Minnesota Attorney General says, “Hold on, Mayo!”
A recent investigation of the Mayo Clinic by the state AG found that the hospital put up barriers to financial assistance.
Nonprofit hospitals are required to offer free or discounted care to patients who are uninsured or can’t afford to pay, known as financial assistance or “charity care.” However, not all hospitals are making the same efforts to make free care available to those who need it. Our research has shown that hospitals can have very different income thresholds for free care, even those in the same city. Sometimes hospital policies can include other restrictions on who is eligible for free care based on where patients live, how much they own in assets, and the type of care they receive.
In other cases, hospitals may have a generous policy for free care eligibility, but the policy isn’t well-implemented. For example, the New York Times reported in 2022 that Providence Health System had been training their staff to ask patients to pay again and again, rather than inform them that financial assistance was available. This led many patients to be billed and sent to collections when they should have received a discount.
Mayo Clinic under investigation
It appears that the Mayo Clinic in Minnesota was using a similar strategy as Providence to avoid paying more in free care, according to a recent investigation by the state Attorney General. The AG’s office began investigating Mayo in 2022, after the Minnesota Post-Bulletin reported that the clinic was suing patients who should have qualified for free care.
In the AG’s investigation, they found that Mayo Clinic’s billing department employees were trained to ask for payment before talking about financial assistance, including asking patients “if they are able to obtain a bank loan, borrow from a family member, or have a fundraiser” to pay for care.
Mayo Clinic employees were trained to ask patients to set up a fundraiser to pay for their care, before telling them about financial assistance.
Mayo’s application for financial assistance was also too burdensome, according to the investigation. When patients didn’t finish the application, the hospital often billed them, rather than trying to follow up and help them complete the process. In one case, the patient had filled out everything but a signature; the hospital denied their application and sent them a bill.
The investigation also found cases of the clinic suing patients for amounts under $1,000 and denying or delaying follow-up appointments for patients with outstanding medical debt.
Is Mayo giving back enough?
Previous research has found that the Mayo Clinic spends relatively little in financial assistance. The Mayo Clinic system contributed 0.34% of its functional expenses to charity care in 2021, much less than the national average of 2.3%. Including other community contributions like community health programs and donations to local charities, the Mayo Clinic still spent $165 million less than they received in tax breaks in 2021, according to Lown Institute research. The Mayo Clinic’s financial assistance and billing practices may explain why their spending is so much lower than their peers.
Improving financial assistance policies
Here’s the good news: the Mayo Clinic is changing its policies, per a settlement with the AG’s office. The settlement requires Mayo to screen patients for financial assistance eligibility and apply discounts automatically, use a simplified financial assistance application form, and only file medical debt lawsuits in “exceptional circumstances.” These are welcome changes that will likely improve access to free care for the Mayo Clinic patients who need it.
What’s not clear is when in the process the hospital must screen patients for financial assistance. It appears that the Mayo Clinic has already adopted a policy to screen patient accounts for assistance, but only after medical debt has incurred. Last year, the Mayo Clinic touted their updated presumptive eligibility policy to evaluate patient records that have debt, check to see if they are eligible for assistance, and write off the existing debt if patients shouldn’t have been billed.
It’s good that the hospital is trying to erase debt, but this screening should happen before patients are billed. Otherwise, low-income patients might be spending valuable resources or accruing debt in other ways (such as on a credit card) but may never get the financial assistance they are due. Hopefully, this new AG agreement will expand the Mayo Clinic’s screening requirement earlier in the process, to prevent medical debt rather than reduce it after the fact. Additionally, state laws implemented in recent years provide additional debt protections by requiring hospitals to screen patients for free care eligibility before sending the account to collections.
The AG’s office recommended that Minnesota lawmakers consider additional medical debt protections for all hospitals in the state, including: A standard eligibility “floor” for hospital financial assistance policies, a uniform simple financial assistance application, and patient screening processes for financial assistance eligibility. These policies, which have been implemented in other states successfully, would go a long way toward ensuring that hospitals are doing what they can to prevent medical debt in their communities.