Minnesota would stop collecting medical debt for private hospitals, under proposals at the Capitol this session.
The state has used its revenue recapture program to intercept certain payments to residents, including state income tax or property tax refunds, and divert the dollars to medical bills. A Star Tribune report found the state has collected tens of millions in recent years to help large private nonprofit hospitals — a role some legislators say it should stop playing.
"The idea of HealthPartners using the state as a collection agency for people of modest and low means just seems like a totally wrong thing," said Sen. Jim Abeler, R-Anoka, who is sponsoring one of the measures that would end the revenue recapture process for certain hospitals.
The Department of Revenue's recapture program was expanded more than two decades ago to help hospitals that were facing a financial burden from providing care to uninsured and underinsured patients. However, people with income below certain poverty levels would not have their tax refunds given to a hospital.
During a committee hearing earlier this month, James McClean with Regions Hospital and HealthPartners outlined a list of steps they take before using revenue recapture, from offering financial assistance while the patient is in the hospital to mailing at least four statements after someone is discharged and repeatedly calling to try to set up a payment plan. The recapture program also includes an appeals process, he said.
"We believe we have put many safeguards in place to ensure revenue recapture is used appropriately and will continue to work to address those concerns," McClean said. He added that losing the recapture option without another mechanism to address uncompensated care would be a major challenge.
But Rep. Liz Reyer, DFL-Eagan, said she read about the use of tax refunds "with a certain amount of disbelief and a certain amount of outrage."
"You put off getting your car fixed, you put off getting a roof, you put your kids' school clothes on credit cards and you figure, 'OK, I'm going to have that tax return.' And then you have medical debt take it away. I think it's fundamentally wrong," Reyer said. "It's also a misuse of the state's power."
Reyer has proposed two bills in the House to end the practice. She hopes one of them will be included in the House Tax Committee's broad budget and policy package and will be passed this session.
One bill would end the assistance only to private nonprofit hospitals that lease a building from a county or city. Reyer said that includes facilities in the HealthPartners, Essentia Health and CentraCare systems. The other proposal would also stop the state from seizing dollars to help ambulance service providers.
The state program collected $21.4 million for Regions Hospital, which HealthPartners owns, between 2014 and 2019, a Star Tribune analysis of Revenue Department data found. Ambulance services also got millions during that time frame.
Ambulance services might need more support than hospitals as they make the transition away from using the revenue recapture program, Reyer said, but legislators are still working through the details.
Allina Health said in a statement Wednesday that its emergency medical services provide care for patients, regardless of their ability to pay. "The revenue recapture program is used as a last resort after working extensively with our patients to help them overcome any financial barriers they are experiencing," the health system said.
Meanwhile, organizations such as Health Policy Advocates are pushing legislators to make the change. John Kolstad with the group said Minnesotans are having their tax refunds taken without getting a chance to argue their case in court and have a judge consider the full circumstances.
Sen. Melissa Wiklund, DFL-Bloomington, said hospitals and ambulance services do need to collect debts. But they can use payment plans and other methods that do not destabilize someone's finances, said Wiklund, who is sponsoring one of the bills and pushing for a hearing in the Tax Committee. "They have other ways to develop collection plans with people that don't lead to this same abrupt recapture," she said.
Former staff writer Marissa Evans contributed to this report.
Jessie Van Berkel • 651-925-5044