Senate Bill Aims to Remedy Healthcare Debt Collection Abuses

Collecting medical debts will get more difficult, should Congress enact laws proposed by Sen. Al Franken (D-Minn.).

Late last month Sen. Franken fulfilled a promise and submitted a bill to Congress proposing to strengthen the Fair Debt Collection Practices Act. The new bill — Senate 3350, “End Debt Collector Abuse Act of 2012″ — is nearly identical to an earlier bill Sen. Franken introduced except for the sections related to medical debt. That bill died in committee and was never enacted.

In his proposed changes to the Fair Debt Collection Practices Act, Franken seeks to have medical debt treated differently from other debt, especially as it applies to collection practices.

[To read how Sen. Franken’s bill would change the FDCPA, download this PDF]

According to the senator’s bill, “Medical debt is unique among types of consumer debt” because “consumers seek out health care services out of medical need, not choice” and they typically do not know how much healthcare services cost before they receive them. Also, “overly aggressive medical debt collection can discourage consumers from seeking needed healthcare services, with dire financial, physical and public health consequences for themselves and their communities.”

Under the bill, communicating with a patient while they are receiving critical medical services (such as in an emergency room or intensive care unit) about a medical debt shall be considered harassment or abuse and therefore a violation of law, unless the patient requests that information. According to the Minnesota Attorney General, this was a practice at Fairview Hospital.

The bill also adds to the section of “Unfair Practices” two provisions: Withholding or threatening to withhold emergency medical services until a debt is paid, and using protected patient information to collect a debt. It also expands upon recent rules proposed by the U.S. Treasury Department regarding making available information to patients regarding availability of financial assistance programs. In Sen. Franken’s bill, anyone seeking to collect a medical debt — be it from the provider or from a third-party collection agency — must inform the patient of financial assistance programs. The Treasury’s proposed regulations, which will be enforced by the IRS, will only apply to not-for-profit hospitals.

Sen. Franken, who has long been active in seeking legislation aimed at the credit and collection industries, became involved in medical debt collection practices following an investigation by the Minnesota attorney general into Minneapolis-based Fairview Health Services, a not-for-profit chain of seven hospitals and more than 40 clinics, and its contractual relationship with consultant Accretive Health, which allegedly integrated bill collectors into hospital admissions staff.

In May Sen. Franken conducted a Senate field hearing at the Minnesota state capitol to investigate attorney general Swanson’s claims, and at the end promised “to look into whether we can do more to strengthen our federal laws” regarding patient debt and collections practices.

At the end of June, Sen. Franken submitted two bills, the “End Debt Collector Abuse Act” and Senate 3351, “Protect Our Health Privacy Act,” which seeks to expand protections in the Health Information Technology Act (HITECH) to healthcare provider business associates, such as collection agencies.