Nonprofit Tennessee hospital rewarded overdue bill collection, rarely offered financial help, probe finds

In working to recoup millions of dollars in overdue bills, Memphis, Tenn.-based Methodist Le Bonheur Healthcare hardly ever presented patients with financial assistance options and financially rewarded staff for collecting payments, according to new information analyzed by ProPublica and MLK50.

The nonprofit hospital system reported that it collected $169 million from more than 977,0000 patients with bills at least 30 days late since 2014. Of those patients targeted, just 1 percent received financial assistance from the health system during the collections process, according to the report. 

Methodist Le Bonheur also gave employees at its now-closed collections agency a 10.8 percent commission if they collected more than $30,000 per month from patients, the health system reported in response to a query from Sen. Chuck Grassley, R-Iowa, who chairs the Senate Finance Committee.

Mr. Grassley began inquiring about the health system's collection practices last year after an investigation by ProPublica and MLK50. The senator released the results of his inquiry this week. 

The 2019 investigation by the publications found that Methodist had sued more than 8,300 patients, many of whom were low-income or its own employees, between 2014 and 2018.  

In response to the 2019 investigative articles, Methodist dropped thousands of lawsuits, erased $11.9 million owed by patients and said it would no longer sue its own employees. Since July 2019, Methodist has only sued two patients for unpaid bills. 

The health system also reformed its charity care policies to include a 100 percent hospital bill writeoff for patients whose household income is below 250 percent of the federal poverty guidelines. The prior amount was 125 percent of the federal poverty level, according to the report. 

Although Methodist made changes to its billing practices and financial assistance programs, Mr. Grassley is urging his peers in the Senate Finance and Judiciary committees to bring new attention to the tax laws governing nonprofit hospitals after his yearlong inquiry. 

In the letter, Mr. Grassley said that the healthcare industry has continuously argued that the tax code that guides hospitals' charity care and collection practices, Section 501(r), is too strict. But he said his inquiry "unfortunately has shown that, if anything, the requirements of 501(r) need to be strengthened rather than softened."

Methodist didn't respond to ProPublica's request for comment.

Access the full ProPublica and MLK50 article here. Access the documents released by Mr. Grassley here. 

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