The Hashmi Group’s unusual business model of turning away commercial insurance and managed care contractors while accepting only Medicare and Medicaid at rural hospitals has worked, according to its owners. But it has also attracted the attention of state inspectors thanks to very high out-of-network rates, expired licenses for staff and missing infection protocols.

As Politico reports, areas the Hashmi hospitals are serving have largely welcomed the group for saving facilities from closure, such as the tiny Bowie Memorial Hospital in Bowie, Texas, a town of just 5,000. If the facility had closed in 2016, a patient population that is largely uninsured or covered by Medicaid or Medicare would’ve been 30 miles away from the nearest emergency room.

The formula used by Hasan Hashmi and his sons Faraz and Suleman leaves out any contracting with commercial insurers—including those holding Medicaid or CHIP managed care contracts—and charges astronomical out-of-network rates found to be up to 15 times Medicare’s allowable costs.

“We like to go into a community where there is a need, where if a facility doesn’t exist, people wouldn’t have access to health care,” Faraz Hashmi said. “Our model is meant to make the project financially successful so it becomes profitable. … It doesn’t help anyone if you open up the hospital and close it a month later because you can’t pay the bills.”

Despite taking Medicaid and Medicare, there have been reports of low-income and disabled patients receiving hefty bills. For the commercially insured who receive care in an emergency, the charges can be extreme—in one case, a four-day stay in the intensive care unit came with a $191,000 charge, which the Hashmis eventually dropped a local TV station reported on it.

State lawmakers looked into the hospitals’ billing practices, but found it had no power to regulate its out-of-network prices or force it to negotiate with commercial insurers.

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