The Mayo Clinic has agreed to a deal with Minnesota’s attorney general to settle claims that the nonprofit system had sued to collect medical debt from patients who may have qualified for charity care.
Announced Friday, the settlement deal does not include financial penalties nor a restitution payment. Rather, it outlines concrete income cutoffs for Mayo’s charity care policies, requires expanded screening for charity eligibility and grants some “presumptive eligibility” without the need for a completed application.
It also prohibits lawsuits for debt collection “other than in exceptional circumstances and requires approval of Mayo’s [chief financial officer] before filing any lawsuit," according to the attorney general’s office.
"In exchange for their tax exemption, nonprofit hospitals are supposed to give back to their communities by providing free or reduced-cost health care to folks with low incomes," Attorney General Keith Ellison said in a release. “My office investigated Mayo Clinic and discovered that they were actively dissuading certain patients from seeking charity care. While this is disappointing, I am heartened by the substantial improvements Mayo Clinic has made to their charity care program, and I am grateful for their cooperation with our investigation.”
The settlement (PDF) does not constitute an admission of Minnesota’s nonprofit hospital charity care statute, which the attorney general is authorized to enforce. In a statement given to the Star Tribune, a representative of Mayo said the organization “contests many of the findings reflected in the report” on the office’s investigation released alongside the settlement (PDF).
The attorney general had announced the launch of an investigation in December 2022 in response to allegations reported at the time in a series of Rochester Post-Bulletin articles.
That investigation found three internal documents “that instructed billing department employees to steer certain patients away from Financial Assistance in an effort to collect payment,” according to the settlement agreement. Two of those procedure documents have been voluntarily discontinued, and the third modified “to ensure that patients receive full information about the availability of Financial Assistance as soon as a patient indicates they may be eligible.”
The office’s investigation also found “some” cases in which patients who did not appropriately complete an application for financial assistance were not sent a follow-up for missing information, leading to missed assistance for some who may have been eligible. It also reviewed three cases in which the office said Mayo sued patients who “may have qualified for Financial Assistance based on their household size and gross income.”
Among the terms of the settlement is an agreement that Mayo maintain a charity care policy of free care to those with incomes up to 200% of the federal poverty guidelines and discounts of 40% to 50% for those with incomes up to 400% of the federal poverty guidelines. The system has "material representations" that it is working to improve financial assistance availability in response to the investigation, the office said.
Rochester, Minnesota-based Mayo reported $19.8 billion of total revenues and $1.3 billion in net operating income in 2024.
“The settlement I have reached with Mayo Clinic ensures their improved charity care policies and procedures will remain in place,” Ellison said. “Our investigation also revealed shortcomings in the charity care system generally, and I hope lawmakers will consider my office’s recommendations to address those shortcomings and help more Minnesotans get the care they need to be well.”
These recommendations for lawmakers, as outlined in the accompanying report, include expanding presumptive eligibility for charity care—or a determination that an individual qualifies without the need for an application. The office also called for the provision of a consistent income eligibility floor for charity care across the state’s hospitals and a “uniform and simple” patient application for charity care.
Nonprofit hospitals and health systems in the U.S. collectively enjoy tens of billions in annual tax benefits in exchange for community benefits such as charity care they are expected to provide. Recent years have seen increased scrutiny from lawmakers and others over whether they deserve the breaks, particularly amid media reports that some nonprofit systems have been lax in their eligibility policies or aggressively pursuing debts.
Providence, for instance, has found itself in the crosshairs of multiple states’ attorneys general over its alleged charity care billing practices. Atrium Health led all other North Carolina nonprofits in patient lawsuits before halting the practice with its 2022 merger to become Advocate Health—which has since announced it would be striking all judgment liens on patients’ homes and working to eliminate other outstanding debts for unpaid medical care as part of its updated charity care policy.