UVA Health Drops Lawsuits Over Patient Financial Responsibility

April 21, 2021 - The University of Virginia Health System (UVA Health) will drop all lawsuits against lower-income individuals after years of suing patients for outstanding patient financial responsibility.

In a statement on Monday, the health system said it will release all liens and judgments for patients who are at or below 400 percent of the federal poverty level. This includes patients who earn less than $51,520 a year or who are part of a family of four with an annual income of $106,000 or less.

The move could impact tens of thousands of UVA Health patients. A 2019 analysis conducted by Kaiser Health Network found that the health system had filed 36,000 lawsuits against patients over a six-year period seeking over $106 million in unpaid medical bills before revising its billing policies later that year.

UVA Health also said last year that it would stop suing patients over unpaid patient financial responsibility.

“We are committed to providing high-quality, compassionate care to all community members and these new policies and practices uphold our commitment,” Douglas E. Lischke, UVA Health’s chief financial officer, said in the statement earlier this week.

The latest announcement is part of the health system’s updated billing policies and practices that “reflect fair and financially responsible guidelines based upon a patient’s ability to pay.”

According to the health system’s website, UVA Health uses a sliding scale to determine a patient’s eligibility for financial assistance with unpaid medical bills. The scale is based on whether a patient has insurance, their assets (including the values of bank and retirement accounts, home, and car), income, and the number of people in their household.

The health system offers full and partial discounts on medical bills depending on household income and whether assets are less than $50,000 in value.

In addition to the sliding scale, the health system also recently implemented new financial aid options for emergency care if patients do not have insurance or other coverage, costs are over $10,000, and whether care is eligible for financial aid. Patients who qualify under this policy will not owe more than 25 percent of their family’s income and assets.

The patient financial assistance policy could be key for many patients since many US adults say they would not be able to pay their medical bills if they were to encounter a $400 medical emergency.

The new billing policies and practices will also impact students. Under the updated policies, the health system will no longer block enrollment of University of Virginia students with outstanding patient balances, according to multiple reports.

Blocking students from continuing education at the university was another patient collections practice at UVA Health the KHN analysis revealed last year.

UVA Health said it developed the new billing policies and practices with a local Community Advisory Council. Together, the stakeholders conducted a national study of hospital billing and collection practices for low-income, under-insured, and uninsured patients and implemented practices similar to other hospitals.

As part of this update, the health system also plans to establish an Ombudsperson’s office to help patients navigate payment options for their bills. The office will also ensure “a fair, impartial assessment of individual cases.”

Additionally, UVA Health will be updating its clinical scheduling and intake processes to assist patients with financial navigation. This includes a new financial assistance application designed for better patient understanding.

Patients and providers are struggling to overcome the challenges of rising financial responsibility, including out-of-pocket costs for healthcare. Patient financial responsibility is up 11 percent since 2017, per 2018 numbers from TransUnion Healthcare. More recently, Kaiser Family Foundation reported that the average single deductible is $1,644, up from just $917 a decade ago.

The increase in patient financial responsibility is a burden for patients but providers are also experiencing cash flow problems because of the trend. Data shows that patient collections take over a month for most providers and the likelihood of collecting from patients diminishes the more they owe out of pocket for care.

Providers are increasingly optimizing billing and collection practices to assist patients with medical bills and optimize revenue collection, especially in light of COVID-19.

Nearly one in five providers said in a recent survey they are overhauling their entire collections strategy because of the virus and most are looking to make the process more flexible and accommodating to patient needs.

Increasing payment options, adjusting bad debt placement timing, and delaying credit reporting were also key ways providers are optimizing collection processes, the survey showed.