MN Bill Proposes to Ban Medical Debt Sales

The Minnesota legislature was busy in February 2024. Though the Minnesota Debt Fairness Act captured recent headlines (a deep dive into the bill can be found here), another bill that proposes to ban the sale of medical debt in the state, could also cause significant disruption to the industry and to Minnesota citizens. 

The bill, SF 3681, proposes to amend MN statute 332.37. Though the bill contains only one amendment,  it is a powerful one:

“(a) No collection agency, debt buyer, or collector shall : [...]

(25) purchase medical debt owed to: (i) a medical provider; (ii) a medical facility, including but not limited to a hospital; or (iii) an affiliate of any such provider or facility.”

If passed, medical providers who are unable to collect patient debt using their own devices would be limited to using the services of collection agencies or not collecting anything on the debt at all. In other words, the bill does exactly what it looks like: if passed, it would ban the sale of medical debt in Minnesota. 

insideARM Perspective

The proponents of this bill seem to be operating under the assumption that the problem with medical debt is the sale of it to debt buyers. As with the Debt Fairness Act, the legislature in Minnesota is ignoring potential consequences and focusing on the symptom of debt collection instead of the actual problem of increased costs of medical care.

Though requiring medical providers to collect debt on their own or through an agency may seem preferable to the idea of allowing them to sell the debt, additional costs might flow down to patients. Medical providers may be less willing to offer beneficial deals or payment terms to a patient than a debt buyer. Further, providers might move to litigation on accounts they would otherwise sell, which would move up the timeline for when that debt becomes a burden on the patient. 

Additionally, this proposal doesn’t consider the potential repercussions this could have for medical care and patients in the state. What happens when medical providers can’t collect or sell the debts owed to them? Will they want to stay where they may struggle to get paid for the work they do? And will medical facilities be able to stay open facing the increasing costs and difficulty of collection?