Providence, a healthcare organization, has agreed to reimburse around $21 million to low-income individuals in Washington who have paid medical bills. Additionally, the organization has decided to eliminate $137 million in unpaid debts for many others who were subjected to forceful collection methods after being overcharged.

On Thursday, an announcement was made shortly before the trial between Attorney General Bob Ferguson and Providence Health and Services, which runs 14 hospitals in Washington under the names Providence, Swedish, and Kadlec.

The state claimed that the medical system’s actions were in violation of Washington’s charity care law, which is known for being one of the most robust in the nation. This law mandates that hospitals inform patients about the option of financial assistance and assess their eligibility for discounts before attempting to collect payment.

According to Ferguson, Providence has instructed its employees to not accept patients’ claims of being unable to pay their bills.

“During a press conference, Ferguson stated that hospitals, particularly nonprofits like Providence, receive tax exemptions and other advantages under the condition that they contribute to providing accessible and affordable healthcare for all. However, if they fail to do so, they are exploiting the system for their own gain.”

According to the office of Ferguson, the law has been extended to include about half of the population, allowing them to receive free or discounted medical treatment at state hospitals. This applies to expenses such as co-pays and deductibles.

Individuals or families earning less than four times the federal poverty level may be eligible for aid. For instance, a family of four making $120,000 annually may receive a 50% reduction in costs at certain hospitals.

Providence announced on their website that they are streamlining their approach to sharing financial assistance details with patients and improving the application procedure for easier understanding.

The Chief Financial Officer of Providence, Greg Hoffman, stated that charity care and financial assistance are crucial for patients who are unable to pay for healthcare. He also emphasized Providence’s dedication to assisting those in need and ensuring that their efforts align with the needs of their patients.

Providence has already erased about $125 million in medical debt following the state’s lawsuit two years ago, said Ferguson, a Democrat who is running for governor. Under the settlement, Providence will also pay $4.5 million to the attorney general’s office for legal fees and the costs of enforcing the charity care law.

Overall, approximately 65,000 individuals will have their unpaid balances cleared and 34,000 will be reimbursed with an additional 12% interest for bills they were able to pay despite facing challenging circumstances. The debts that will be cleared range from under $1 to $262,000, while the refunds will range from under $1 to $293,000, according to Ferguson’s office.

Kevin and Evangeline Holloman, who were speakers at the press event, fall into the second group. They shared that upon the arrival of their daughter in 2020 at Swedish hospital in Seattle, they were presented with a $7,000 invoice and were required to make monthly payments of $250 as part of a payment arrangement.

According to the individual, Swedish did not notify them when they were sent to collections for missing a payment. As a result, they had to deplete their emergency savings and use a tax refund to settle the debt.

Evangeline Holloman expressed the difficulty of starting over with their child and saving money in case of any emergencies. She also mentioned the challenge of losing their sense of security.

The state is currently continuing to pursue consumer protection claims against two debt-collection companies that Providence utilized.

An expert in accounting and health care finance and policy, Ge Bai from Johns Hopkins University, stated that the settlement may prompt other states to enhance their laws regarding charity care or improve their enforcement. Bai served as an expert witness for Washington state in this case.

According to Bai, Washington has a thorough law on charity care, which is not the case for many other states. This also has an impact on hospitals in other states, as state attorneys general are paying close attention to this matter.