Washington Attorney General Bob Ferguson announced Monday that his office had reached an agreement with PeaceHealth in which the nonprofit will refund millions to those who qualified for and should have been informed of financial assistance.
The Vancouver, Washington-based system, which has five of its nine hospitals in its home state, has agreed to $13.4 million in direct and claims-based refunds and will pay an additional $2 million to the attorney general’s office for investigation costs and attorney fees, according to statements from both parties.
The arrangement comes after an investigation launched by the office in 2020, with which the system said it cooperated by providing “tens of thousands of documents and supplying evidence” on its financial assistance practices.
The attorney general said the investigation revealed instances where PeaceHealth “failed to screen patients for financial assistance eligibility prior to attempting to collect payment, failed to meaningfully disclose the availability of financial assistance and collected payment from patients who it knew were likely eligible for financial assistance without disclosing their eligibility.”
The office also noted that the system was using a tool to predict when patients could be eligible for assistance but billed them for care rather than notify them of their eligibility. However, the balances of patients who did not pay after being sent four bills were written off by the provider, Ferguson’s office said.
“I appreciate PeaceHealth’s cooperation in reaching this resolution that fully refunds Washingtonians for millions of dollars in medical payments, plus interest, without the need for litigation,” Ferguson said in the announcement. “Washington’s hospital financial assistance law helps working families avoid crushing medical debt by making help available to those who qualify.”
In its announcement, PeaceHealth asserted that it had done “everything required by law—and more—to inform its patients about the availability of financial assistance.”
The system’s general counsel, Tom Karnes, said it entered the agreement to avoid “expending time and resources on litigation” that could be used to “continue with our health mission and commitment to health justice.”
The repayments will be broken into two buckets. The first comprises $4.2 million of direct refunds, plus interest, in mailed checks to over 4,500 patients. These patients are estimated to have lower incomes and will receive an average payment of over $900.
Another $9.2 million will go to a second group of 11,000 patients who “were also likely eligible for help on their medical bills.” These patients will need to file a claim for their payment, plus interest, and will receive a letter from the attorney general’s office informing them of the process.
PeaceHealth said it has awarded $258 million in charity care to 66,338 patients since 2018. Its current policy provides free or discounted care for those at 400% of the federal poverty level or lower, it said, and supported a 2020 state law (also backed by Ferguson) that increased the requirement from 200% to the current 400%.
PeaceHealth said the $4.2 million payment represents less than 1.6% of the charity care it’s provided since 2018. The attorney general’s office also noted that none of the impacted patients have outstanding medical debt due to care received from PeaceHealth’s hospitals during the investigation window.
“PeaceHealth is committed to identifying every single person who can benefit from charity care,” Karnes said. “We welcome this opportunity to continue to lead the way in charity care, providing physical and financial healing to the most vulnerable in our communities.”
PeaceHealth’s Darrin Montalvo, chief financial and growth officer, added that the organization’s mission “is healing, not profit,” and that “our commitment to financial healing closely aligns with our mission.”
The Catholic system spans about 170 locations in Washington, Oregon and Alaska. It brought in $3.3 billion of total revenue in its 2022 fiscal year and provided $324.5 million in community benefits during that time, according to financial documents.
Washington’s charity care policies came into contention last month when the state’s hospital association filed a lawsuit petitioning against the state for how the Department of Health reinterpreted a long-standing charity care law to expand eligibility.
More broadly, nonprofit systems’ charity care practices and the tax breaks that accompany them have been in the spotlight of legislators and policymakers due to high-profile reports that certain organizations have been providing little relief while bringing numerous patients to court.