Following pushback, Allina Health to 'formally transition' from controversial billing policy

Updated Aug. 23, 4:00 p.m.

In the wake of intense public scrutiny, Allina Health said it is ending a policy that restricted certain outpatient care to patients who had extensive unpaid medical bills.

"Our policy that interrupted the scheduling of non-emergency, outpatient clinic care for patients who do not engage after significant outreach to support the resolution of their medical debt has been extensively reviewed," the system said in a statement to press. "We have determined there are opportunities to engage our clinical teams and technology differently to provide financial assistance resources for patients who need this support. We will formally transition away from our policy that interrupted the scheduling of non-emergency, outpatient clinic care."

The nonprofit disclosed the face turn just days after Minnesota Attorney General Keith Ellison said his office was investigating the health system (see below), and more than two months after a New York Times report shed light on the policy.

Allina Health said earlier this week that it had postponed the controversial policy, which canceled outpatient appointments for patients with at least $4,500 in unpaid medical debt, as of June 9. 

Aug. 21, 2023, 5:00 p.m.

The Minnesota attorney general's office is investigating Allina Health over reports that the provider restricted care to patients with certain amounts of unpaid medical bills.

The New York Times reported in June that Minneapolis-based Allina Health had an explicit policy to cancel outpatient appointments for patients with at least $4,500 in unpaid medical debt. The publication based its investigation on internal documents and interviews with doctors, nurses and patients. In response, Allina told the NYT patients are notified repeatedly of their medical debt, along with details on how to apply for financial assistance, before they surpass the threshold.

A week after the NYT piece was published, the health system announced it was placing the controversial billing practices on hold as it reevaluates its approach.

“I continue to be concerned about reports of Allina denying needed non-emergency medical care solely on the basis of medical debt,” Minnesota Attorney General Keith Ellison said in a statement.

All 128 nonprofit hospitals in Minnesota are bound by the Hospital Agreement, which provides protections to state residents who receive healthcare services at Minnesota’s hospitals by "protecting patients from abusive, harassing, and deceptive practices when hospitals seek to collect medical debt," according to the attorney general's office.

The agreement, which was updated in 2022, further prohibits unfair practices in billing and collections and mandates that Minnesota hospitals provide discounts on healthcare services for certain patients and reasonable payment plan options to all patients.   

The health system continues to engage with the attorney general’s office about its compliance with the Minnesota Hospital Agreement and the comprehensive support it offers patients with financial needs, an Allina Health spokesperson said in a statement.

"Our policy that interrupted the scheduling of non-emergency, outpatient clinic care remains on pause since June 9. We continue to conduct research and analysis as well as outreach to patients and remain committed to reducing barriers to care," the spokesperson said.

In Minnesota’s most recent legislative session, the attorney general’s office supported a new law that will require hospitals to screen certain patients for charity care eligibility starting Nov. 1, 2023.

"Denying patients needed care on the basis of medical debt harms every Minnesotan, whether or not they are Allina patients. My office has heard from a good number of Allina patients who have shared their own upsetting stories of being denied care for this reason. I continue to encourage people who have experienced or are familiar with these practices to keep contacting my office so we can determine the scope of the problem and whether any laws or agreements have been broken," Ellison said in the statement.

Allina runs more than 100 hospitals and clinics in the Midwest and brings in $4 billion in revenue annually. In 2020, the health system spent less than half of 1% of its expenses on charity care, whereas the national average is about 2%, according to an analysis of hospital financial filings published in Health Affairs.

According to the attorney general's office, Allina's termination of care policy has reportedly been enforced upon patients who had relatively small amounts of debt and, in some cases, patients with chronic conditions who relied on continuous care to manage their conditions.

Ellison's office also has other hospitals in its crosshairs as it scrutinizes billing and collection practices.

In December 2022, the attorney general’s office announced an investigation into Mayo Clinic over allegations reported in the Rochester Post-Bulletin that Mayo had sued patients who qualified for charity care over their medical debt. The investigation into Mayo Clinic remains ongoing. 

Three years ago, the attorney general's office reached a settlement with Hutchinson Health Hospital that required the hospital to restore more favorable payment plan terms that it had unilaterally terminated for many of its patients, which had the effect of increasing patients’ monthly medical bills beyond what they agreed to pay and led to ballooning payments and defaults. By June 2021, that settlement had resulted in $184,000 in medical-debt forgiveness for affected patients, according to state officials.

Ellison has scheduled public meetings over medical billing issues in the coming weeks. The office also is collecting information from consumers about medical billing issues through an online form.

Nonprofit hospitals get tax breaks in exchange for providing care to the poor but many of these hospitals face scrutiny over charity care spending and billing tactics.

Earlier this month, a bipartisan group of senators sent requests to federal tax agencies and regulators for information on what currently passes muster as a "community benefit" and how they ensure nonprofits' collection practices aren't driving poor patients deeper into debt.