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Collection Actions: 9.3.1.5.5 Application process

Hospitals must describe, either in the FAP itself or in the application form, the information and documents that the hospital may require for FAP eligibility.277 There are no standards or restrictions regarding what type of information a hospital can require, and the IRS rejected requests that hospitals be prohibited from requiring certain information, such as credit reports.278 Consequently, there is a concern that hospitals may establish excessive or onerous documentation requirements that pre

Collection Actions: 9.3.1.6 Information That Nonprofit Hospitals Must Report to the IRS

The IRS requires nonprofit hospitals, other than certain government hospitals,301 to describe their financial assistance policies in Schedule H of IRS Form 990 and to report on the amount of charity care they provided, their debt collection policies, and the amount of bad debt that is estimated to be attributable to patients eligible for financial assistance.302 Schedule H and Form 990s are publicly available and may be obtained directly from the nonprofit hospital.

Collection Actions: 9.3.1.7 Private Remedies for Violations

While no private right of action is available for violations of the ACA’s financial assistance rules, it may be possible to pursue claims under state UDAP laws.303 It is unsettled whether a failure to include information about a hospital’s FAP in collection letters would form the basis of an FDCPA violation.304

Collection Actions: 9.3.3 Truth in Lending Act (TILA)

Many hospitals offer payment plans to consumers who owe large amounts of medical debt. Under certain circumstances, these plans will be covered by the federal Truth in Lending Act (TILA).307 A non-credit transaction, such as the typical medical bill, can be converted to a credit transaction subject to the TILA if several requirements are met.

Collection Actions: 9.3.4 Emergency Medical Treatment and Active Labor Act (EMTALA)

If a debtor is refused treatment at an emergency room because of medical debt, a claim may exist pursuant to the Emergency Medical Treatment and Active Labor Act (EMTALA).329 EMTALA is a federal statute that includes a prohibition against hospitals turning away a patient in need of emergency medical treatment because the patient may not be able to pay for the care.330 EMTALA should prohibit a hospital from turning away a patient in need of emergency care because of prior bills owed to that hospi

Collection Actions: 9.3.6.1 Impact of Medical Debt on Credit Reports

Medical debt can have a significant impact on a consumer’s credit history. Providers often refer medical debt to a collection agency, which in turn will report the debt to a consumer reporting agency (CRA), resulting in a derogatory item on the consumer’s credit report366 and a decrease of the consumer’s credit score.367 As of June 2021, there was an estimated $88 billion in medical debt on consumer credit records.368

Collection Actions: 9.3.6.2 Limits on Reporting of Medical Debt

Prior to the voluntary measures described in § 9.3.6.1, supra, the three major CRAs (known as the “Big Three”) reached an agreement with a multistate group of attorneys general to refrain from including medical debt in a consumer’s credit report if the debt is delinquent for fewer than 180 days when it was reported.396 In addition, the three ma

Collection Actions: 9.3.6.3 Right to Dispute Erroneous Medical Debt Reporting

Consumers facing wrongful credit reporting damage relating to medical debt may want to file a written dispute with the consumer reporting agencies (CRAs).406 Filing written disputes with the CRAs provides a cause of action under the Fair Credit Reporting Act (FCRA) against the furnisher of the information, if the furnisher fails to undertake a reasonable investigation of the dispute.407

Collection Actions: 9.3.6.5 Health Care Providers As Users of Credit Reports

Health care providers may be users of credit reports. Hospitals sometimes order the credit reports of patients, including patients who apply for or are eligible for charity care.425 The providers claim they do so in order to verify income and thus their eligibility for charity care. In addition, consumer reporting agencies have developed specialized health care credit scores that rely on hospital payment records.426

Collection Actions: 9.3.7 Nursing Home Law

If the medical debt is owed to a nursing home facility, regulations governing that industry may provide a defense or cause of action. The federal Nursing Home Reform Law (NHRL) prohibits a facility from requiring a resident’s family or friends to become financially responsible for expenses.433 The NHRL regulations also require that nursing facilities inform consumers of all charges, including (for Medicaid recipients) those charges not covered by Medicaid.434

Collection Actions: 9.3.8.1.1 Overview

The enactment of the No Surprises Act445—which took effect on January 1, 2022—extended uniform protections against “surprise billing” (or “balance billing”)446 to consumers with private insurance, whether employer-provided or purchased on their own.447 On August 26, 2022, the Departments of Labor, Health and Human Services (HHS), and the Treasury issued final rules implementing the surprise medical billing provisions of the No Surprises Act.

Collection Actions: 9.3.8.1.3 Interaction between the No Surprises Act and state surprise billing laws

More than half of states have enacted their own surprise billing (or balance billing) laws.490 The No Surprises Act sets a minimum standard for surprise billing protections. The states can impose stronger surprise billing protections as long as those laws do not prevent application of the No Surprises Act. For example, some states’ surprise billing protections extend to ground ambulance services, whereas the No Surprises Act’s protections exclude ground ambulance services.

Collection Actions: 9.3.8.2 Medicare and Medicaid Balance Billing Protections

Medicaid programs often reimburse providers at rates less than what private insurers pay and far less than “chargemaster” or “list” charges.”495 Medicaid law prohibits health care providers from engaging in the practice of balance billing, or collecting additional amounts from Medicaid patients for a covered benefit to make up for the difference between chargemaster and Medicaid rates.496 The Medicare Act contains a similar protection against balance billing.

Collection Actions: 9.3.8.3 Other Protections Against Balance Billing

By some estimates, nearly one-third of privately insured Americans have received surprise medical bills, many of which were the result of out-of-network charges.518 A particularly difficult issue is balance billing by so-called “out-of-network” providers, especially emergency room physicians, who do not have contracts with managed care organizations.519 Essentially, a patient who is balance billed for out-of-network charges is in the same position as an uninsured patient with respect to facing e

Collection Actions: 9.3.9 Military Medical Debt

Patients who utilize the U.S. Department of Veterans Affairs (VA) healthcare systems have some protections from medical debt due to recent changes in medical debt reporting and financial assistance. Under the Johnny Isakson and David P. Roe, M.D.

Collection Actions: 9.4.2.1 Generally

Every state provides a private remedy under a statute that typically prohibits unfair and deceptive acts and practices (UDAP).562 Unfairness and deception are broad standards563 that may apply to any number of medical debt abuses.564 UDAP statutes also often have the advantage of providing a prevailing consumer with attorney fees and, in some cases, multiple or punitive damages.565