Dive Brief:

• PeaceHealth will pay up to $13.4 million to thousands of low-income patients who were inappropriately billed for care, settling a state attorney general’s probe into the nonprofit health system’s charity care practices.
• The AG found PeaceHealth billed low-income patients up to four times for medical care before writing off bills — while never notifying them about their potential eligibility for financial assistance, according to a settlement announced on Monday. 
• The deal includes $4.2 million in direct refunds for more than 4,500 patients and up to $9.2 million in refunds for approximately 11,000 additional patients, provided they submit income validation.

Dive Insight:

Attorney General Bob Ferguson began investigating Vancouver, Washington-based PeaceHealth in 2020. PeaceHealth is a nonprofit Catholic health system that operates more than 100 clinics and medical centers in Alaska, Oregon and Washington.

Nonprofit hospitals, like PeaceHealth, receive tax exemptions in exchange for providing charity care, which includes reduced or free services for low-income patients. Approximately four million Washingtonians are estimated to qualify for some form of charity care, according to the state. 

Ferguson concluded PeaceHealth hadn’t always met its obligation to provide such care and specifically had a pattern of failing to notify low-income patients about their possible eligibility. 

Under the settlement, the health system must notify all patients about financial assistance programs prior to attempting to collect payment, offer to screen patients for eligibility, and refrain from billing or attempting to collect payment until financial assistance applications are processed.

During the course of the investigation, PeaceHealth said it cooperated fully, sharing “tens of thousands of documents” with the AG and offering evidence that “it did everything required by law — and more — to inform its patients about the availability of financial assistance,” according to a release posted Monday.

Refunding patients roughly $4 million represents less than 1.6% of its charity care spend since 2018, according to a PeaceHealth spokesperson. The health system said the payments will go to patients who “did not apply for assistance or respond to outreach.”

The system added it has “proactively” made changes to its charity care program over the years to enhance eligibility and education. PeaceHealth said it supported a legislative change that expanded care access from a threshold of 200% the federal poverty level to 400%.

"Our programs have a demonstrated record of providing industry-leading free or discounted care to those in need — not maximizing collections," Chief Financial and Growth Officer Darrin Montalvo said in the health system's release. 

Elsewhere in the state, hospitals are pushing back on charity care obligations that they say are increasingly steep.

In a lawsuit filed last month, the Washington State Hospital Association, which represents most hospitals and health systems in the state, pushed back on expanded charity care obligations that, as of next year, will require Washington hospitals to subsidize out-of-state patients. 

In the suit, the association warned hospitals couldn’t afford additional charity care costs. Last year, state hospitals reported $2.1 billion in operational losses and $750 million in operational losses in the first six months of 2023, according to the suit.