Dive Brief:

• Mayo Clinic reached a settlement with the Minnesota attorney general’s office last week, ending a multiyear dispute over the nonprofit provider’s charity care and debt collection practices.
• The system will not have to pay a financial penalty. However, moving forward Mayo Clinic must “presumptively” assume certain patients are eligible for financial assistance, streamline the application process for assistance and not sue patients for outstanding debt outside of extreme circumstances, according to the settlement.
• Mayo Clinic did not admit wrongdoing as part of the agreement, and says it has already reformed patient assistance policies, including increased spending on charity care. The system funded $170.5 million in financial assistance last year, roughly double what it spent each year in 2023 and 2022, according to settlement documents.

Dive Insight:

The Minnesota attorney general’s office launched its investigation into Mayo Clinic in late 2022, following reports that the system had sued patients who should have qualified for charity care over their medical debt.

The lawsuits violated Mayo Clinic’s agreement with the state, which requires hospitals to give patients an opportunity to apply for financial assistance if there is reason to believe they could qualify.

The state’s investigation revealed aggressive debt collection practices and billing policies that seemed, at best, to make financial assistance processes difficult to navigate, and at worst appeared designed to steer certain patients away from receiving charity care, according to Minnesota’s attorney general.

Mayo Clinic was “actively dissuading” patients from seeking financial help, Minnesota Attorney General Keith Ellison said in a statement on Friday.

According to Ellison’s office, Mayo Clinic would instruct staff to avoid discussing charity care with patients and to suggest patients take out loans to pay bills.

The system had three internal documents that explicitly instructed billing department employees to steer patients away from financial assistance in an effort to collect payment, according to settlement documents. Two of the three documents have since been voluntarily discontinued, and the third has been substantially modified to give patients more information about the availability of financial help.

“I am heartened by the substantial improvements Mayo Clinic has made to their charity care program,” Ellison said, adding that the settlement “ensures their improved charity care policies and procedures will remain in place.”

Minnesota’s investigation of Mayo Clinic coincided with a rising focus nationwide on nonprofit health systems’ charity care policies.

Nonprofit systems agree to provide charity care in exchange for exemptions from certain federal, state and local taxes. However, multiple studies from independent organizations have found the health systems routinely fall short of charity care expectations.

Unaffordable care can cause patients to skip or delay treatment, according to health policy firm KFF. Last year, roughly one in four adults reported skipping or delaying health services because of cost.

Minnesota has been particularly bullish on attempting to hold hospitals to charity care obligations.

In 2023, Ellison investigated Minnesota-based Allina Health following reports the system was denying care to patients carrying high loads of medical debt. The system has since ended that policy.

Minnesota also bolstered its charity care laws in 2023 to require hospitals to check whether patients are eligible for financial assistance before referring medical debt for collections.

Still, Ellison said that the state could go further to address the impact of medical debt and improve charity care policies at other health systems. The attorney general zeroed in on the idea of expanding presumptive eligibility, which instructs health systems to enroll certain patients in charity care programs without requiring an application, to a greater number of patients.

The attorney general’s office said that once Mayo Clinic adopted presumptive eligibility policies in the fall of 2023, the system “substantially increased the amount of Financial Assistance awarded to patients.”

Of the $142 million that Mayo Clinic provided in financial assistance to patients between October 2023 and August 2024, $89 million went to individuals who didn’t have to complete an application, according to the settlement.