Nonprofit hospitals receive a tax-exempt status based on their work to serve the poor by addressing their medical needs. However, the medical billing practices of hospitals was recently called into question by a Consumer Financial Protection Bureau report. The report examined medical debt in this country and found that 1 in 5 consumers, or 43 million individuals, have a negative mark on their credit report from a medical debt. The debt collections practices employed by hospitals raise several concerns including releasing private medical information covered by HIPAA to outside parties not involved in treatment, unfair billing practices that disproportionately impact low-income patients, a failure to provide and educate patients on available aid, the need for aid to retroactively cover eligible medical costs, and the legality of nonprofit hospitals suing their poorest patients.
A recent NPR story highlighted the issues that arise for low-income patients when nonprofit hospitals sue for unpaid medical bills. In addition to the aribtrarily higher prices many low-income patients are charged for medical treatment, the debts associated with their medical care negatively impact nearly every area of their lives. Medical debts reported to credit agencies lower credit scores which in turn, raises the prices for many basic needs such as car insurance, mortgages, credit cards, and loans. Additionally, some employers examine the credit report in the hiring process and a low credit score or history of medical debt may negatively impact an individual's chance to get a job because they are viewed as irresponsible or the employer feels they will not be reliable due to the medical issues insinuated in the report.
Hospitals are turning to the courts to recover these inflated debts from their low-income patients. When the hospitals are successful they may be able to recover the debt, in addition to court costs, debt collection administration fees, and interest by garnishing the low-income individual's wages. This practice creates a cycle of poverty that is nearly impossible to escape and discourages individuals from receiving medical care. It particularly provides a disincentive for low-income individuals to receive preventative care, which would be beneficial to all parties involved.
Reform is imperative. Hospitals and health access managers must be diligent in educating patients about aid, prudently billing, and limiting the debts that move to collection agencies.
Resources to help those with medical debt may be found at the following websites: