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Friday, November 6, 2020

H.R. 5330 Amendment - The Consumer Protection for Medical Debt Collections Act

H.R. 5330 Amendment - The Consumer Protection for Medical Debt Collections Act

Background:

On December 5, 2019 Rep. Rashida Tlaib (D-MI) introduced H.R. 5330, the Consumer Protection for Medical Debt Collection Act. This legislation was then marked-up and passed out of Committee on December 11, 2019 by a vote of 31-24.

The legislation introduced by Rep. Rashida Tlaib (D-MI), would delay the ability to report medical debt to credit reporting agencies for one year, and creates a ban of the reporting of debt arising out of “medically necessary procedures”. Additionally, the legislation prohibits collecting medical debt at all, for two years.

On May 21, 2019, Senator Jeff Merkley (D-OR) introduced a similar bill to HR 5330 in the form of S. 1581, the Medical Debt Relief Act. S. 1581 would also prohibit credit reporting for one year. However, unlike the House bill the Senate version clarifies that the legislation does not impact when a debt collector may engage in activities to collect or attempt to collect any debt owed or due or asserted to be owed.

Impacts:

AAHAM strongly opposes HR5330. The proposed legislation would make it almost impossible for a hospitals to provide the care its patients need. If passed, H.R. 5330 prohibits the collection of medical debt for up to two years and will impose significant negative consequences to the patient. Such delays will essentially keep the patient in the dark about their financial responsibilities by eliminating the essential communication between the provider and the patient regarding medical financial obligations as they occur and limit the window of opportunity for resolution. H.R. 5330 prohibits any third party, whether at the day one early out level of sending statements and making phone calls, or the bad debt collection agency level, from collecting medical debt for the first two years postdate of service. Not only will this place a hardship on providers and the accounts receivables industry, but H.R. 5330 harms consumers who could miss out on the ability to seek charity care or other options for addressing unaffordable medical debt and correcting coding and billing errors in order to properly file with insurance carriers for proper claim payment if collection efforts are stalled for years at a time.

These restrictions clearly swing the pendulum way too far in making it difficult to collect on a patient’s medical account and would be disastrous for medical providers taking care of patients and those serving them in the accounts receivable management industry. The accounts receivable management industry employs more than 230,000 people worldwide and returns tens of billions of dollars to the American economy. The ability to recover debt enables providers to operate, employ healthcare experts, and extend services to patients of all socioeconomic levels. It is of vital importance that the accounts receivables management industry has the ability to assist early in the process so that patients are informed of their liabilities and aware of the options available to them to help resolve their debts. If hospital’s can no longer outsource the statement and early-out process, they will have to find a way to absorb that function back in-house which will be detrimental from a financial, technological and human resource perspective. Most hospitals do not have the technology, human resource or ability to accommodate this process.

H.R. 5330 would strain critical resources that currently go towards helping the patients they serve. Passage of H.R. 533 would mean some of those resources would now have to be diverted so that the hospital can aggressively pursue early out payments before these claims reach bad debt status. The goal should be to drive healthcare costs down, not up. H.R. 5330 will drive up costs to hospitals, which in turn means patients will end up paying more.

This legislation puts consumers at risk if they are obtaining more credit and services during the lengthy timeframe where collection and credit reporting is delayed, that they really cannot afford and would not be detectable in a credit score. The potential economic impact of this bill is hard to even imagine but it certainly will at the very least make it harder for certain consumers to obtain medical care because of fears from providers that it will be impossible to ever collect on payment and would throw a wrench in a functioning credit based economy.

If passed H.R. 5330 would be devastating to the Health Care Community at large. It would significantly impact hospitals from providing care and create unprecedented barriers to the daily operations of the health care systems.

AAHAM Recommendation:

AAHAM urges Congress to reconsider this legislation. Passage of H.R. 5330 and S. 1581 would have negative unintended consequences on the patients we serve. We urge Congress to instead work with AAHAM on a solution that is balanced and fair. Passing this legislation in its current form will cause severe financial hardship on hospitals, especially those in rural communities and will negatively impact patient consumers.

Click here to review the bill.


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