In a recent article, Laurie Nelson, our General Counsel & Chief Compliance Officer, shared her expertise on a topic that is gaining national attention: the potential prioritization of a new medical debt bill. The proposed legislation, which would be a “top priority” if Democrats retake the House, could significantly impact both consumers and businesses.
Medical Debt Bill Would be “Top Priority” if Dems Retake House, Sponsor Says
Earlier this year, Rep. Gabe Vasquez, a Democrat from New Mexico, introduced a bill in Congress that would, among other provisions, prohibit hospitals from sending unpaid medical debt accounts to collection agencies unless certain circumstances are met. While the bill hasn’t moved an inch in the six weeks since it’s been introduced, it’s what could happen months from now that may be of concern for the healthcare and accounts receivable management industries. During a meeting in Albuquerque last week to discuss the bill and the state of medical debt, Rep. Vasquez made a comment that if Democrats regain control of the House of Representatives, Rep. Frank Pallone [D-N.J.], currently the ranking member of the House Energy and Commerce Committee, would make passing Rep, Vasquez’s bill a “top priority,” according to a published report.
WHAT THIS MEANS, FROM LAURIE NELSON OF PAYMENTVISION:
“As the article notes, if Democrats retake control of the House, the Patient Debt Relief Act (H.R. 9129) could become a legislative priority, given the widespread concern over medical debt. For debt collectors, it’s critical to understand the bill’s nationwide implications, not just in New Mexico. Stricter Regulations on Medical Debt Collection
The Patient Debt Relief Act is a federal bill that, if passed, would impose stricter regulations on hospitals participating in Medicare. For debt collectors, any medical debt tied to Medicare patients particularly lower-income individuals and seniors-would be managed under tighter rules. Hospitals must comply with more rigorous financial assistance guidelines, ensuring patients are informed of aid options before their debts can be transferred to collectors.
This could significantly reduce the number of unpaid debts available for collection. Hospitals must improve their financial assistance offerings and work proactively with patients earlier in the billing cycle, leaving collectors with fewer accounts to pursue.
Debt Forgiveness through Nonprofit Involvement
A vital feature of the act is creating a grant program that allows nonprofit organizations to purchase and forgive medical debt. Similar programs, such as RIP Medical Debt, have already successfully eliminated billions of dollars in medical debt through donations. For debt collectors, this trend suggests a shrinking
market for medical debt, forcing companies to shift focus to non-medical debts or adjust their strategies to operate in a landscape with fewer accounts.
Compliance with New Rules and Tighter Oversight
The act mandates that hospitals notify patients about financial assistance programs and curb aggressive debt collection tactics. This presents a significant shift for debt collectors, as it will result in increased oversight and regulation of how unpaid medical debts are pursued. Collectors must adjust their practices to comply with these new restrictions, likely leading to higher operational costs related to compliance, training, and legal oversight.
Potential for Additional State-Level Protections
With the increased focus, beyond the federal level, states like New Mexico, Colorado, and California could follow with added reforms, such as capping interest rates on medical debt or limiting wage garnishment for unpaid bills. These state-level regulations would add another layer of complexity for debt collectors, particularly for those operating across multiple states. Ensuring that practices align with both federal and state laws will be critical to maintaining compliance and avoiding potential penalties. Conclusion
Debt collection companies specializing in medical debt must be proactive about the potential changes introduced by the Patient Debt Relief Act. With fewer debts to collect, stricter rules to follow, and increased regulatory oversight, the industry must adapt its strategies and explore new areas to sustain growth. Remaining vigilant about federal and state regulations will be essential for maintaining compliance and navigating this shifting landscape.”
Laurie Nelson – General Counsel & Chief Compliance Officer of PaymentVision
