April 15, 2021
We’re excited to share that the Medical Debt Protection Act passed the Maryland General Assembly in March and is headed for the Governor’s desk. The bill is a strong foundation for protecting low-income Marylanders’ livelihoods, homes, and potential for intergenerational wealth transfer from harmful hospital medical debt collection practices.
This victory was a team effort. PJC attorney Ashley Black worked with bill sponsors Delegate Lorig Charkoudian and Senator Brian Feldman and End Medical Debt Maryland, a coalition of 57 organizations and more than 350,000 advocates and individuals with lived experience with medical debt. As Senate Bill (SB) 514 / House Bill (HB) 565 progressed through legislature, the coalition demonstrated hospitals’ tendency to sue patients, mostly people of color and women, for relatively small amounts of debt instead of using the millions of dollars in charity care funding they receive to cover the cost of care for patients who cannot afford their medical bills. A report from the Maryland Health Services Cost Review Commission (HSCRC) showed that hospitals turned 60% of patients eligible for free care over to debt collectors, resulting in these patients paying approximately $60 million statewide. Hospitals have garnished wages, placed liens on homes and have devastated the lives of low-income Marylanders. All this for an average debt of $944. These practices have continued during the COVID-19 pandemic, when only about one third of Maryland hospitals stopped suing patients.
The coalition successfully fought off several attempts to weaken the bill. While we were disappointed that the opposition removed a provision that would have banned lawsuits by hospitals for debts under $1,000, the bill contains many important provisions that will benefit thousands of Marylanders. Here are some of the major components of the Medical Debt Protection Act:
- An unofficial moratorium on medical debt lawsuits, the first of its kind in the country. HSCRC must develop guidelines for an income-based repayment plan on or before January 1, 2022. Hospitals must submit and have their financial assistance policy approved by the HSCRC before they can begin suing patients again. When read together, these provisions essentially create an unofficial moratorium on medical debt lawsuits potentially until January 1, 2022.
- Hospitals cannot seek body attachment[1] or an arrest warrant against patients for medical debt; garnish wages against patients who are eligible for free or reduced-cost care; or make a claim against the estate of a deceased patient to collect the debt if the hospital knew the deceased patient was eligible for free care or if the value of the estate after tax obligations are fulfilled is less than half of the debt owed. These provisions will protect low-income Marylanders from losing their livelihoods, homes, and the potential for intergenerational wealth transfer.
- Hospitals must develop a financial assistance policy and submit it annually to HSCRC. There are minimum requirements that the policy must meet, including a requirement that hospitals determine eligibility for free or reduced-cost care at the time of service. If the patient’s financial situation changes within 240 days after the initial bill is provided, they can be reconsidered for financial assistance. Hospitals must provide the policy in the patient’s preferred language. They cannot collect additional fees that exceed what is allowed by HSCRC for patients eligible for free or reduced-cost care. These safeguards will protect patients from having to pay more than they should.
- HSCRC must release a public report annually on the number of patients sued; the number of patients that hospitals report or classify as “bad debt”; and the total dollar amount of hospital charges provided to patients but not collected by the hospital for patients who are covered by insurance and those without insurance. Lawsuit and debt data must be reported by race, ethnicity, gender, and zip code. The data must be submitted annually by each hospital to HSCRC for the report.
- HSCRC must develop guidelines with input from stakeholders for an income-based repayment plan. Stakeholders will include individuals with lived experience with medical debt, labor unions, legal service providers who work with patients who have experienced medical debt, and patients’ rights organizations.
- Hospitals cannot report to a consumer reporting agency or file a lawsuit to collect debt within 180 days after they provide the initial bill to the patient. Additionally, hospitals cannot report adverse information to a consumer reporting agency regarding a patient who was uninsured or eligible for free or reduced-cost care at the time of service.
- Hospitals must offer repayment plans to eligible patients. They cannot charge interest or fees on any debt incurred on or after the date of service by a patient who is eligible for free or reduced cost care. Further, hospitals must notify all patients with medical debt in writing about the availability of an installment payment plan for the debt. They cannot file lawsuits against patients to collect medical debt until 180 days after the initial bill was provided to the patient.
HB 565 / SB 514 unanimously passed the House and Senate and is on its way to the Governor. With this legislation, Maryland has positioned itself to have one of the strongest medical debt laws in the country. Please take a moment to urge Governor Hogan to sign the bill here. Going forward, the PJC will advocate with the End Medical Debt Maryland coalition for additional safeguards to ensure that people can access healthcare without worrying about the cost. To learn more, check out End Medical Debt Maryland on Facebook and Twitter.
[1] A brief explanation of body attachment in Maryland: A creditor can ask a court to issue an order directing law enforcement or a sheriff to bring the debtor before the court to answer questions and explain themselves. This type of warrant is typically used for civil contempt, where an individual fails to show up for a hearing. https://ricelawmd.com/body-attachment-warrant-maryland/.
