Vidant Health inflates prices, lawsuit alleges

Vidant Health allegedly hid its inflated prices from patients and harassed them when their bills were past due, according to a new lawsuit.

George Cansler, a patient of the nine-hospital system based in Greenville, North Carolina, was charged $3,119 for a CT scan in 2018 after his insurance paid $465, which amounted to more than 11 times the Medicare reimbursement rate, the federal lawsuit claims. Vidant then tapped FirstPoint Collection Resources, which allegedly used illegal schemes to coerce payment.

Cansler seeks class certification for Vidant patients who have experienced similar billing and debt collection issues, as well as associated damages and an injunction.

"When patients ask Vidant representatives about the cost of care before they receive a service, Vidant has had a policy of refusing to tell patients the price it plans to charge," the complaint reads. "Thus, Vidant made it impossible for patients to make an informed financial decision about their care, and patients could not—and did not—willingly consent to pay Vidant's unreasonable, undisclosed prices."

Vidant said in a statement that the narrative presented in the complaint is inconsistent with its "patient-centered, mission-driven, not-for-profit values."

"In addition to a dedicated team of case managers who help patients understand their bills, set up payment plans and provide charity care in all applicable cases, Vidant has transparent pricing resources available online for any patient or prospective patient to reference," the organization said.

Cansler went to Vidant Chowan Hospital's emergency room with acute abdominal pain, allegedly because there were no urgent care facilities close to his home and the hospital didn't have a more appropriate setting to treat him. While he signed a consent form, the term "charges" was not defined, which Cansler and his legal team argued didn't amount to an agreement to pay the inflated chargemaster prices.

An itemized bill was sent more than a year after the treatment; he paid the minimum as he disputed the charges over that span. Vidant allegedly sent him a final notice on July 29, 2019, but Cansler didn't receive it until mid-August, which was already outside the mandatory 10-day payment window before it was sent to collections.

The president of the hospital allegedly blamed "high deductible health plans for pushing a lot of this invoice to you personally," and explained that 80% of the hospitals' patients do not pay and the rest must be made up by the remaining 20%.

"Unfortunately for residents of Eastern North Carolina, Mr. Cansler's experience is typical of patients who receive care from Vidant," the complaint reads. "Moreover, because Vidant is a regional monopolist, residents of Eastern North Carolina have no choice but to submit to its unreasonable charges and aggressive collection efforts."

Download Modern Healthcare’s app to stay informed when industry news breaks.

Hospitals list their charges for procedures on their chargemasters, which, until recently, were kept secret. They use those charges in negotiations with insurers, even though they have little bearing on the actual cost or the quality of the procedure, research shows. Uninsured and out-of-network patients are often responsible for the gross charges.

Chargemaster prices for pelvic CT scans vary wildly across Vidant's hospitals, from $1,727 to $4,996 in 2021, according to the complaint. The Medicare reimbursement rate was $315.

Commercial insurers paid hospitals, on average, 247% what Medicare would have for the same services in 2018, according to a RAND Corp. study. That gap was widened in recent years, largely attributable to hospitals' growing market share in their respective service areas, researchers said.

Transparency should limit those price disparities, regulators hoped, as they required hospitals to publish their chargemasters, along with the rates they negotiate with insurers. But many are not complying with the rule implemented last year, opting to pay the fine instead. Vidant, in a statement, said it is complying with all federal transparency requirements.

Lawmakers also intended to crack down on surprise billing last year, via the No Surprises Act, which aimed to prevent patients from unknowingly accepting care from an out-of-network provider.

"Surprise billing is a widely criticized, predatory practice and it is especially harmful when one hospital system is the monopoly provider in a region because patients have no alternatives for care," Jamie Crooks, an attorney at Fairmark Partners, the firm that's representing Cansler, said in a news release.

Hospitals often employ third-party collection agencies to recoup outstanding debt by barraging patients with letters and calls, industry observers said. In some cases, they have resorted to suing patients or working with third parties that exchange "charity work" for payment.

Vidant reported a $19.5 million operating income on operating revenue of $2.15 billion in 2021, up from a $34 million operating loss on $1.98 billion of operating revenue in 2020. It has been buoyed by more than $270 million in non-operating revenues, including COVID-19 relief grants, over the past two years.

Vidant's provision for bad debt increased 8% in 2021 to $168.5 million.