Colorado Enacts Medical Debt Collection Bill

The governor of Colorado yesterday signed a bill into law that will prohibit healthcare facilities from pursuing debt collection activities against individuals with unpaid medical bills unless those facilities are in compliance with federal price transparency guidelines.

House Bill 1285 prohibits 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. For most facilities, the law will go into effect on August 1. For facilities with fewer than 25 beds, the law will go into effect next February.

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.

“We have been focused on saving Coloradans money on healthcare since day one, and today we are taking a major step forward to keep money in the pockets of hardworking Coloradans,” said Gov. Jared Polis in a statement. “We are making sure that when Coloradans go to the doctor, they don’t end up with surprise bills for getting the care they need, and that hospital pricing is available to increase competition and drive down costs.”

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