January 13, 2008
Beginning January 1, 2008, medical creditors could have the State of Missouri collecting their debts for them by taking your tax refunds. Once again, creditors have convinced legislators to allow them to take your money without giving you a meaningful way to defend yourself.
Under the new law, a health service provider like a hospital could present your overdue bill to the State of Missouri’s department of health and senior services. The department would treat the bill as though it was owed to the State and set it off against income tax refunds you have coming. The department would get up to 20% of the money to pay for its costs and the rest would go to the service provider.
The law is aimed squarely at working class Missourians. It is limited to folks who were not “eligible” for state medical assistance under various state and federal programs, like Medicaid. And it would not apply to folks who were “not covered by a health insurance policy.” The debt must be for services more than 90-days old and not paid and “appears meritorious on its face.”
The DHSS would send a certified letter to the tax payer — there is no requirement the tax payer actually receive the letter — warning about the intercept and providing some sort of opportunity for an administrative hearing to contest the setoff. And any intercept would be paid to the medical provider only after any outstanding tax or agency debt (like certain
student loans) owed to Missouri and any child support obligation balance owed.
The DHSS is required to promulgate rules for the intercept program and hearing procedures. Many fairly obvious questions remain. Will the hearings be available in many regional locations or at some remote location near the Capitol but far from most of Missouri’s population? Will the DHSS decline to intercept a tax refund to help a hospital cover unpaid co-pays for someone who is insured or underinsured?
What if they are insured but the insurer declines to pay a claim for services? (That never happens. of course!) What is there’s a legitimate dispute pending over whether the services should have been covered under a COBRA or other employer policy? What if the individual believed they were eligible for coverage under the government plans but can’t prove it or has a fight going on over it? Will DHSS verify whether the individual has filed bankruptcy in the interim?
Odds are in most of these cases the hospitals will be taking tax refunds and daring consumers to do something about it. Once again, large financial interests have convinced legislators that forcing them to go through all the hassle of suing someone, making sure they receive notice of the law suit, and proving to a judge they are entitled to take your money with government assistance is just too cumbersome. And instead of having to pay their lawyers a share, they are cutting the state in for 20% of the action.