Limits Put On Nonprofit Hospital Debt Collection

LINDA WERTHEIMER, HOST:

Let's turn now to proposed rules to protect patients from abusive debt-collection practices, specifically at nonprofit hospitals. The rules come from the Treasury Department. They were required by the 2010 federal health law. Jenny Gold, of our partner Kaiser Health News, has more.

JENNY GOLD, BYLINE: When Deb Waldin arrived at the emergency room of Fairview Health Services, a nonprofit hospital system in Minnesota, on a scale of one to 10, she says her pain was a 12.

DEB WALDIN: I was in a little ball - in a fetal position, wishing I could die.

GOLD: She turned out to have kidney stones. But before she even had the diagnosis - when she was still lying on a gurney, waiting to see a doctor - she was approached by a debt collector from a company called Accretive Health.

WALDIN: I saw - out of the corner of my eye, I saw this little guy wheeling a podium. And I was just having such pain, it was hard to process what he was saying. But I do recall, he said I needed to pay him between 7- and $800.

GOLD: Accretive later apologized to patients for such tactics. Walden testified about her experience in May, at a hearing held by Democratic Sen. Al Franken of Minnesota.

SEN. AL FRANKEN: I know that hospitals across the country are being squeezed right now. And hospitals deserve to be paid for the services they provide. But especially in this time of economic hardship, we have to make sure that patients aren't the unintended victims of budget shortfalls.

GOLD: On Friday, the Treasury Department granted part of Sen. Franken's wish, with a draft of rules that prohibit debt collection in the emergency department of nonprofit hospitals. That covers more than half of the hospitals in the U.S. Those hospitals must give patients a clear explanation of how they can get free or reduced-cost care. Then they have to give patients at least eight months to apply for it. The rules also say hospitals can't charge uninsured patients more than they charge insurers.

JESSICA CURTIS: We were excited - really, just excited to see how much, and how comprehensive, they were.

GOLD: That's Jessica Curtis, who directs the Hospital Accountability Project at Community Catalyst, a patient advocacy organization.

CURTIS: Our take-home message, really, is that we need to put more of the onus on hospitals, to be better about being fair with patients.

GOLD: But the American Hospital Association says the rules are onerous, and place too much of the blame on hospitals. Melinda Hatton is the trade group's general counsel.

MELINDA HATTON: Hospitals appear to be held accountable for the activities of the third-party debt collectors that they employ.

GOLD: Hatton complains that if a hospital makes a mistake in the way they explain their financial assistance policy to patients, the penalty could be enormous.

HATTON: You could, potentially, lose your tax exemption. And don't forget that the way the IRS is looking at this, is that if you're a hospital system and any one of the hospitals in your system loses their tax exemption as a result of noncompliance, your whole system could lose their tax exemption.

GOLD: The new rules are based on a provision in the health law that was championed by Republican Sen. Chuck Grassley of Iowa. For years, Grassley has been scrutinizing the finances of nonprofits, including hospitals' debt-collection practices.

SEN. CHUCK GRASSLEY: It's on the - hospitals' responsibility to find out, does this person have the ability to pay? If they do, then get from them what you can get from them. But if they don't have the ability to pay, leave them alone. We got tired of the harassment.

GOLD: But like all Republican senators, Grassley voted against the Affordable Care Act. The Supreme Court is set to rule on the law tomorrow. And if the court decides to strike down the whole thing, the new rules on debt collection would disappear along with it.

For NPR News, I'm Jenny Gold. Transcript provided by NPR, Copyright NPR.