In their debt

sun special investigation

Maryland hospitals have stepped up debt collection, sometimes from the poor, and Gov. O'Malley demands review

December 21, 2008|By Fred Schulte and James Drew | Fred Schulte and James Drew,investigations@baltsun.com

Willie Mae White began worrying how she'd pay the $36,224 bill from Johns Hopkins Bayview Medical Center a few weeks after having emergency brain surgery. She lived off Social Security and food stamps after decades working as a housekeeper. So she was thrilled when Bayview informed her in writing that her bill would be forgiven, at least in part. The hospital had little to lose, since it can recover its costs of free and unpaid care under a unique state program. Instead, the hospital sued her 15 months later to collect the bill. Fearing she'd lose her Waverly rowhouse and too sick to defend herself in court, she agreed to pay $500 right away plus $50 a month. At that rate, it would have taken her 59 years to get out of debt.

"It wasn't fair. But what could I do? I said, 'Lord, it's in your hands,' " said White, 66, who remains too weak to work.

"All my life, I try to do the right thing. I have been working since I was a child."

On Wednesday, two months after The Baltimore Sun asked Johns Hopkins officials about her case, the hospital wiped out the debt and agreed to pay White $2,207.Even though her debt was resolved, Willie Mae White's case illustrates the ordeal that some needy people face even though Maryland's hospital regulation system was designed to protect them.

Three decades ago, Maryland officials devised a novel system - now the only one of its kind - in which a state agency sets hospital rates for all patients. It was designed in part to guarantee hospital care whether patients could afford it or not. Hospitals received $921 million last year to cover costs of providing free and unpaid care, according to the most recent state records, and all hospital patients in Maryland contribute through the rates they pay.

But an eight-month investigation by The Sun found that over the past five years some of Maryland's 46 nonprofit hospitals have received millions of surplus dollars from the payment system even as they sued tens of thousands of patients over unpaid bills.

Many of these suits have been filed against patients in the poorest areas of the state.

The investigation found:

* Hospital debt collection lawsuits spiked sharply between 2003 and 2006 before falling slightly last year. In all, hospitals filed more than 132,000 of these suits in the past five years, winning at least $100 million in judgments.

* In some cases they added annual interest at twice the rate allowed for other types of debts. And despite national hospital industry guidelines that caution against routinely placing liens on houses, Maryland hospitals placed at least 8,000 liens in the past five years.

* Maryland, unlike some other states, lacks uniform standards and practices to determine who is eligible for free or reduced-price care at hospitals. Some people wind up facing lawsuits even though they have little means to pay their bills.

* State officials have never resolved critical gaps in the system. For instance, they don't monitor debt collection practices to ensure that patients are being treated fairly, and they cannot be sure hospitals aren't getting paid twice for some of the same bills. Hospitals deny they collect bills twice.

* A majority of Maryland's hospitals have received surpluses from free and unpaid care in recent years, even though the system is supposed to ensure that they merely break even over time, according to state figures.

Gov. Martin O'Malley, responding to The Sun's findings, ordered an "immediate and thorough review" of hospital debt collection practices and said he wants it completed by early February.

"Assuring the public that all hospitals are pursuing reasonable collection practices consistent with their missions and are not unduly profiting from the system is an essential step to continuing the system well into the future," O'Malley wrote earlier this month to the Health Services Cost Review Commission, the panel that oversees rate setting.

Carmela Coyle, president of the Maryland Hospital Association, said in an interview that hospitals typically sue only patients who can afford to pay and who ignore numerous efforts to make payment arrangements. She noted that hospitals statewide sue only about 0.5 percent of the patients they treat. "Nobody would pay their bills" if hospitals didn't sue to enforce collection, she said.

"The shame about this is ultimately what is happening in the courtroom is what hospitals want to happen in the billing office," Coyle said. "Sometimes, it is the weight of the law that brings people to that conversation."

Hospital administrators said they need to pursue unpaid bills because all patients cover the costs of those bills under Maryland's rate-setting system. Hospitals also argue that they must balance their charitable missions against the need to be paid for services.

"The board of trustees expects us to have prudent business practices," said Ronald R. Peterson, president of the Johns Hopkins Health System. "We could have bad behavior from people who are in that category of deadbeats."

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