Dive Brief:
- After an investigation by National Public Radio and ProPublica found that some nonprofit hospitals were sending patients who couldn't pay bills to collection agencies that would sue them and garnish their wages to recoup medical charges, Sen. Charles Grassley (R-IA) sent a letter to Heartland Regional Medical Center, a nonprofit hospital in St. Joseph, MO, that called the organization out on this behavior.
- Citing the report, Grassley said the hospital, which recently changed its name to Mosaic Life Care, had stretched the law to the breaking point and may not be meeting the requirements to be a nonprofit, tax-exempt hospital.
- Under draft rules posted by the Internal Revenue Service, nonprofits are now required to allow more leeway for individuals to apply for financial aid before calling on debt collection agencies.
Dive Insight:
If nonprofit hospitals are as vulturous as Grassley contends, he is doing a huge service by bringing attention to the issue. His allegation that some nonprofits are flouting the law, however, is a serious one, and it should be taken with a grain of salt: This isn't the first time Grassley has gone after nonprofit practices. In the past, Grassley has expressed similar concerns, including one about a report that Kaiser Health News and ABC News published suggesting that some nonprofit hospital CEOs are benefiting from huge bonuses and other benefits in reward for raising profit margins.
Either way, we likely will not see any major changes to payment-collection procedures until the IRS' draft rules go into effect in 2016, after which hospitals will be required to post their financial assistance policies on their websites in plain, straightforward language.
When that happens, nonprofit hospitals may have a hard time adapting to new regulations without more aggressive tools at their disposal. The takeaway here is likely not that Mosaic and other hospitals are targeting poorer patients, but that nonprofits continue to struggle to determine how to handle charity care requirements.