Last week, the Maryland Senate and the House of Representatives each voted unanimously to approve bills that would limit a hospital’s means of collecting past due medical debt. Senate Bill 0514 and House Bill 0565 now move onto the opposite chamber for approval. SB 05014 has already been referred to committee. The bills as originally introduced would have prohibited hospitals from delegating to collections or commencing lawsuits for debts less than $1,000.00 and would have capped interest to 1.5% per year, however these provisions were stricken at committee review. The bill in its current forms contains several key limitations to a hospital’s means of collecting past due medical bills.
Proposed Prohibited Activity
The bill as proposed would prohibit hospital creditors from requesting wage garnishments against patients for debts if that patient was eligible for free or reduced-cost care. Also, under existing law, hospitals holding a lien on a patient’s primary residence may maintain its position as a secured creditor with respect to other creditors. However, under the bill as proposed, a hospital may not request a lien against a patient’s primary residence.
Proposed Required Activity
The bill would require hospitals to notify patients that income-based payments plans would be available. Additionally, hospitals would be required to document and report steps taken to inform patients about financial assistance and further report the number lawsuits filed annually. Further, as a prerequisite to filing a lawsuit or referring for collection, hospitals will be required to demonstrate that they made a “good faith” attempt to enter into payment arrangements with the patient.
With bipartisan sponsorship and unanimous chamber approval in the early stages, this bill appears likely to be signed into law. Watch this space for further developments.