Fifteen states explicitly require hospitals to report total dollar amounts spent on financial assistance and/or bad debt, while 11 states also require hospitals to report certain data related to their financial assistance programs. Most of these 11 states limit the data they collect to the numbers of applications received, approved, denied, and appealed. However, a handful of them go further and ask hospitals to report on the amount of financial assistance provided per patient, number of financial assistance applicants approved and denied by zip code, number of payment plans created and completed, and number of accounts sent to collections.
Five states require hospitals to further break down their financial assistance data by race, ethnicity, gender, and/or preferred or primary language. For example, Maryland requires hospitals to break down the following data by race, ethnicity, and gender: the bills hospitals write off as bad debt and the number of patients against whom the hospital or the debt collector has filed a lawsuit.
Only Oregon asks hospitals to report on the number of patient accounts they refer for collections and extraordinary collections actions.
Discussion and Policy Implications
In 2022, the federal government announced administrative measures targeting the medical debt problem, which included launching a study of hospital billing practices and prohibiting federal government lenders from considering medical debt when making decisions on loan and mortgage applications.46 Although these measures will help some, only federal legislation and enhanced oversight will likely address current gaps in federal standards.
States can also fill the gaps in federal patient protections by improving access to financial assistance, ensuring that nonprofit hospitals are earning their tax exemption, and protecting patients against aggressive billing and collections practices. States also can leverage underutilized usury laws to protect their residents from medical debt.
Finding the most effective ways to enforce these standards at the state level could also protect patients. Absent oversight and enforcement, patients from underserved communities continue to face harm from medical debt, even when states require hospitals to provide financial assistance and prohibit them from engaging in aggressive collections practices.47 Bolstering reporting requirements alone would not likely ensure compliance, but states could protect patients by strengthening their penalties, providing patients with the right to sue noncompliant hospitals, and devoting funding to increase oversight by state agency officials.
To develop a comprehensive medical debt protection framework, states could also bring together state agencies like their departments of health, insurance, and taxation, as well as their state attorney general’s office. Creating an interagency office dedicated to medical debt protection would allow for greater efficiency and help the state build expertise to take on the well-resourced debt collection and hospital industries.
Still, these measures only address the symptoms of the bigger problem: the unaffordability of health care in the United States. Federal and state policymakers who want to have a meaningful impact on the medical debt problem could consider the protections discussed in this report as part of a broader plan to reduce health care costs and improve coverage.
HOW WE CONDUCTED THIS STUDY
This report is based on a review of federal and state laws, regulations, and related materials. Specifically, we analyzed the federal tax laws governing nonprofit hospitals, federal laws regulating debt collectors and credit reporting agencies, state laws and regulations governing hospital financial assistance policies, community benefits, hospital billing and collections practices, medical debt lawsuits, and related hospital reporting requirements. We reviewed all relevant statutes, regulations, and any publicly available subregulatory materials. Finally, we confirmed our research by reaching out to state agency officials, legislators, policy experts, and advocates with expertise in their state’s medical debt protection laws.
ACKNOWLEDGMENTS
The authors thank all the state agency officials, legislators, policy experts, and advocates who shared their knowledge with us. We are also grateful to Jenifer Bosco and Noam Levey for their thoughtful review, and our former colleague, Madeline O’Brien, for her invaluable support.
NOTES
- David U. Himmelstein et al., “Medical Bankruptcy: Still Common Despite the Affordable Care Act,” American Journal of Public Health 109, no. 3 (Mar. 2019): 431–33. ↩
- Lunna Lopes et al., Health Care Debt in the U.S.: The Broad Consequences of Medical and Dental Bills (Henry J. Kaiser Family Foundation, June 2022); and Noam N. Levey, “100 Million People in America Are Saddled with Health Care Debt,” KFF Health News, June 16, 2022. ↩
- Lopes et al., Health Care Debt in the U.S., 2022; and Mackenzie Hawkins, “Two in Three Americans Couldn’t Cover $400 Emergency, Suze Orman Warns,” Bloomberg News, Jan. 24, 2023. ↩
- Megan Brenan, “Record High in U.S. Put Off Medical Care Due to Cost in 2022,” Gallup Wellbeing, Jan. 17, 2023; and Lopes et al., Health Care Debt in the U.S., 2022. ↩
- Lopes et al., Health Care Debt in the U.S., 2022. ↩
- Olga Khazan, “What Happens When You Don’t Pay a Hospital Bill,” The Atlantic, Aug. 28, 2019. ↩
- Selena Simmons-Duffin, “When Hospitals Sue for Unpaid Bills, It Can Be ‘Ruinous’ for Patients,” National Public Radio Health News, June 25, 2019; and Lindsey Bomnin and Stephanie Gosk, “Surprise Medical Bills Lead to Liens on Homes and Crippling Debt,” NBC Health News, Mar. 19, 2019. ↩
- Noam N. Levey, “Nineteen Surgeries over Five Years. Then They Lost Their House.,” KFF Health News, June 16, 2022. ↩
- Consumer Protection Financial Bureau, Complaint Bulletin: Medical Billing and Collection Issues Described in Consumer Complaints (CPFB, Apr. 2022). In 2022, the three major credit reporting agencies — Equifax, TransUnion, and Experian — announced plans to stop including information on all unpaid medical debt under $500 as well as all paid medical debt in credit reports. A CFPB report on the impact of this decision finds that though it will have a large effect on the number of medical collections reported, “about half of all consumers who currently have medical collections on their credit reports will likely still have” them on there. ↩
- Miranda Santillo et al., “Communities of Color Disproportionally Suffer from Medical Debt,” Urban Wire (blog), Urban Institute, Oct. 14, 2022; Neil Bennett et al., “19% of U.S. Households Could Not Afford to Pay for Medical Care Right Away,” U.S. Census Bureau, Apr. 7, 2021; and Robin A. Cohen and Amy E. Cha, “Problems Paying Medical Bills: United States, 2021,” National Health Statistics Reports, no. 180 (National Center for Health Statistics, Jan. 18, 2023). ↩
- Zack Cooper, James Han, and Neale Mahoney, “Hospital Lawsuits over Unpaid Bills Increased by 37 Percent in Wisconsin from 2001 to 2018,” Health Affairs 40, no. 12 (Dec. 2021): 1830–35; and Jessica LaVoice and Domonkos F. Vamossy, “Racial Disparities in Debt Collection,” SSRN (Sept. 1, 2019). ↩
- Michael Karpman, Most Adults with Past-Due Medical Debt Owe Money to Hospitals (Urban Institute, Mar. 13, 2023); Cohen and Cha, “Problems Paying Medical Bills,” 2023; Lopes et al., Health Care Debt in the U.S., 2022; and Bennett et al., “19% of U.S. Households,” 2021. ↩
- Lopes et al., Health Care Debt in the U.S., 2022. ↩
- Karpman, Most Adults with Past-Due, 2023. ↩
- Lopes et al., Health Care Debt in the U.S., 2022; and Sara R. Collins, Lauren A. Haynes, and Relebohile Masitha, The State of U.S. Health Insurance in 2022: Findings from the Commonwealth Fund Biennial Health Insurance Survey (Commonwealth Fund, Sept. 2022). ↩
- Matthew Rae et al., The Burden of Medical Debt in the United States (Peterson–KFF Health System Tracker, Mar. 10, 2022). ↩
- Daniel Arnold and Christopher M. Whaley, Who Pays for Health Care Costs? The Effects of Health Care Prices on Wages (RAND, July 2020); and Zack Cooper et al., Do Higher-Priced Hospitals Deliver Higher-Quality Care? (National Bureau of Economic Research, Feb. 2022, revised Jan. 2023). ↩
- “Fast Facts on U.S. Hospitals, 2023,” American Hospital Association, n.d.; and “Requirements for 501(c)(3) Hospitals Under the Affordable Care Act — Section 501(r),” Internal Revenue Service, last updated July 13, 2023. ↩
- “IRS Oversight of Hospitals’ Tax-Exempt Status,” U.S. Government Accountability Office, Apr. 26, 2023. ↩
- For this report, we treat the District of Columbia as a state. ↩
- Oregon and Texas do not extend their financial assistance standards to their for-profit hospitals. New York’s financial assistance standards only apply to nonprofit hospitals accepting state uncompensated care funding, but the state has no for-profit hospitals. (N.B.: Some states, like Maine and New York, do not have any for-profit hospitals.) ↩
- Connecticut requires any hospital receiving a private donation (referred to in the state as a “bed fund”) for the provision of medical services to provide financial assistance in accordance with state law. In practice, this requirement ends up applying to all the state’s hospitals. Georgia and Nevada apply their financial assistance laws only to disproportionate share hospitals and certain large hospitals, respectively. New York’s financial assistance standards apply to all nonprofit hospitals receiving state uncompensated care funding, which includes most, but not all, hospitals in the state. ↩
- Some states also establish provider reimbursem*nt funds to incentivize hospitals to provide financial assistance without requiring that they do so. For this report, these states have been marked as not having financial assistance standards. ↩
- California, Colorado, Illinois, Maine, Maryland, Nevada, Rhode Island, South Carolina, Vermont, and Washington. ↩
- Florida, Georgia, New Jersey, New York, Ohio, and Oklahoma. ↩
- Delaware and the District of Columbia. National Conference of State Legislatures, Certificate of Need State Laws (NSCL, last updated Jan. 1, 2023). ↩
- Colorado, Illinois, Maryland, and Vermont. ↩
- Florida, Oklahoma, and South Carolina. ↩
- Maryland, New Jersey, and Oklahoma. ↩
- Financial assistance only available to uninsured: Connecticut, Illinois, Nevada, Ohio, Oklahoma, and Rhode Island. Financial assistance available to underinsured as well: California, Delaware, District of Columbia, Maine, New Jersey, New York, South Carolina, and Vermont. ↩
- Allie Atkeson and Elinor Higgins, How States Can Hold Hospitals Accountable for their Community Benefit Expenditures (National Academy for State Health Policy, Mar. 15, 2021). ↩
- Idaho, Nevada, and New Hampshire. ↩
- The District of Columbia, Minnesota, Nevada, Rhode Island, South Carolina, and Virginia. ↩
- The District of Columbia, Illinois, Indiana, Nevada, Oregon, Rhode Island, and Texas. ↩
- For additional details on these eight states, see cite to interactive maps page. ↩
- Daniel G. Bird and Eric Maier, “Wayward Samaritans: ‘Non-Profit’ Hospitals and Their Tax Exempt Status,” University of Pittsburgh Law Review (forthcoming, posted online Apr. 14, 2023). ↩
- Michelle Black and Robin Saks Frankel, “What Is the Average Credit Card Interest Rate This Week? April 25, 2023,” Forbes Advisor, Apr. 25, 2023, accessed Apr. 26, 2023. ↩
- “Minn. AG Sues Allina over Interest on Medical Debt,” MPR News, Jan. 22, 2009. ↩
- California, Illinois, Maryland, Minnesota, and North Carolina. Additionally, though Connecticut does not require hospitals to oversee debt collection agencies, it does require hospitals to submit to the state a “debt collection report” providing information on the names of debt collectors it uses, its policies on sending a bill to collections, what it pays debt collectors, and the recovery rate of the debt collector. ↩
- Debt Buyers (Office of the Minnesota Attorney General, n.d.). ↩
- Minnesota AG Office, Debt Buyers, n.d. ↩
- Maryland, New Mexico, and Vermont. New Mexico only prohibits sale of debts accrued by patients under 200 percent of federal poverty level. ↩
- This Colorado protection is set to expire on July 1, 2028. ↩
- The District of Columbia, Florida, Iowa, Kansas, Oklahoma, South Dakota, and Texas. ↩
- “Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act’s Title III (CCPA),” U.S. Department of Labor, revised Oct. 2020. ↩
- “Fact Sheet: The Biden Administration Announces New Actions to Lessen the Burden of Medical Debt and Increase Consumer Protection,” The White House, Apr. 11, 2022. ↩
- National Nurses United, Preying on Patients: Maryland’s Not-for-Profit Hospitals and Medical Debt Lawsuits (NNU, Feb. 2020). ↩
