The healthcare industry is abuzz with the recent finalization of the CFPB rule removing medical bills from credit reports. Rightfully so, as it removes a key piece of leverage in the collection of medical debts. However, ACA International has already filed a lawsuit against the rule, arguing overreach beyond the CFPB’s regulatory authority. In light of the delay in implementation this will likely cause, our January blog post will review noteworthy recent regulatory changes in various states across the US.
Minnesota
Minnesota implemented the Debt Fairness Act to enhance protections for individuals with medical debt. Key provisions include:
- Prohibition on Reporting Medical Debt: Healthcare providers and debt collectors are barred from reporting medical debt to credit reporting agencies, preventing such debt from adversely affecting credit scores.
- Ban on Denial of Medically Necessary Care: Providers cannot deny medically necessary services due to unpaid medical bills, ensuring access to essential healthcare regardless of outstanding debt.
- Elimination of Automatic Spousal Debt Transfer: Medical debt is no longer automatically transferred to a spouse upon a patient’s death, protecting spouses from inheriting unpaid medical bills.
- Mandatory Debt Collection Policies: Healthcare providers are required to adopt and publish their medical debt collection policies, promoting transparency and accountability.
Delaware
Meanwhile, Delaware has the Medical Debt Protection Act, with the main points below:
- Interest Prohibition: Creditors are now prohibited from charging interest on medical debt, preventing the accumulation of additional financial burdens on patients.
- Payment Plans: Hospitals are required to offer reasonable payment plans to patients, ensuring that monthly payments remain manageable.
- Debt Sale Restrictions: New limitations have been placed on the sale of medical debt, protecting patients from aggressive collection practices by third-party entities.
- Wage Garnishment Ban: The state has fully prohibited wage garnishment for medical debt, safeguarding patients’ incomes from being seized to satisfy medical bills.
- Home Foreclosure Protection: Creditors are now barred from foreclosing on patients’ homes to collect unpaid medical bills, ensuring housing security for indebted individuals.
New Jersey
The Louisa Carman Medical Debt Relief Act was passed in New Jersey in July. The focal points are as follows:
- Interest Rate Caps: The state has established caps on interest rates for medical debt, limiting the financial strain on patients.
- Payment Plan Requirements: Hospitals must provide reasonable payment plans to patients, facilitating manageable repayment terms.
- Debt Sale Restrictions: New Jersey has implemented restrictions on the sale of medical debt, offering patients protection from potentially aggressive third-party debt collectors.
- Wage Garnishment Protections: The state prohibits wage garnishment for individuals with incomes under 600% of the federal poverty level, shielding lower-income patients from income seizure.
- Medical Debt Forgiveness Initiative: New Jersey has appropriated $10 million to purchase and forgive medical debt, potentially canceling up to $1 billion in medical debt for residents.
New York
In New York they have SB S4907, which includes two key points for healthcare providers:
- Interest Rate Caps: The state has set limits on interest rates for medical debt, reducing the financial burden on patients.
- Debt Sale Prohibition: New York has fully prohibited the sale of medical debt, preventing third-party entities from engaging in aggressive collection practices.
Florida
Florida passed HB 7089 for health care expenses in 2024, which creates several consumer protections relative to the collection of medical debt, including:
- Debt Sale Restrictions: The state has introduced new limitations on the sale of medical debt, offering patients protection from aggressive third-party debt collectors.
- Statute of Limitations: Florida now bars medical debt collection lawsuits unless initiated within three years of the debt becoming due, preventing prolonged legal actions against patients.
Rhode Island
SB 2709 in Rhode Island eliminates credit reporting for medical debt at the state level. Additionally, the state prohibits medical debt collection lawsuits if the debt collector knows or should know that the insurance coverage decision contributing to the debt is under review or being appealed, protecting patients during insurance disputes.
Oregon
Lastly for the purposes of our post we have Oregon’s Revised Statute 646A.677, which increased the amount of home equity protected from seizure, ensuring that patients’ homes are safeguarded from being used to satisfy medical debts.
Our Final Word
If upheld, the CFPB’s medical debt credit reporting rule will be one of the most impactful regulations to hit our industry in a long time…it will necessitate adjustments to collection techniques, but other tweaks such as committing to educating patients on their financial responsibilities early in the revenue cycle will also prove beneficial.
Yet compliance remains paramount, so we must not lose sight of state-specific regulations to ensure that your patients are treated fairly within the law. If you have a question about compliance or other RCM challenges, please feel free to send them to us!