Wall Street Journal Examines Hospital Efforts To Collect Old Debts From the Uninsured

The Wall Street Journal on Tuesday examined efforts by some hospitals in New York state to collect old debts from uninsured and low-income patients. According to the Journal, collection agencies on behalf of hospitals have begun to "go after long-dormant court judgments against patients" with tools that allow them to attach bank accounts electronically. Hospitals that won the judgments in the past had considered them uncollectible, but a 1999 New York law that "streamlines the process of collecting court judgments has helped make some old debts attractive targets for hospitals' collection agencies," the Journal reports. The efforts to collect old debts have prompted criticism from patient advocacy groups, which maintain that hospitals should have a higher standard than other creditors because they receive tax exemptions and subsidies as charitable organizations. In addition, patient advocacy groups maintain that hospitals should not continue to seek payments from uninsured and low-income patients after they receive compensation from an $848 million "bad debt and charity" pool, which the state administers and hospitals finance through surcharges on patient bills. The pool pays hospitals between 50 and 70 cents for each dollar of unpaid debts from patients. However, hospitals can continue to seek payments from patients after they receive compensation from the pool, provided that they "tell the pool of any money they recover, to be subtracted from future payments" -- a practice recommended by pool regulations, the Journal reports.

Officials for several hospitals said that were unaware of the efforts by collection agencies to collect old debts from patients, and some promised to end the practice or implement "stringent new oversight to make sure the destitute aren't harassed," the Journal reports. However, hospitals also maintain they have financial concerns that require them to collect old debts. The House Energy and Commerce Subcommittee on Oversight and Investigations plans to hold hearings on the issue within the next few weeks (Lagnado, Wall Street Journal, 6/8).