UVA Health System announces revamp of collection practices after controversy

A stack of medical bills
(Griffin Pivarunas for KHN))

Starting in 2020, the University of Virginia (UVA) Health System will no longer sue patients as a matter of routine in collections cases and will reduce bills for patients least likely to be able to afford them, officials announced Friday.

In a release, the health system said "absent unusual circumstances" it would "generally reserve filing suit" for cases involving balances over $1,000 by individuals earning over 400% of the federal poverty level.

"We recognize that lawsuits, property liens and garnishing wages can be not only disruptive but devastating," officials said in a statement. "We would much prefer to work out a reasonable repayment plan, and that is where we will devote our attention and energy going forward."

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The announcement came days after Kaiser Health News reported the Charlottesville-based health system sues thousands of patients a year and sends many into bankruptcy. A Kaiser investigation found UVA sued more than 36,000 patients over six years for unpaid bills for more than $106 million.

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Thursday, UVA Health officials suspended dozens of medical lawsuits and promised a policy change as a result of outcry.

Among the changes to the policy announced Friday, UVA officials said they would seek to reduce medical bills for low-income patients and those without insurance under a tiered structure.

  • Currently, patients who fail to meet the state-approved asset test of $3,200 for a family of four only receive a 20% discount. But moving forward, officials said, patients at or below the federal poverty level who have less than $50,000 in assets will have their bills written off entirely. (They do not include a home, a car or up to 3.99 acres of land in the calculation.)
  • For patients between 101% to 200% of the federal poverty line, the health system has used a sliding scale for billing. (200% of the federal poverty line is about $25,000 for an individual and $51,500 for a family of four.) Going forward, patients in this income bracket who have less than $50,000 in assets will have their bills written off entirely.
  • For patients between 201% to 300% of the federal poverty line, the health system writes off 20% of charges if patients are not insured. But going forward, the health system will write off 60% of the charges for those within this income bracket who have less than $50,000 in assets and are uninsured.
  • For those between 301% to 400% of the federal poverty line, the health system writes off 20% of charges if patients are not insured. Moving forward, they will write off 50% of the charges for those within this income bracket who have less than $50,000 in assets and are uninsured.
  • For those who are not insured and who are over 400% of the federal poverty line, the health system writes off 20% of their charges. Moving forward, they said they will write off 40% of their charges. They said they will do the same for those below 400% of the poverty line who have assets over $50,000.

The policy—which requires adjustments to billing system—takes effect Jan. 1.

"These changes represent a first step. In the coming months, we will be examining additional ways that we can improve our billing and collection system, including taking a close look at how we treat our own employees and our students, and how we price our services," officials said in a statement.

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Kaiser's report highlighted growing concerns about the broader trend across the U.S. of some hospitals suing former patients in aggressive collections efforts.

Mary Washington Healthcare—another health system in Virginia—also changed its policies several years ago after its lawsuits came to light. Other outlets have reported on similar practices at hospitals including Johns Hopkins Hospital in Baltimore and Carlsbad Medical Center in New Mexico.

UVA Health officials said they plan to create a working group consisting of internal and external stakeholders to examine best practices at other institutions to identify areas of additional improvement and to propose solutions.

"As a medical center associated with a public university, our mission is to provide excellent care to anyone who needs it. In practice, this means we treat a comparatively higher number of patients who cannot pay," officials said. "At the same time, we are legally required, as a state agency, to collect money owed to the state. This can be hard to balance, but we can and will do better than we have in the past."

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