Senate Bill Seeks to Place Restrictions on Medical Debt Collection

A bill has been introduced in the Senate that seeks to cap the interest rate that can be charged on unpaid medical debts, create a private right of action, and force providers to wait 180 days after a bill has been sent before engaging in “extraordinary” collection actions.

A copy of S. 5150, the Strengthening Consumer Protections and Medical Debt Transparency Act, which was introduced by Sen. Chris Murphy [D-Conn.] can be accessed by clicking here.

Among the provisions of the bill are:

  • The Department of Health and Human Services (HHS) would create a publicly available database of annual reporting from hospitals, freestanding facilities, and large provider practices with information about whether they use collection agents, the process for assigning debt to a collection agent, and the number of Extraordinary Collection Actions, as defined by the IRS, they have initiated. HHS will maintain a public list of any health care entity that does not submit the required information each year.
  • Medical debt interest rates should be capped at the annual rate set by the federal post-judgment interest rate or 5 percentage points annual growth, whichever is lower, to protect patients from uncontrolled rate increases that multiply debts.
  • Before an entity can send debt into collections, health care entities should ensure that all insurance coverage appeals have been resolved and determine whether the patient qualifies for assistance.
  • Health care entities, or their contracted debt collection agencies, shall not enter into extraordinary collection until 180 days after an initial bill is sent and the debtor’s identity has been confirmed.
  • Health care entities provide the patient with an itemized statement of the debt owed as well as detailed receipts of payments made within 30 days.
  • A health care entity or its agent who fail to comply with changes under the Act is liable to the patient for actual damages and up to $1,000. In the case of a class action suit, damages are the amount each plaintiff could have recovered, not to exceed $2 million. If the patient is successful, then attorney’s fees and other costs also can be recovered.
  • The Consumer Financial Protection Bureau (CFPB) issue a biennial report on medical debt and review the public database for its application to the CFPB’s risk supervision program.

“Forcing people to go bankrupt just because they get sick is immoral – plain and simple,” said Sen. Murphy, in a statement. “We need to shed light on the hospitals out there who are abusing patients with overly aggressive debt collection practices. I hope we can get our legislation to increase transparency and reform hospital practices across the finish line.”

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