🔒Analysis: Tens of thousands of CT residents faced medical-debt lawsuits

Debt-collection lawsuits against Connecticut patients with overdue medical bills have been on the decline in recent years, but hospitals and other in-state health providers are still suing at a healthy clip.

That’s according to recent research by the Health Disparities Institute (HDI) at UConn Health, which found that nearly 86,000 medical-debt lawsuits were filed in small-claims court between 2011 and late 2016.

Those lawsuits claimed, at least initially, more than $110 million in debts owed.

Dr. Victor G. Villagra, associate director of HDI, which was founded in 2011 to enhance research and delivery of care to minority and underserved populations, said the findings are just “the tip of the iceberg,” in terms of understanding the scope of medical debt, since his organization’s analysis only includes “hospital” and “non-hospital” cases filed in small-claims court.

He said his team was unable to obtain similar data from Superior Court, where claims exceed $5,000, due to technical barriers. In addition, there’s likely plenty of medical-debt-collections activity that falls short of a lawsuit.

“The vast majority [of debt] is under the surface,” Villagra said.

HDI’s debt research is ongoing, but the figures in its first brief are noteworthy, as state-level data and insights into medical debt can be difficult to find.

Surveys, mostly national in scope, have shown that medical debt is a reality for many Americans, which can lead to financial struggles, poorer health outcomes, and racial disparities.

But, bit by bit, the body of research on medical debt in Connecticut continues to grow.

It’s important to note that Connecticut doesn’t appear to stick out negatively among other states. For example, an Urban Institute study found that Connecticut had the fifth-lowest share of adults in the country who reported past-due medical debt in 2015. The 16 percent of Connecticut adults reporting debt that year was down from 26 percent in 2012, one of the largest declines in the country.

State reports also show that Connecticut acute-care hospital’s “bad debt,” which are bills deemed uncollectible after patient services were delivered, declined between 2014 and 2017 from $506.1 million to $372.9 million.

However, that doesn’t mean patients don’t struggle with healthcare costs.

Last year, a survey commissioned by the Universal Health Care Foundation found that half of Connecticut adults in the past 12 months had been uninsured due to the high cost of premiums; delayed health care due to cost; or struggled to pay medical bills.

”Health insurance is supposed to protect people from financial devastation and I don’t think it’s doing its job,” said Jill Zorn, senior policy officer at Universal Health Care Foundation.

Better but not great

HDI’s small-claims data show that both the volume of medical-debt lawsuits as well as the amounts plaintiffs claimed began to decline in 2014.

Villagra credits the Affordable Care Act for that, since it decreased the number of people who are uninsured and put some restrictions on aggressive billing and collection practices.

It fits with a broader national trend, according to the federal National Health Interview Survey, which found that the number of Americans having trouble with medical bills has declined since the ACA was enacted. However, blacks and Hispanics struggled with bills at higher rates.

Villagra said those disparities are a key concern for HDI, and he supports better education to promote health-insurance literacy for patients and doctors alike.

Other factors could be contributing to the dip in lawsuits, HDI observed, including higher employment levels in the state and new restrictions on “surprise billing,” which is when patients are unknowingly treated by an out-of-network provider at an in-network hospital, increasing out-of-pocket costs.

Still, Villagra has concerns, since those factors — perhaps outweighed by the ever-climbing cost of premiums, deductibles and other insurance “cost-sharing” — haven’t eliminated the medical-debt problem.

For example, more than half of the summoned defendants in the cases his team analyzed didn’t show up for court, which often guarantees a ruling in the plaintiff’s favor.

Villagra said he wants to better understand the reasons for the no-shows, and is pondering whether reforms are needed at the state level to ensure alleged debtors receive their court summons and that claimed amounts owed are detailed and accurate.

“Generally, I have a big problem with pricing practices that are unreasonable in health care,” he said. “It is so difficult to get [providers] to give you something that is understandable, where you know what you’re paying for.”

For now, Villagra and his team have plenty of work ahead as they pursue other research questions based off the debt data.

They are designing a survey to ask Connecticut physicians and patients about how collection practices and billing lawsuits impact the doctor-patient relationship.

Villagra said there hasn’t been much academic research into that question, but from his experience practicing medicine for about a decade into the 1990s, he has a hunch HDI might learn that trust, physicians’ roles as advocates for their patients, and quality and continuity of care all suffer when providers are chasing a patient over an unpaid bill.

As hospitals and provider groups grow larger through mergers and acquisitions, Villagra said billing and collection decisions are getting further away from physicians themselves.

“I am convinced I am going to find out that many of these doctors don’t know that the patient they’ve had for years is suddenly in court because they couldn’t pay,” he said.