ABC for Health: Unpaid Hospital Care Report: Bad Debts and Inequality Rise in Wisconsin

Wisconsin hospitals’ bad debts increased by $8.4 million (1.1%), while charitable care services provided decreased by $84.2 million (13.5%) in 2021 according to the Wisconsin Hospital Association.Unpaid Health Care Report, Wisconsin Hospitals Fiscal Year 2021.” The report identifies a slight decline in overall unpaid care, a measure that combines both charitable care and bad debt totals at Wisconsin hospitals. In 2021, unpaid care for Wisconsin hospitals totaled $1.29 billion, up from $1.36 billion in 2020.

The decline in unpaid care may be partly explained by pandemic-related policies that have dramatically increased health coverage rates. For example, states are prohibited from de-enrolling people from Medicaid until the end of the COVID-19 public health emergency (currently extended through January 2023).

Unpaid care has steadily increased in Wisconsin from 2015 to 2020. Yet, with rising bad debts in 2021, the amount of hospital charitable care funds for patients has dropped precipitously. In fact, the 2021 report noted that charitable hospital care fell by more than $84.2 million compared to 2020. Compared to the pre-pandemic year of 2019, charitable hospital care dollars fell dropped more than $94 million.

The growing chasm between charitable care and bad debt in Wisconsin is a grim omen for low-income patients. “Hospitals aren’t getting paid anyway,” says Bobby Peterson, public interest attorney at ABC for Health, Inc. “But as charitable care helps communities by wiping out medical debt, accounts labeled as ‘bad debt” can lead to damaged credit ratings. , lawsuits and other patient harms. Peterson says rising medical debt is a huge health equity issue and a major stressor for populations with health disparities in Wisconsin. He continues, “We need to apply common sense strategies to help these patients avoid certain debts.

Nonprofit hospitals are required to develop and publish charitable care policies that provide low-income patients with discounted or free care in exchange for significant tax breaks. “In theory, charitable care should be a major shield against medical debt, but making it work in practice is a whole different ball game,” Peterson notes. “When you look at the hurdles patients have to jump through to apply – application deadlines, verification requirements, lost communications, ambiguous policies with arbitrary exceptions – it’s remarkable that a patient is getting the correct discount they deserve.” ABC for Health has released several recommendations to promote equity and accessibility in financial aid policies as part of a October report on medical debt in Wisconsin.

Peterson says, “Patients endure the hurdles of medical debt: harassment, court summonses and default judgments. Families impacted by health disparities are not equipped to challenge debt actions on their own. They suffer from wage garnishment, family stress and disrupted access to care. The negative effects of impending debt and a downgraded credit rating hang over a family like an angry storm cloud.

Collection agencies and associated law firms are the real winners from the continued growth of medical debt. Unfortunately, the medical collections industry profits from the misery of low-income and credit-impaired consumers. Most hospitals assign accounts to long-time business partners in collection agencies and law firms who extract profits at the expense of patients and sometimes the reputation of hospitals and other providers.

“Hospitals have legal representation 100% of the time in court, and patients almost never do!” said Peterson. He continued: “Without balanced justice, the collections industry moves relentlessly and there is no check on the questionable tactics they use to maximize revenue.” Peterson notes, “The collection machine is undeterred by the health disparities and inequities faced by patients who cannot fight back effectively without advocacy or legal help. Many patients face a downward spiral that leads to deterioration in their health and locks them, by credit score, in an electronic debtor’s prison. For more information see:

Medical debt and collections: A better way forward for Wisconsin (June 2021)

Despite COVID, Medical Debt Lawsuits Continue at Some Wisconsin Hospitals (December 2021)

Wisconsin Medical Debt and Collections: Restarting the Collections Machine (October 2022)

As ABC has pointed out in its research and recommendations, proactive assistance early in the healthcare service process with trained and qualified hospital staff can help prevent or reduce certain medical bills and promote equity in health care for patients with disparities. Knowledgeable advocates serving low-income communities can also help patients appeal denied insurance claims, secure continued coverage, seek charitable care, and avoid future uncovered bills. Peterson says, “Many other hospitals need to step up, join together to protect the health, well-being and financial future of their patients, and end the outdated and petty process of reflexively returning accounts to collections. .”

ABC for Health has also updated its “Moving Forward: Challenging Medical Debt» resource for consumers.

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John A. Bogar