Providence hospital system to refund low-income patients who were entitled to free care

One of the country’s largest nonprofit hospital chains, Providence, will refund payments made by more than 700 low-income patients who were wrongly charged for medical care that should have been free.

The patients qualified for Medicaid, the government health insurance for people with low incomes, but were nonetheless billed for health care and then referred to debt-collection firms. The practice was the result of a program, known as Rev-Up, that was designed to maximize revenues by wringing as much money as possible from patients — even those whose incomes were so low they should never have been billed at all.

Providence is Sonoma County’s dominant hospital operator, operating Santa Rosa Memorial, Petaluma Valley and Healdsburg District hospitals. Providence also operates Queen of the Valley Medical Center in Napa.

(Sonoma County patients criticize Providence’s aggressive collection of medical bills)

Rev-Up, which Providence created with the help of the consulting firm McKinsey & Co., was the subject of a New York Times investigation last month.

Providence began reaching out to the patients in late September, weeks after the Times asked the hospital system to comment on its billing and debt-collection practices, according to Melissa Tizon, a spokesperson for Providence. She said the hospital system, which is not disclosing the total amount of money it is refunding, had been planning to issue the refunds for months.

In February, Bob Ferguson, the attorney general of Washington state, sued Providence, accusing it of violating state law in part by deploying debt collectors to go after more than 55,000 patient accounts. Providence is fighting the lawsuit.

Under state law in Washington, where Providence is based, hospitals must provide free care to patients whose income falls below 300% of the federal poverty level, or about $83,250 in annual income for a family of four. The group typically includes anyone who qualifies for Medicaid, and, until 2019, Providence waived all medical costs for people covered by the program.

That year, Providence — which operates 51 hospitals and more than 900 clinics across the country — changed its practices and began sending Medicaid patients to debt collectors, the Times reported last month.

Tizon blamed an “unintended error” that occurred when Providence was updating how it identified those eligible for charity care, “causing some Medicaid patients to receive collection notices.”

Tizon said Providence was reaching out to about 760 patients who qualified for Medicaid but were wrongly billed.