Minnesota settlement on medical debt saves Hutchinson Health patients $184,000

About $184,000 in medical debt has been forgiven thus far under an October legal settlement over bill collection practices at Hutchinson Health.

Located about 60 miles west of the Twin Cities, the hospital in 2019 adopted a new payment plan for medical debts as part of its transition to a new electronic health record system. State Attorney General Keith Ellison argued the switch wasn't fair to patients, however, since many faced ballooning payments as a result.

The settlement filed in Ramsey County District Court restored more favorable billing terms for some patients and created an ongoing chance for others to obtain discounts. In a news release this month, Ellison tallied the medical debt forgiven thus far and highlighted a June 30 deadline for certain patients to obtain discounts on medical debts incurred before November 2019.

"The process of working with the Attorney General and his team was helpful in showing where we could have improved this transition process," said HealthPartners, the Bloomington-based nonprofit that runs Hutchinson Health, in a statement. "We encourage individuals with questions about their bills or payment arrangements to contact us directly."

In a settlement agreement filed with the court last year, Hutchinson Health said it neither admits nor denies the allegations contained in the filing, which is called an "assurance of discontinuance."

Hutchinson Health agreed in 2017 to merge into HealthPartners, which operates eight hospitals and is one of Minnesota's largest nonprofit health insurance companies.

Like other nonprofits across the state, Hutchinson is subject to a broad agreement between hospitals and the attorney general over fair debt-collection practices. It calls for hospitals to develop payment plans that take into account patients' ability to cover their health care costs.

With the new system, patients had less time to pay debts up to $3,000. Minimum monthly payments of $50 were no longer allowed.

After sending a letter to patients describing the change, hospital representatives called "to secure their purported agreement to the terms of the new payment plan policy" as of November 2019, according to the settlement agreement.

"At that time, the original payment plans were scheduled to be deactivated regardless of whether the patients 'agreed' to the terms of the new payment plan policy," the settlement states.

"Hutchinson representatives further told patients they needed to make the new minimum monthly payment to keep their accounts from being sent to collections. When patients indicated they were unable to afford the increased monthly costs, Hutchinson representatives sometimes asked if they could secure a loan or use their retirement savings to satisfy the debt."

Most patients who agreed to the terms saw an increase in their required monthly payment, according to the court filing. Of those who did not agree to the new plan, roughly one-third made either no or inconsistent payments — even though they all made consistent payments under the old plan.

The settlement required Hutchinson Health to provide affected patients with the lowest available monthly payment they would have been allowed under the old policy, Ellison said in a statement. He added that, under the settlement agreement, certain patients with medical debt incurred before Nov. 1, 2019, can receive a 40% discount on outstanding medical bills if the debt is fully paid by the end of June.

Patients with questions about medical debt at Hutchinson Hospital can call 320-484-4493.