Practice Management News

Feds Go After Medical Debt Collection for Military Hospitals

A new report spotlights aggressive medical debt collection tactics used by the federal government to cover the costs of civilian care at military hospitals.

Medical debt collection and military hospitals

Source: Getty Images

By Jacqueline LaPointe

- The federal government is pursuing medical debt collection for care received at military hospitals, and its collection tactics can be a lot more aggressive than the typical hospital’s strategy, according to a new report from The Center for Public Integrity and The Atlantic.

Despite being designed to care for military personnel and their families, civilians can receive care from a military hospital. Many of these hospitals admit civilians to give military doctors experience with different types of injuries. In many cases, the hospitals also provide additional services or superior care compared to other facilities in the region.

Civilians may be able to access services like a trauma center at their local military hospitals. But the process for paying for that care is a lot different and could end up costing patients a lot more, Jared Bennett, a former reporter at the Center for Public Integrity, and The Atlantic’s Olga Khazan reported.

Most non-profit or private hospitals must abide by charity care laws created by federal and state governments. These laws require the hospitals to write off bad debt for low-income and uninsured patients in certain situations.

On the other hand, Department of Defense regulations mandate that military hospitals take “prompt and aggressive action” to collect medical debt incurred by patients, Bennett and Khazan found.

Military hospitals can also transfer medical debts to the US Treasury where the federal government can withhold wages, tax refunds, or 15 percent of an individual’s Social Security income without a court order. Private debt collectors need to obtain permission from a judge before taking such extreme measures.

The Department of Defense took this approach to medical debt collection after an inspector general found that certain military hospitals, including the one under scrutiny in Bennett and Khazan’s report, did not have adequate debt collection processes in place. As a result, individual military hospitals left hundreds of thousands to millions of dollars on the table.

The process for paying for care at military hospitals can also be confusing for civilians, Bennett and Khazan pointed out. Military hospitals may not bill a civilian’s insurance carrier for treatments. Instead, patients are responsible for filing their own claims with their insurers.

Bennett and Khazan also found that many civilian patients experienced trouble communicating with the financial departments at military hospitals, with some never hearing from a hospital spokesperson at all and later receiving a surprise medical bill from the US Treasure.

The Atlantic report highlights the problems with the current medical debt collection process.

Patients are paying higher and higher prices for care. According to the 2019 Employer Health Benefits report from Kaiser Family Foundation, average premiums for family coverage increased 22 percent over the last five years and 54 percent over the last ten years, significantly higher than both wages and inflation. At the same time, deductibles rose, with the average amount increasing over 150 percent between 2009 and 2018.

Hospitals are oftentimes at a loss for what to do in response to rapidly increasing patient financial responsibility rates. Many still rely on manual collection processes, cannot consolidate bills across different providers, and do not offer payment plans.

The federal government is working to help patients manage their medical debt. Bills from both the House and Senate are trying to solve the issue of surprise medical bills and HHS has released several consumer-focused price transparency requirements in the last year.

But this new report shows that the federal government may be just as much to blame, if not more responsible, for the dire situation facing many patients in this country.