Bill collection may be barrier to health care

Those who owe and can't pay often put off medical treatment

September 13, 2004|By Dan Fesperman | Dan Fesperman,SUN STAFF

Jacqueline Morgan would seem to have little to offer a debt collector. She is 64, lives in a mobile home park in Thurmont, can't work because of an injured left shoulder, and survives on disability pay.

Yet, last April a court summons arrived in her mailbox threatening to put a lien on her house - as if she owned one - unless she paid a $2,065 medical bill from a Baltimore physical therapy firm, plus $690 in court costs.

A few phone calls by a Legal Aid Bureau attorney in Frederick soon cleared up the matter, and the company wrote off the debt. But the episode was emblematic of bill-collection tactics now employed by health care providers, which commonly enlist collection agencies and lawyers to round up money from overdue accounts, sometimes from customers who can't possibly pay.

When that happens, the pressure can be daunting enough to scare away patients from seeking needed treatment.

"They're frightened, or they don't know where they can get health care they can afford, so they put it off until it's an emergency. We hear that all the time," said Dave Liddle, chief executive of Mission of Mercy, a nonprofit group that operates 13 mobile clinics offering free care in Maryland, Pennsylvania and Arizona.

Liddle's assessment is supported by a study published in July by the Baltimore Community Health Consortium, which interviewed 274 patients at 10 "safety net" providers of health care to the city's poor. About 19 percent said they had delayed seeking medical care either because of medical debts or the pursuit of those debts by collection agencies. An additional 48 percent felt pressured enough to have made other changes in the way they sought care.

Even though the patients in the study were drawn heavily from the poor and the homeless - groups that usually qualify for free health care - 46 percent had incurred health care debts averaging $3,409, and 39 percent had been contacted by collection agencies.

Among uninsured patients with slightly higher incomes, such problems can be even more acute, Liddle said. Too well off to qualify for government-paid care, yet too poor to afford a hospital stay, "they're getting regularly hammered by bills," he said.

The use of collection agencies, which step up the pace of letters and phone calls seeking payment, has become "kind of an industry norm and an industry expectation," according to Dr. Thomas P. O'Toole, a principal author of the study, and an associate dean of the Georgetown University School of Medicine. Nationwide, medical bills now account for more than half of collection agency actions listed on credit reports, according to research by the Federal Reserve.

"But when the practice is applied without any brakes on the system, and is being capriciously applied," O'Toole said, "that's when you have these kinds of problems."

The study results are all the more striking given the way Maryland's health care system is set up. Baltimore has an extensive network of health centers geared toward low-income patients, and the state's Health Services Cost Review Commission sets hospital billing practices that are among the nation's fairest for the poor and the uninsured - an "all-payer" system in which hospitals charge the same rates to everyone and are allowed to account for uncollected bills when setting prices.

But when it comes time to collect overdue debts, O'Toole said, "that is typically outsourced to agencies that are not under the direct employ of the caregivers. It becomes relatively faceless. [The caregivers] have allowed a system to develop where this happens without them knowing it."

Maryland hospitals turn over accounts to collection agencies from 90 to 180 days after the first bill goes out, according to Bob Murray, executive director of the state's cost review commission.

State hospital officials, while disputing some of the study's conclusions, say they have taken pains in recent months to make sure collection efforts aren't overly zealous, or directed at the wrong people. One reason was a spate of negative publicity after a congressional hearing last June on hospital billing and collection practices, at which the horror stories included that of an Illinois woman, hospitalized after a miscarriage, who was jailed after missing two court hearings on her unpaid bill of about $1,700.

"It's an issue we've been revisiting with our hospitals, and we've been encouraging them to re-evaluate their practices," said Nancy Fiedler, spokeswoman for the Maryland Hospital Association. She said that all 50 of the state's hospitals recently signed on to a commitment to follow billing and collection guidelines drawn up last year by the American Hospital Association.

None of those guidelines calls for hospitals to stop using collection agencies, but one does suggest that the hospitals pay closer attention to setting standards for the agencies to operate by on their behalf.

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