Minnesota hospitals barred from debt collection until screening patients for charity care

Minnesota hospitals can no longer pursue collection activities on overdue bills until they screen patients for charity care that could reduce or eliminate their debts.

The requirement took effect Nov. 1 as a result of state legislation. Lawmakers were prompted to act this year by reports that hospitals were suing patients for debts that were eligible for discounts or write-offs.

Had Yolanda Pierson known she was eligible for assistance, she said she could have paid off mounting medical debts and avoided collection efforts by Mayo Clinic — which at one point cut off her family's access for four months to nonemergency care.

"Nobody ever told us of any type of benefits or anything we could qualify for," said Pierson, a Blaine mother who sought treatment from Mayo in Rochester six years ago for her son's debilitating eye condition. "We had insurance, so I guess they just didn't think to talk to us about it."

The difference between a patient supported by charity care and one saddled with debts has sometimes been random, even though hospitals have clear income and clinical guidelines to determine which patients qualify for help. Some patients simply didn't know to ask.

Sen. Liz Boldon, DFL-Rochester, said she authored the screening legislation to give everyone a chance to find out if they qualify for help. Minnesota has a low adult uninsured rate under 5% but a substantial underinsured population that can't afford high copays and deductibles of health plans.

Boldon, a nurse, credited an investigation by the Rochester Post-Bulletin for identifying patients who could have received charity care but instead were sued by Mayo for unpaid bills.

"This is a significant problem for Minnesota in many ways, and it has far-reaching effects," she said. "When families have exorbitant medical debts, that is money they are not spending on groceries or even on future health care. I talk to a lot of patients who are avoiding care because they are worried about their costs."

Hospitals under the new requirements also can't offer loans or repayment plans until they have determined whether patients are eligible for charity care or discounts.

Advocates believe the problem of medical debt is worse than appears in Minnesota. A widely cited national report estimates that 2% of Minnesota adults have medical debts in collections, compared to 13% of adults nationally.

However, the report is based on debts sent to collection agencies, and Minnesota hospitals have agreed in a deal with the state attorney general not to file debts with such agencies. The 2% figure mostly accounts for outpatient and other sources of medical care that aren't subject to that hospital agreement.

Mayo in a statement said that its charity care policies comply with the new Minnesota requirements and that it "proactively offers financial counseling" to patients.

"Mayo Clinic is committed to providing compassionate, world-class care to each person … including our patients faced with difficult financial circumstances," the statement said.

Minnesota hospitals reported $162 million in charity care in 2021 and $493 million in unrecoverable debts. Both present challenges for hospitals that have increasingly reported financial losses during and after the COVID-19 pandemic.

Pierson has workplace health insurance but said she still faced $17,000 in out-of-pocket costs over three years after her son was diagnosed with Coats' disease.

The condition has severely restricted vision in the now 11-year-old boy's right eye, but treatment stabilized it. Pierson said he is at risk for more problems, though.

She testified in favor of the legislation this spring, hopeful that it will help others and maybe her family if future medical bills emerge.

"I would have definitely applied for (charity care)," she said, "especially because there were times where I couldn't work because we had to be down at Mayo. … It was a challenging time for our family."