Bill in Colo. Prohibiting Collections of Medical Debt Without Price Transparency Advances out of Committee

A bill has been introduced in the Colorado state legislature that would prohibit hospitals from engaging in certain debt collection practices if they are not in compliance with a federal price transparency law, a mandate that only 6% of hospitals in Colorado are currently in compliance with, according to a published report.

Engaging in the prohibited collection practices would be considered a unfair practice under Colorado’s Fair Debt Collections Act. A copy of the bill, House Bill 1285, can be accessed by clicking here. Yesterday, the state legislature’s House Committee on Health & Insurance unanimously passed the bill and referred it to the state House of Representatives for its consideration. The bill was introduced by both a Democrat — Rep. Daneya Esgar and a Republican, Rep. Patrick Neville. A published report indicated that this is the first time that these two “ideological opponents” have coordinated on a bill in their eight years in the House together.

Under the bill, hospitals that are not in compliance with the price transparency rule that went into effect in January 2021 would be prohibited from placing debts with third-party collection agencies, filing lawsuits to collect on unpaid debts, and reporting debts to credit reporting agencies.

If found to have initiated a prohibited collection action, hospitals will be required to refund any amount of the debt that has been paid by the patient, dismiss any lawsuit that has been filed, and remove any negative tradelines that have been reported. By making a violation an unfair act under the state’s collection law, the bill also gives individuals a private right of action against hospitals that violate its provisions, should it become law.

The bill “will bring a lot of market influences that are desperately needed within the hospital system,” said Rep. Neville in the report. “And most importantly, rather than creating a new agency to enforce, we actually allow consumers to enforce the issue.”

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