Providence begins issuing refunds to Medicaid hospital patients wrongly billed

Providence, one of the country’s largest nonprofit hospital operators, has begun refunding medical payments made by hundreds of low-income patients who should have received the care for free.

Providence said Wednesday that 760 patients across seven states where the system operates would receive refunds. The growing Providence system operates 52 hospitals, including Santa Rosa Memorial, Petaluma Valley and Healdsburg hospitals, as well as Queen of the Valley Hospital in Napa.

Melissa Tizon, a national Providence spokeswoman, said she could not provide a figure for the number of patients in Sonoma County who are expected to receive refunds.

“The only number I can give you is 760 across our seven states,” Tizon said, adding that Providence began issuing the refunds in September.

News of the refunds comes after the New York Times published an investigation Sept. 24 detailing how the nonprofit system used aggressive tactics to induce payment even from low-income patients who qualified for free care under government health programs.

The New York Times report found Providence paid millions of dollars to a consulting firm to come up with a strategy to maximize collections from patients. Some patients who qualified for free care had their unpaid bills sent to collections agencies, the report said.

Tizon rejected the suggestion that the refunds were a response to the investigation. In an email, Tizon also rejected that Providence had intentionally implemented policies designed to “enrich itself by taking advantage of the poor and vulnerable.”

Tizon pointed out that in 2021, Providence provided $1.9 billion in community benefit, which includes charity care for 266,000 individuals, as well as $1.2 billion in uncompensated Medicaid costs.

In an interview Wednesday, Tizon said refunds are being provided to Medicaid patients who were subject to an error in the system’s billing process. She said the error resulted after Providence switched from a manual process to an automated one.

The 760 patients are those who made payments after being sent to collections incorrectly. They are being refunded payments with interest and Providence said it’s working with collection agencies to reverse any negative credit impacts as a result of the “error.”

“There was an error that sent Medicaid patients to collections (after 120 days) and that is not consistent with our policy,” she said.

She said the error was fixed in December 2021 and that Providence had been planning to issue refunds well before the New York Times investigation, she said.

Following the New York Times story in late September, The Press Democrat asked local residents if they’ve been subject to aggressive billing tactics. Some patients with Medi-Cal, the state’s version of Medicaid, described being hounded for payment, while others who had insurance were asked to prepay their medical bill prior to a medical procedure.

You can reach Staff Writer Martin Espinoza at 707-521-5213 or martin.espinoza@pressdemocrat.com. On Twitter @pressreno.