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When collection efforts fail, some hospitals seize patients' tax refunds

16 Jun 2019 8:39 AM | AIMHI Admin (Administrator)

Modern Healthcare source article | Comments courtesy of Matt Zavadsky

Interesting approach for providers in states that have a state income tax. 

Wonder if this option could be used for federal income tax refunds – that would help everyone, including providers in states without a state income tax.

Note Allina EMS’ use of the program to collect ambulance bills from patients who don’t pay, but do not quality for charity care.

Allina Health, which reported revenue of $4.3 billion in 2018, uses a provision of the Minnesota revenue recapture law allowing licensed ambulance services, public or private, to seize refunds for unpaid bills. It’s garnered nearly $5.7 million from more than 15,000 claims over the past five years.

Mark Anderson, director of finance for Allina Health Emergency Medical Services, acknowledged that the statutory provision originally was written to help struggling volunteer ambulance services in rural parts of the state. Still, Allina has used the system in its Minneapolis-St. Paul service area.

Allina only seeks a patient’s tax refund after repeated letters and at least one phone call to the patient to try to work out a payment arrangement, he said. It first makes sure the person doesn’t qualify for charity care or financial assistance and has the ability to pay. Anderson wasn’t sure if the letters specifically warn people that their tax refunds may be seized.

“The typical ambulance bill is about $2,000, and taking people to court isn’t very cost-effective,” he said. “No one wants to create hardships for anyone, but some individuals just don’t cooperate.”


When collection efforts fail, some hospitals seize patients' tax refunds

June 15, 2019

Duluth, Minn.-based Essentia Health collects only about 20% of the $125 million its patients owe for self-paid services, deductibles and cost-sharing.

To boost those collections, the 11-hospital, not-for-profit system takes advantage of a Minnesota law allowing it to seize state tax refunds from people who have unpaid bills. Under the law, five of its rural hospitals can use the “revenue recapture” program since they lease facilities from state or local governments.

In 2018, the tax refunds it intercepted totaled more than $500,000, a small percentage of Essentia’s nearly $4 billion in total patient revenue.

“We get excited about anything we recover,” said Melanie Wilson, Essentia’s vice president of revenue services. “We invest a lot of money to serve those communities. This is just a small way to balance our commitment with their commitment back to us.”

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