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After lawsuit, Providence health system erases or refunds $158M
SEATTLE | Providence health care system is refunding nearly $21 million in medical bills paid by low-income residents of Washington — and it’s erasing $137 million more in outstanding debt for tens of thousands of others — to settle the state’s allegations that it overcharged those patients and then used aggressive collection tactics when they failed to pay.
The announcement Thursday came just weeks before Attorney General Bob Ferguson’s case was set for trial against Providence Health and Services, which operates 14 hospitals in Washington under the Providence, Swedish and Kadlec names.
The state argued that the medical system’s practices violated Washington’s charity care law, which is considered one of the strongest in the country. It requires hospitals to notify patients about the availability of financial aid and to screen them to see if they’re eligible for discounts before trying to collect payment.
Providence trained its staff not to accept it when patients said they couldn’t afford the bills, Ferguson said.
“Hospitals — especially nonprofits like Providence — get tax breaks and other benefits with the expectation that they are helping everyone have access to affordable health care,” Ferguson said at a news conference. “When they don’t, they’re taking advantage of the system to their benefit.”
Recently expanded, the law now covers roughly half of all residents, making them eligible for free or reduced-cost care at hospitals in the state, according to Ferguson’s office. It applies to out-of-pocket hospital costs, including co-pays and deductibles.
Those earning up to four times the federal poverty standard could qualify for assistance. For example, a family of four earning $120,000 a year could be eligible for a 50% discount, depending on the hospital.
In a statement posted to Providence’s website, the organization said it was simplifying how it provides information about financial aid to patients and working to make the application process clearer.
“Charity care and financial assistance are vital resources for patients who cannot afford health care,” said Providence Chief Financial Officer Greg Hoffman. “Providence is committed to providing support to those who need it most, and we will continually evaluate our efforts and make sure they fully meet the needs of those we serve.”
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.
In all, about 65,000 patients will see their outstanding debt erased and 34,000 will receive refunds, plus 12% interest, for bills they managed to pay despite difficult circumstances. The debts being erased range from less than $1 to $262,000, while those receiving refunds will get amounts varying from under $1 to $293,000, Ferguson’s office said.
The latter category includes Kevin and Evangeline Holloman, who spoke at the news conference. The couple said that after their daughter was born in 2020 at Swedish hospital in Seattle, they received a bill for $7,000 and were put on a payment plan of $250 per month.
But when they missed a payment, Swedish immediately sent them to a collection agency without informing them, they said. They eventually wiped out their emergency savings and used a tax return to pay off the balance.
“We had to restart from ground zero with our kid, and having to set aside money again in case anything were to happen,” Evangeline Holloman said. “Having your security ripped out from under you like that is really hard.”
The state is still pursuing related consumer protection claims against two debt-collection firms Providence used.
Ge Bai, an accounting professor at Johns Hopkins University who focuses on health care finance and policy, said the settlement could encourage other states to strengthen their charity care laws or seek to better enforce them. Bai was listed as an expert witness for Washington state in the case.
“Washington has a pretty comprehensive charity care law — many states don’t even have that,” Bai said. “It also has a chilling effect for hospitals in other states: State attorneys general are taking this seriously.”
AmEx tries to
win over grumpy Delta customers
NEW YORK | American Express rolled out several updates to its Delta SkyMiles credit cards Thursday that will give additional benefits to users, part of efforts to soothe sore Delta Air Lines customers who have considered abandoning the airline after last year’s SkyMiles loyalty fiasco.
The updates, however, will come with a higher annual fee, which AmEx says it believes the new benefits will more than pay for.
New York-based AmEx is adding $200 flight credits to the cards after a certain amount of spending, $120 to $240 in restaurant credits at restaurants booked with Resy, as well as $120 to $240 in credits to use on rideshare apps like Lyft and Uber. Higher-end cards will also get $2,500 in “medallion qualifying dollars” that will get users closer to reaching elite status on the airline.
Additionally, Delta cardholders will now be able to use companion certificates on a broader array of flights, including to Hawaii, Alaska, Mexico, the Caribbean and Central America, instead of just the continental U.S. There had been complaints that Delta was overly restrictive on the use of these certificates in the past.
Atlanta-based Delta Air Lines and AmEx have had deep corporate ties going back decades, and it’s been lucrative for both companies. AmEx customers get access to Delta’s airport lounges and are able to transfer their Membership Rewards points to Delta, among other benefits.
In exchange, Delta got $6.8 billion from American Express in 2023 as part of its co-brand credit card partnership. The money comes from the fees AmEx collects from the billions of dollars spend on the cards by cardmembers.
To give a sense of scale, Delta CEO Ed Bastian told investors in June that roughly 1% of the entire U.S. economy is spend on Delta’s credit cards.
So, when Delta made alterations to its SkyMiles loyalty program last year, it was largely seen by Delta customers as a watering down of its program. Part of those changes required Delta customers to spend large sums of money on airfare or on the Delta credit card to be given elite status on the airline. Delta was also going to restrict the number of entries a customer could get into their lounges based on status.
Shortly after the announcement, message boards were often full of AmEx customers saying they were ready to cancel their cards due to Delta’s changes.
Bastian later apologized for the changes and Delta rolled back some of the proposed changes or delayed them for another year.
AmEx typically works on refreshing its credit cards with a lead time of 18 to 24 months, so the changes announced Thursday were in the works before Delta made changes to its SkyMiles program. But the changes come at a time when both companies want to make sure those who exclaimed “Done with Delta” on social media after last year’s SkyMiles changes remain in the fold.
“These cards offer a host of new benefits to help consumers and business owners get closer to Medallion status, access new credits and more value, and enjoy a premium travel experience,” said Howard Grosfield, president of U.S. Consumer Services at AmEx.
With the new benefits come with a higher annual fee. The Delta Gold Card will have a $150 annual fee, up from $99, while the Delta Platinum will be $350, up from $250, and the high-end Delta Reserve will have a $650 annual fee, up from $550.
More Americans apply for unemployment benefits
The number of Americans filing for jobless benefits rose last week to the highest level in 11 weeks, though layoffs remain at historically low levels.
Applications for unemployment benefits climbed to 224,000 for the week ending Jan. 27, an increase of 9,000 from the previous week, the Labor Department reported Thursday.
The four-week average of claims, a less volatile measure, rose by 5,250, to 207,750.
Weekly unemployment claims are seen as a proxy for the number of U.S. layoffs in a given week. They have remained at extraordinarily low levels despite efforts by the U.S. Federal Reserve to cool the economy.
The Federal Reserve raised its benchmark rate 11 times beginning in March of 2022 in an effort to squelch the four-decade high inflation that took hold after an unusually strong economic rebound from the COVID-19 recession of 2020.
Though inflation has eased considerably in the past year, the Labor Department reported recently that overall prices rose 0.3% from November to December and were up 3.4% from 12 months earlier, a sign that the Fed’s drive to slow inflation to its 2% target will likely remain a bumpy one.
The Fed has left rates alone at its last four meetings.
As the Fed rapidly jacked up rates in 2022, most analysts predicted that the U.S. economy would tip into recession. But the economy and the job market remained surprisingly resilient, with the unemployment rate staying below 4% for 23 straight months, the longest such streak since the 1960s.
The government issues its January jobs report on Friday.
Though layoffs remain at low levels, there has been an uptick in job cuts recently across technology and media. Google parent company Alphabet, eBay, TikTok and the Los Angeles Times have all recently announced layoffs.
Outside of tech and media, UPS, Macy’s and Levi’s also recently cut jobs.
Overall, 1.9 million Americans were collecting jobless benefits during the week that ended Jan. 20, an increase of 70,000 from the previous week. That’s the most since mid-November.
Average long-term U.S. mortgage rate eases to 6.63%
LOS ANGELES | The average long-term U.S. mortgage rate eased this week, welcome news for prospective homebuyers as the spring homebuying season approaches.
The average rate on a 30-year mortgage fell to 6.63% from 6.69% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.09%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also fell this week, pulling the average rate down to 5.94% from 5.96% last week. A year ago it averaged 5.14%, Freddie Mac said.
The cost of financing a home has been mostly easing in the weeks since the average rate on a 30-year mortgage hit 7.79%, the highest level since late 2000. So far this year, the weekly average has ranged between 6.60% and 6.69%.
The decline in rates since their peak last fall has helped lower monthly mortgage payments, providing more financial breathing room for homebuyers facing rising prices and a shortage of homes for sale.
The pullback in mortgage rates loosely tracks the moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans. The yield has largely come down on hopes that inflation has cooled enough from its peak two summers ago for the Federal Reserve to begin cutting interest rates this year.
Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with interest rates can influence rates on home loans.
On Wednesday, the Fed left its main interest rate steady and made clear it “does not expect it will be appropriate” to cut rates “until it has gained greater confidence that inflation is moving sustainably toward” its goal of 2%. It also signaled it won’t likely begin cutting rates in March, something many traders on Wall Street had been betting on.
Still, many economists are projecting that mortgage rates will continue heading lower this year, though forecasts generally have the average rate on a 30-year home loan hovering around 6% by the end of the year.
“Mortgage rates have been stable for nearly two months, but with continued deceleration in inflation we expect rates to decline further,” said Sam Khater, Freddie Mac’s chief economist.
If rates keep easing that should help boost purchasing power for prospective homebuyers this spring, traditionally the busiest period for home sales.
Elevated mortgage rates and a dearth of available homes have kept the U.S. housing market mired in a slump the past two years. Sales of previously occupied U.S. homes sank to a nearly 30-year low last year, tumbling 18.7% from 2022.
For now, the average rate on a 30-year mortgage remains sharply higher than just two years ago, when it was 3.55%.
—From AP reports
