Medical debt affects an estimated three in 10 U.S. adults, and for collection professionals who work these accounts, that statistic comes with a compliance landscape that continues to grow more complex. State laws governing financial assistance, billing, and collections vary widely, and accounts receivable management (ARM) companies serving healthcare clients must understand which requirements apply to the accounts they handle.
A recent Commonwealth Fund report examining state laws highlights how fragmented the landscape has become. While the report focuses on gaps in patient protections, it also demonstrates that there is no uniform national standard governing the preparation and collection of healthcare accounts. Requirements can differ based on the state, provider type, and how the underlying debt is held.
Requirements Before Account Placement
Federal law requires nonprofit hospitals to establish financial assistance policies, but it does not establish specific standards for who must qualify or how much financial assistance hospitals must provide.
Twenty states and the District of Columbia have adopted minimum requirements addressing eligibility for financial assistance, the amount of assistance that must be offered, or how patients can apply.
According to the report, eight states require hospitals to screen patients for financial assistance or public insurance eligibility before an unpaid account can be advanced to collections. Other states impose additional conditions on collection placement. In North Carolina, for example, hospitals cannot send an account to collections while an insurance determination or financial assistance application remains pending.
Hospitals and healthcare providers are generally responsible for determining whether patients qualify for financial assistance before placing an account with a collection agency or other third party. However, collection agencies, law firms, and debt buyers must still understand the applicable requirements and ensure that accounts are appropriate for collection when they are received.
Account and Provider Type Matter
State protections may depend not only on the nature of the debt, but also on the type of healthcare provider involved and who holds the account.
Many state requirements apply specifically to debts owed directly to hospitals. Accounts involving physicians, dentists, ambulance services, outpatient facilities, or independently billing hospital-based providers may be subject to different requirements.
How a patient pays for healthcare services can also affect which protections apply. State requirements may change when a patient uses a credit card or financing product to pay medical expenses. Once a balance becomes consumer debt rather than an amount owed directly to a healthcare provider, it may no longer fall under the same state-specific medical debt requirements.
Subject To Change
The differences among provider types, account ownership, and payment methods contribute to the varying treatment of medical debt across states. As a result, the requirements applicable to a medical account can depend on the state involved, the type of healthcare provider, the entity that holds the debt, and the manner in which the balance was originally billed or financed. As states continue to adopt and modify medical debt protections, the regulatory landscape remains subject to change.
Author: Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
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