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Let the Work Begin: Congress Needs to Address Medical Debt

Eva Stahl

In early December, Senators Murphy (CT) and Van Hollen (MD) reintroduced the Strengthening Consumer Protections and Medical Debt Collection Act. The senators are no strangers to the issue of medical debt, having proposed this bill and others in the past including one that sought to tie COVID relief funds to limitations on the use of extraordinary collection actions (ECAs) like wage garnishment or property liens. However, the reintroduction of Strengthening Consumer Protections and Medical Debt Collection Act feels a bit different at this moment and certainly is timely. Inflation has made it harder for people to pay medical bills coupled with the rising cost of health benefits. As an organization committed to abolishing medical debt for millions of people nationwide, we at Undue Medical Debt know firsthand the pain and anguish that medical debt creates and the emotional relief that abolishment delivers. That said, we know that abolishment is not the solution to medical debt and that is why we are watching the Strengthening Consumer Protections and Medical Debt Collection Act with interest. As we look ahead into 2023, we are hopeful that the senators’ medical debt legislation is just the start of a set of proposals that are serious about solving the medical debt crisis. Let’s review this bill and why it matters.

What’s in the Strengthening Consumer Protections and Medical Debt Collection Act?

The bill takes aim at the harm of medical debt by building on existing federal protections and by creating a national database on medical debt.

First, the bill expands federal consumer protections currently in place for nonprofit hospitals to other health care providers in a number of key ways. For example, while current federal law requires hospitals to notify patients about their financial assistance policies before taking more aggressive actions to collect on a bill, this bill would require all “health care entities” — not just non-profit hospitals — to actually determine whether the patient qualifies for it or public programs before they can take “extraordinary collection actions.” This is an important and significant shift given the health care consolidation landscape and that in some communities, a for-profit hospital may be the only option. Further, non-profit hospitals may be staffed by non-employed physician groups, so it is essential that all providers, not just hospitals, be included in these protections. Currently, for-profit hospitals, physicians and labs do not have the same requirements to offer financial assistance or charity care as non-profits entities, exposing some patients to the risk of medical debt. The bill would also limit what non-profit hospitals, or their debt collectors, can recover from any uninsured person to an amount that’s closer in line with what a typical insurance provider and beneficiary would pay for the service.

Second, the bill requires the Health & Human Services (HHS) Secretary to establish a database that gathers medical debt data from “health care entities.” The database will be publicly available and searchable. Currently, there is no national data set on medical debt; without complete data, it undermines our ability to understand the extent of the problem and develop solutions. The available data is often cobbled together from credit bureaus, large- and small-scale patient surveys, and other sources that only capture some dimensions of medical debt such as medical debt on credit reports. This proposed data collection would presumably allow policymakers and the public to track medical debt at its source, which would shine a light on the scope of medical debt and guide solutions to the problem. Finally, the Consumer Financial Protection Bureau (CFPB) is directed to provide a report on the data in the first year of publication and its usefulness in monitoring medical debt.

Does This Bill Help Patients?

The Strengthening Consumer Protections and Medical Debt Collection Act takes important steps to mitigate the harm caused by aggressive collection tactics, most notably by expanding these protections beyond non-profit hospitals. We believe that the steps outlined in the bill surrounding collection actions will provide patients with more information about coverage, access to financial assistance and the content of their medical bills which may allow them to avoid medical debt altogether. In our experience, many hospitals don’t employ these transparency tactics and these protections will help promote the best and most compassionate practices. We also believe that the collection of data on medical bills and collection efforts is necessary to monitor the medical debt landscape and support better solutions that will protect patients. Currently, there is no national monitoring mechanism for medical debt, and it is sorely needed help to address the inequity of our health care financing system and target policy solutions. The bill’s framework offers a great starting point to understand the harm of medical debt and more deeply understand medical debt across the country.

Areas to Watch & Strengthen

There are several things to watch regarding the Strengthening Consumer Protections and Medical Debt Collection Act. Some changes that could strengthen the proposal and win support from stakeholders include:

  • Clarify the process for referring and qualifying patients for financial help. The bill requires hospitals to qualify patients for financial assistance or refer them out to a community organization that can help. For this to be feasible, we think health care providers are going to need more guidelines around community referrals. The bill should do more to encourage providers to use tools that automatically qualify people for help, rather than making them jump through hoops.
  • Expand protections against overcharging uninsured patients to all providers. The bill’s requirement that almost all health care providers observe certain consumer protections when collecting on overdue bills is a positive change. We’d like to see the bill go further to cap what any provider or debt collector — not just non-profit hospitals — can charge uninsured patients.
  • Give providers a reasonable timeline and the support they need to do this well. The bill introduces new, and necessary, data reporting requirements for health care providers. We think this is most likely to succeed if health care providers have the human, data management, and financial resources they need to be successful.
  • Link the medical debt database to health care quality measures. Increasingly, studies are demonstrating that medical debt — and the fear of acquiring it — are driving poorer outcomes for patients with cancer diagnoses, disabilities, and chronic illness. A medical debt database should help providers and insurers connect the dots between the financial pressures their patients and beneficiaries face and their clinical outcomes. We believe this is a “missing link” that can help create more demand for affordable, comprehensive health care.

Finally, while this bill addresses some harmful collection practices and takes steps toward medical debt surveillance, it does not address what is a fast-growing challenge for patients: out-of-pocket costs and covered benefits with regard to health insurance. We anticipate more conversations about the inability of patients to pay their out-of-pocket costs including unaffordable deductibles, cost-sharing obligations, and co-pays in addition to benefit exclusions or limited coverage.

We hope 2023 will bring some concrete policy change for people struggling with medical debt. In the meantime, we will keep working to bring them relief immediately through medical debt abolishment. Medical debt is not a debt of choice; it’s a debt of necessity. And people can’t wait.

Eva Stahl