Home > 2015 > Managing Debt

Hospital Bills Just Got Easier to Manage

Advertiser Disclosure Comments 0 Comments

The Department of Treasury and the Internal Revenue Service issued final regulations on new community benefit requirements for nonprofit hospitals on Dec. 29 – offering welcome protection to American consumers struggling with healthcare costs. These regulations call on hospitals to establish written financial assistance policies (also known as charity care policies), limit the amount billed to patients who qualify for assistance, and require hospitals to screen patients for such assistance prior to pursuing aggressive collection actions.

The release of the final regulations were released after a busy time of examining medical debt. In early December, the Consumer Financial Protection Bureau issued a report that found 43 million American consumers have medical collections on their credit reports.

Millions of Americans have only medical collections on their reports and half of them have otherwise clean credit, meaning they have no serious delinquencies and show no other signs of financial distress. The agency also found that most credit scoring systems penalize consumers who have medical collections on their credit reports.

Investigative reporters from ProPublica and NPR issued a report in early December focused on the debt collection practices of nonprofit hospitals. These charitable hospitals benefit from generous federal tax exemptions, as well as state and local exemptions. But the reporters found that certain nonprofit hospitals use aggressive collection actions such as going to court and getting wage garnishments. Some people may think it inconsistent for a charitable institution to sue people. Several people featured in the story had wages garnished and were low income; they claimed that they were never informed of financial assistance.

Creating a Policy & Being Transparent

Enter the Department of Treasury and the IRS. They were directed to establish new rules governing the “community benefit” to be provided in exchange for the tax subsidies received by charitable hospitals. These new requirements were included in the Affordable Care Act and were intended to promote transparency of nonprofit hospitals’ assistance policies, as well as protect patients from aggressive collection actions if they were eligible for such assistance.

Though it has been nearly five years since passage of the Affordable Care Act, these final regulations only now clarify the requirements. Here are some of the highlights:

  • Hospitals must establish financial assistance policies that clearly describe eligibility and the level of assistance provided, for example, whether free or discounted care is available.
  • Policies must include the information and documentation required to make an eligibility determination, and no one can be denied eligibility based on documentation not clearly referenced in the policy.
  • Each hospital must make its financial assistance policy, application and a plain language summary available on its websites.
  • Information on assistance must be conspicuously posted in the emergency room and admitting sites.
  • Hospitals must take proactive steps to inform groups in their service area of this assistance, so as to reach those most likely to benefit from such assistance.

Hospitals are also required to limit the amount charged patients who qualify for assistance to amounts generally billed patients with insurance. This requirement should put an end to the practice of charging the uninsured the highest of rates.

Collecting on Medical Debt

When it comes to collections, the regulations include strong protections. Hospitals are required to get approval from the governing board before the hospital or any third-party collection agency operating on their behalf uses extraordinary collection actions to collect on bills. The regulations include among these actions reporting collections to credit bureaus, selling debt to another party, and taking action that requires legal or a judicial process such as putting a lien on property, seizing a bank account, causing an individual’s arrest or wage garnishments.

Typically, hospitals must wait 120 days following the date of the first billing statement before taking such actions. And, patients must be given a 30-day notice of the actions a hospital intends to take. The notice must also include a plain language summary of the financial assistance offered.

Finally, hospitals are required to accept applications for assistance up to 240 days following the date of the first billing statements. Both the hospital and its collection agencies must accept the application, and if the patient is found eligible, extraordinary collection actions must cease and a refund issued of amounts paid in excess of what the individual would be required to pay under the policy.

One important protection worth noting requires hospitals — and any third party collecting on their behalf — to take action to remove any adverse information that had been reported to a consumer credit bureau if the patient is subsequently found eligible for assistance for the particular account. This should help millions of Americans who’ve had their credit ruined because they were not informed of such assistance.

These new regulations do not go into effect until 2016. However, hospitals are currently required to rely on a reasonably good faith interpretation of the statute, which calls for transparency on policies and collection practices, and requires hospitals to make reasonable efforts to screen people for assistance. So there should be no more mystery regarding such assistance.

If you have outstanding bills from a non-profit hospital, regardless of whether or not you have insurance, call the hospital and ask for information on their financial assistance or charity care policy. Apply for assistance, even if the bill has already been sent to collection, or especially if it has been sent to collection. Work with the hospital and the collection agency to make sure it is not reported to the credit bureaus so that it does not drag down your credit score. If it has been reported and you are later granted assistance, make sure it is removed from your report. Remember, it is your right.

[Editor’s note: If you have medical debts that have gone to collection, it’s important to review your credit reports for accuracy, and to ensure that items that are eligible for removal have been removed. It can also help to monitor your credit scores to get an overview of your standing over time. You can get your free credit reports annually from AnnualCreditReport.com, and you can get a free credit report summary updated monthly on Credit.com.]

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.

More on Managing Debt:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team