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Washington sues medical center over claims of 'aggressive' collection tactics

Washington state law requires all hospitals to provide charity care to those who are near the federal poverty level.

Beth Jones Sanborn, Managing Editor

Credit: RCCH Health PartnersCredit: RCCH Health Partners

Olympia, Washington hospital Capital Medical Center is under fire from State Attorney General Bob Ferguson, who has filed a lawsuit alleging the hospital violated the state's Consumer Protection Act through aggressive collection tactics that caused charity care to be withheld from low-income patients.

Capital Medical Center is a 100-bed, for-profit hospital owned by RCCH HealthCare Partners, a system with 17 hospitals in 12 states.

[Also: California now offers consumer protections against 'balance billing' surprises]

Washington state law requires all hospitals to provide charity care to those who are near the federal poverty level. They must provide both verbal and written notice of the availability of charity care; must screen patients for eligibility before trying to collect payment; can only require patients to provide one income-related document to prove they qualify for charity care, the Washington AG's office said.

In the lawsuit, Ferguson states that CMC violated all those requirements with aggressive tactics  utilized by staff who demanded payment from patients without screening them for charity care eligibility or informing them of their charity care rights. The suit also alleges that CMC staff demanded multiple forms of documentation for charity care applications, citing a letter to patients who did apply that demanded up to eight documents proving income including a credit report, multiple pay stubs and letters from income sources.

[Also: Baylor, Scott and White increases collections through price transparency]

The AG's office said CMC management pushed staff to be aggressive in collection efforts. 

"Capital's former CEO, Jim Giest, called collection and registration staff members the emergency department's 'money makers.' He said in a 2012 meeting that the hospital needed to 'get something out of' every patient and told staff to not let uninsured patients 'leave without paying anything,'" the AG's office said in a statement. Staff were even rewarded with cash bonuses and other incentives for meeting collection targets.

Capital allegedly trained its staff to only list upfront payment, payment plans and medical credit cards as payment options for patients, and provide charity care information only to those who specifically asked for it.

The suit also said Capital's Patient Access Department would clear uninsured patients before scheduling them for surgery. During that process, staff members told them the treatment costs, assessed their ability to pay, and tried to settle on a payment arrangement.

An example listed in the suit was from 2012, when an uninsured, unemployed patient tried to schedule a surgery with Capital. The patient offered to pay via a payment plan, and rather than provide a charity care application, the suit said the Patient Access Director decided they "will not move forward with this patient."

When that patient was informed of the decision to not schedule her surgery, she offered to pay a down payment. A financial counselor explained Capital 'would not move forward without payment in full,' even after the patient requested more information about her payment options, the AG's office said.

Another patient reported that a financial counselor called to see how she would like to pay for an upcoming treatment and offered only two possible options: pay in full and receive a 25 percent discount, or put 50 percent down with a payment plan for the remainder, and told her she had 48 hours to commit to one of these two options or her appointment would be cancelled. No information on charity care or offer to screen her for it was given, the AG alleged. Even after another call where the patient did request charity care information, the counselor told her she could apply on the day of her treatment, but still had to make a payment in advance.

"Capital's aggressive collection practices reduced the amount of charity care it provided. Between 2012 and 2015, Capital consistently provided less charity care than the regional average, often less than 1 percent of its revenue," the AG's office said.

Jeff Atwood, Capital Medical Center's senior vice president of marketing and communications said he believed the two sides had been heading towards an amicable resolution," and expressed disappointment over the lawsuit.

"Even though Capital previously addressed the issues included in this lawsuit and is providing financial assistance (and) charity care to more individuals than state law requires, the attorney general filed this lawsuit. We remain committed to serving all of the people within our community," Atwood said.

The AG's office has also filed suit against Tacoma's St. Joseph Medical Center on similar grounds.

Twitter: @BethJSanborn
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