawsuit two years ago. Under the settlement, Providence will also pay $4.5 million to the attorney general’s office for legal fees and costs of enforcing charity care laws.
All told, approximately 65,000 patients will have their outstanding debt wiped out and 34,000 patients will receive refunds, plus 12% interest, as they manage to pay their bills despite difficult circumstances. Ferguson’s office said the debt being forgiven ranged from less than $1 to $262,000, while those receiving refunds will receive amounts ranging from less than $1 to $293,000.
The latter category includes Kevin Holloman and Evangeline Holloman, who spoke at the press conference. The couple said after their daughter was born at Swedish Hospital in Seattle in 2020, they received a $7,000 bill and set up a $250-a-month payment plan.
But they say when they missed a payment, Swedish immediately sent them to a collection agency without notifying them. They end up draining their emergency savings and using their tax returns to pay off the balance.
“We have to start from scratch with a baby and have to save money again just in case anything happens,” Evangeline Holloman said. “Having your safety and security taken out from under you like this It’s really tough.”
The state is still pursuing related consumer protection claims against two debt collection agencies used by Providence.
Ge Bai, an accounting professor at Johns Hopkins University who focuses on health care finance and policy, said the settlement may encourage other states to strengthen their charity care laws or seek better enforcement of them. Bai was listed as an expert witness for Washington State in the case.
“Washington has a pretty comprehensive charity care law, and a lot of states don’t even have one,” Bai said. “It’s also having a chilling effect on hospitals in other states: State attorneys general are taking this seriously.”