Medical debt, collection practices covered by the new laws

Thirty-five percent of American adults have medical debt, according to HealthCare.com, but the state’s new laws aim to limit how aggressively – or even if – hospitals can collect that money.

For example, January 1, Medical Debt Protection Act, 2021 came into force in Maryland, which prohibits hospitals from putting liens on patients’ homes on medical debts and from garnishing the salaries of patients who are entitled to free or reduced-cost care.

The law also requires a state agency to develop guidelines for hospitals to establish income-based payment plans, and until those guidelines are created, hospitals cannot sue patients for any medical debt. .

Research shows that aggressive medical debt collection efforts are on the rise in hospitals. For example, a new Health affairs A study released in December found that in Wisconsin, hospital medical debt lawsuits rose 37% from 2001 to 2018.

Maryland is just one example of states making an effort to help patients get out of medical debt. Others have already implemented or are working on similar measures, including:

New Mexico: the Patients’ Debt Collection Protection Act came into effect on July 1, 2021, preventing healthcare facilities and medical collectors from pursuing collection actions (including lawsuits and wage garnishment) against low-income patients who earn less 200% of the federal poverty line (FPL).

It also puts into law some best practices of the revenue cycle, requiring healthcare facilities to check if the patient has health insurance, research all public insurance and financial aid available, and help patients apply for health insurance. such programs, before being able to collect an invoice.

Additionally, last month the Office of the State Superintendent of Insurance released definitive medical debt rules that require healthcare providers and hospitals to check a patient for low income before suing or sending them to collections and ensures that a low income patient is protected from lawsuits or being sent to collections during two years.

Washington: FPL patients are already getting their medical debt canceled.

Bill 1616 would extend these protections to patients who exceed the FPL by up to 300%. Patients who earn 400% above the FPL could get partial write-offs.

Nevada: from Nevada Senate bill 248 went into effect on July 1, 2021 and includes rules on how collection agencies can deal with medical debts. For example, under the new law, collection agencies must notify patients by registered letter at least 60 days before taking action to collect a medical debt.

The letter should include the names of the medical facility and provider, the date of service and the principal amount of medical debt, as well as the name of the collection agency.