Oregon consumer protection probe adds to Providence's charity care scrutiny

Updated Oct. 17 at 4:15 p.m.

The Oregon Department of Justice's consumer protection arm is reportedly investigating Providence's financial and billing practices—more bad news for the major health system already under scrutiny from Washington's attorney general and a U.S. senator.

Citing a department spokesperson, the Oregonian reported that the probe is a civil investigation but declined to share its specific subject or scope.

The news comes roughly 10 months after Washington Attorney General Bob Ferguson accused the organization of failing to inform thousands of patients of charity care discounts they qualified for and instead collecting on their debt. 

More recently, a New York Times investigation spurred lawmakers including Senator Patty Murray, D-Washington to question the system about its "disturbing practices" charging patients who were eligible for free care. 

Renton, Washington-based Providence said earlier this month that it has begun reaching out to hundreds of those improperly charged to coordinate refunds. 

President and CEO Rod Hochman, M.D., has since penned a public response to Murray's request for information that described amendments to its collections process and "an error" that led charity-qualifying patients to be charged.

The response also included a breakdown of Providence's policies for deciding when to refer a patient, determining a payment plan, the application process for patients to receive financial assistance, how many patients qualified for charity care since 2017 and how much of those patients' care was provided or charged for during the same period.

The executive avoided directly answering a question regarding how much the system paid McKinsey & Company for its consulting and production of the controversial Rev Up program that was criticized in the New York Times report and has been phased out.

Providence plans to refund hundreds of poor patients wrongly charged for charity care

Providence plans to refund payments to hundreds of low-income patients wrongly charged due to what the health system described as an “unintended error,” according to statements given to The New York Times.

The 51-hospital nonprofit system’s collection practices have been under scrutiny since February from Washington Attorney General Bob Ferguson, who accused the organization of failing to inform tens of thousands of patients about the availability of charity care discounts before collecting on their debt. Hospitals are required by state law to provide free care to anyone making under 300% of the federal poverty level.

In late September, the NYT published an investigative report that found patients in California and Oregon who qualified for free care had also been charged. It also called attention to an internal training program developed for Providence by consulting firm McKinsey & Company in 2018 called Rev-Up that instructed administrative staff to pressure patients about their payment plans.

The investigation also prompted pushback from lawmakers including Senator Patty Murray, D-Washington, who penned a letter to the system seeking more information on the “disturbing practices” alleged in the report.

In statements to the NYT and a public response to the investigation published on Providence’s website, the organization said it recognized that “the tone of the training materials developed by McKinsey was not consistent with our values. Over time, we modified these materials to be in our voice and to ensure we are communicating with each patient with compassion and respect.”

The system also acknowledged an error during last year’s shift from a manual to an automatic billing process “that caused some Medicaid patients to be sent to collections after 120 days,” which the system said was amended as of December 2021. Providence also said it had reviewed its third-party collection agency practices and instructed its two partners not to engage in aggressive tactics.

More recently, Providence has begun reaching out to about 760 Medicaid-qualifying patients who were wrongly charged to issue refunds, a representative told the NYT in a follow-up published Tuesday.

The system blamed an error that occurred while updating its process to identify patients eligible for charity care and told the NYT it had been planning to issue the refunds for months. Providence declined to say how much total money it would refund.