Dive Brief:
- Charlotte, North Carolina-based Atrium Health has stopped suing patients for unpaid medical bills following an investigation into the practice from the Duke University School of Law and the North Carolina Department of State Treasurer in August.
- The nonprofit hospital system filed 2,482 lawsuits against patients with medical debt between January 2017 and June 2022 – more than any other North Carolina health system, according to the report.
- Although Atrium said in an Oct. 13 statement that it stopped filing liens as a means of debt collection in November 2022, the hospital only removed lawsuits as an option from its billings and collections policy at the start of this month, according to reporting from North Carolina Health News.
Dive Insight:
Atrium merged with Advocate Aurora Health in December to become the country’s third-largest nonprofit healthcare system by revenue, reporting $15.2 billion in revenue for the first half of this year.
As a nonprofit hospital, Atrium is exempt from federal, state and municipal taxes. However, nonprofits are mandaetd to use tax-exempted funds to pay for charity care. Some lawmakers have called for enhanced oversight into such spending, including revised federal auditing standards, arguing that many hospitals do not fulfill their obligations. The Kaiser Family Foundation found that half of hospitals spent 1.4% or less of their operating expenses on community care in 2020.
Duke Law School and the state treasurer found Atrium may have skirted charity care responsibilities between 2017 and 2022, in some cases directing patients toward care options likely to land them in medical debt.
In 2018, Atrium settled with the Department of Justice and the North Carolina Attorney General over allegations that Atrium unlawfully restricted commercial health insurers from offering patients financial benefits to use less-expensive healthcare services. The report from Duke Law notes that consumers harmed were not compensated in the settlement.
Atrium also encouraged more than 63,000 patients to enroll in “medical credit card” payment plans that charged up to 18% interest on medical debt through the private equity-backed company AccessOne, the report said.
Most recently, Atrium’s “aggressive debt collection practices” included filing 42% of the 5,922 lawsuits brought by North Carolina hospitals against patients between January 2017 and June 2022, Duke Law School found.
Atrium Health did not respond to multiple interview requests for this article, but the health system said in a statement that it has a “generous financial assistance policy” and does not “turn away anyone needing medical care, regardless of their ability or inability to pay for their care.”
But some hospitals do. As of 2022, KFF Health News found one in five hospitals deny non-emergency care if patients reach a certain threshold of debt.
In August, Minneapolis-based Allina Health announced it would “formally transition” away from its policy of interrupting non-emergency, outpatient clinic care for patients with significant debt after facing an investigation from the state’s attorney general.
