Predatory Medical Billing In Texas

Report on Predatory Medical Billing In Texas Names 28 Hospitals And A Dallas Law Firm

By SAM BAKER, KERA News, JUN 1, 2020.

The May 27 report from a healthcare research and policy team at Johns Hopkins University found 28 hospitals (22 in the state) have sued patients in Texas for unpaid hospital bills since 2018. Some saw their personal accounts and property garnished. The Dallas-based DeLoney Law Group handled 83% of the suits.

The report studied 62 Texas counties between January 2018 and February 2020. Most hospitals in those areas did not sue patients to collect unpaid medical debt.

The hospitals that did sue (including Lake Granbury Medical Center and Medical City Weatherford, both in North Texas) recovered a combined total of nearly $18 million, but that was less than 1% (0.15% on average) of the hospitals’ total revenue.

“There’s not a lot of money in it,” said report co-author Dr. Marty Makary, a surgeon and a professor of health policy at the Johns Hopkins School of Public Health. He’s also the author of The Price We Pay: What Broke American Health Care — And How to Fix It.

What The Report Said About Texas Overall

The news by and large in Texas was good — 93% of Texas hospitals have never sued a single patient. So there are many role model hospitals in terms of going down a certain path to try to get collections, but not actually suing low income patients to try to put a lien on their home or garnish a bank account. Which is actually the extreme form of what we call predatory billing in medicine, and that occurred at about 7% of Texas hospitals.

The Hospitals That Chose To Sue

Sometimes it was a for-profit hospitals. Some are nonprofit, which pay no taxes on hundreds of millions of dollars in revenue because they have a criteria that they claim they have met with the IRS to be tax exempt because of community benefit. We’ve argued on the advocacy side of our work that you can’t have it both ways. You can’t choose not to pay taxes and then argue you have to shake poor people down in court to garnish paychecks or put liens on their homes. It’s one or the other.

Dallas-Based DeLoney Law Group That Handled The Suits

So they go to hospitals and say, ‘Hey, we’re gonna “help” collect your bad debt.’ Sounds like a good cause — but actually what they’re doing is terrorizing low income folks in court. The people are getting served papers at home, don’t understand these court documents that they get. Some of these folks are not savvy with the legal process. They don’t know their rights.

The DeLoney Law Group did not respond to KERA’s request for a comment. Chris DeLoney told the Texas Tribune: “We don’t comment on any matters that may relate to any of our clients.”

Hospital CEOs

I often call and tell them what our research discovered. Many of the CEOs and senior executives have no idea their own hospital is suing patients in court, using court orders to get routing numbers and account numbers from individual bank accounts of patients that can’t afford their bills, and to pull the money right out of their bank account or put liens on their car. So I think if we appeal to the best in people, we realized that we all went into healthcare to help people and this sort of represents the ultimate violation of the doctor-patient trust. Most hospitals have stopped when we brought this to their attention and we’re doing this nationwide and things are changing.

Don’t Hospitals Have The Right To Collect Unpaid Debt?

The issue is how far do you go? Number one, if you are a nonprofit institution that claims community benefit as a way to avoid millions of dollars in taxes, that’s point number one. Point number two, the patients are begging for a price. Sometimes they get the bill and they’re just begging for help to figure out if they have to pay or if this is supposed to go to insurance. People are lost in this blame game between collections and the law firm, the insurance company and the hospital billing department, and people are frustrated.

The interview was edited for clarity.


Who are responsible for outrageous medical bills? Hint: It’s not doctors.

Over the last few years, there has been a slew of articles about patients receiving surprise bills after ER visits. One woman was charged $5,751 for an ice pack and a bandage. An infant was charged $937 for an antibiotic ointment. Who sends bills like that? Is it the ER doctors? No. It’s large corporations.

ER docs want to help you regardless of your insurance.

In fact, as an ER doc, I usually have no idea if my patients are even insured when they roll in. The Emergency Medical Treatment and Labor Act (EMTALA) is a federal law that requires us to treat everyone who walks in the door regardless of their ability to pay. We proudly consider ourselves the safety net of the community. The Department of Health and Human Services estimates that ER docs spend about 55 percent of their time providing uncompensated care. This is the most of any medical specialty. We take our physician oath seriously.

But many of us work for large corporations.

The majority of ER docs work for one of three types of employers: 1) small private physician groups; 2) hospital systems; or, 3) contract management groups or CMGs. CMGs are essentially hospital staffing companies that function as large corporations. They employ ER docs and put them to work in hospitals with which they hold staffing contracts. By promising to streamline administrative tasks (such as physician credentialing, insurance billing, and corporate taxes), CMGs have taken over many smaller physician groups and hospital systems. They now hold staffing contracts with hundreds of hospitals around the country.

And these corporations want to generate profits.

Some estimate that half of the nation’s emergency departments are currently staffed by CMGs. Their priority is not to provide quality patient care. It is to generate profit. Some CMGs were traded on the New York Stock Exchange. Others have private equity firms investing in them. One CMG even sues patients who cannot pay. A study done by economists at Yale delved further into how CMGs use their power to exploit patients for profit.

CMGs now staff half of the nation’s emergency departments. Their priority is not to provide quality patient care. It is to generate profit.
A CMG can refuse to participate in insurance networks, which work on behalf of patients to negotiate discounted rates for medical care. These are called in-network rates. It will instead charge patients exorbitant out-of-network rates. Compared to the prior physician group that staffed a hospital, it can raise charges by a whopping 96 percent. These predatory billing tactics are directly responsible for the exorbitant ER bills being sent to patients.

These corporations may also be illegal.

Believe it or not, it gets worse. These corporations are likely violating both federal laws that prohibit physician fee-splitting and state laws that prohibit the corporate practice of medicine. Unfortunately, there is no public agency in place to enforce these laws. There was a case in Texas where the court concluded that the existence of a CMG was in violation of the state’s Medical Practice Act, but that case is from over 30 years ago.

We are struggling to fight for our patients.

Physicians are distraught over this situation, but over 60 percent of us are afraid to speak up out of fear that we will be terminated without cause. Some of us want to help fix the billing process, but CMGs insist on engaging in “closed-book” billing. That means they will not allow physicians to review what a patient is being billed. Consequently, physicians are turning to advocacy organizations for help in this fight.

And the integrity of our advocacy organizations is questionable.

The president one such organization is also the vice president of one of the largest CMGs in the nation. It seems that corporate interests have infiltrated even our own advocacy organizations.

Congress is finally taking notice.

Given all of this, it is not surprising that CMGs have gained the attention of Congress. Recently, Congress announced it would look into their role in surprise billing. Shortly after this announcement, a CMG’s CEO resigned. Maybe there is hope after all.

Ashima Vohra is an emergency medicine resident.

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