Medical Debt Collection Bill in Colorado Moves Closer to Becoming Law

A bill in Colorado that would ban hospitals from placing unpaid debts with collection agencies if the hospitals do not comply with federal price transparency rules is rapidly moving closer to becoming a law, after the state Senate yesterday approved the bill unanimously.

The bill, House Bill 1285, now moves back to the state House to approve changes that were made by the Senate. The House had previously approved a version of the bill by a vote of 63-to-1. Given the broad support that the bill is receiving in both the Colorado House and Senate and the bipartisan backing it has, it seems to be a foregone conclusion that the bill will eventually head to the desk of Gov. Jared Polis for his signature. If signed into law, the bill would go into effect 90 days after the adjournment of the general assembly, which is scheduled to occur next week. The one exception would be for hospitals with fewer than 25 beds; they would have until next February before having to comply with the law.

The bill would prohibit hospitals that are not in compliance with a price transparency rule that went into effect in January 2021 from placing debts with third-party collection agencies, filing lawsuits to collect on unpaid debts, and reporting debts to credit reporting agencies. About 94% of hospitals in Colorado are currently not in compliance with the price transparency rule, according to published reports.

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.

Hospitals in the state are still fighting to keep the bill from being enacted, according to a published report. Their concern is that, if enacted, hospitals will face more frivolous lawsuits from individuals while also threatening the livelihood of smaller hospitals that do not have the resources to comply with the price transparency rule.

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