Patient groups press government to do more on medical debt

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Patient and consumer advocacy organizations, including the Center for American Progress and the Legal Council for Health Justice, have sent letters to the IRS and Consumer Protection Bureau pushing the Biden administration to do more to protect Americans from medical bills and debt collectors.

The groups are advocating for the federal government to bolster financial assistance policies, limit hospital charges and protect people from certain billing and collection practices, with an eye toward keeping debt for medically necessary care from appearing on consumer credit reports.

WHAT'S THE IMPACT?

In their letter to the IRS, the groups said about one-third of all adults in the U.S. have medical debt.

"People with medical debt disproportionately have low incomes, and 80% of medical debt is held by households with negative net worth," they wrote. "As a result of discriminatory barriers to economic security, Black and Hispanic households are more likely than white households to hold medical debt, so actions to reduce it are a step in the direction of equity."

The groups encouraged the IRS to strengthen and enforce current rules, specifically the provisions of Section 1.501(r) of the Affordable Care Act, which in their view "can be improved to limit the accumulation of medical debt, make billing and collections fairer, and hold non-profit hospitals accountable for practices that are antithetical to their charitable status and harmful to their patients."

Section 1.501(r) gives hospitals wide latitude to establish and implement the Financial Assistance Policies (FAP) mandated by the ACA, they said. 

In terms of specific actions, the letter suggested the IRS should specify minimum financial eligibility criteria, such as the percentage of the federal poverty level below which a family would qualify for free care; prohibit certain nonfinancial eligibility limitations, such as residency requirements, lawful presence requirements, and other barriers to assistance; require hospitals to assist patients with the FAP application; and require hospitals to make FAP application data public in their Community Health Needs Assessments to promote transparency about the hospitals' practices and the debt its patients hold.

To protect people from certain billing and collection practices, the groups said the IRS should curtail Extraordinary Collection Actions (ECAs) by prohibiting outright certain practices such as foreclosures, bank account seizures, and debt sales; and prohibit delaying or denying future medically necessary care due to nonpayment.

In the letter to the Consumer Financial Protection Bureau, the groups said CFPB should undertake rulemaking to enhance the protections of the Fair Credit Reporting Act, undertake rulemaking to eliminate deferred interest in medical credit cards, and aggressively pursue "unfair, deceptive and abusive practices."

"The CFPB should work with state attorneys general and other consumer financial regulators to bring actions against providers that violate state laws, such as its recent action against Bank of America for illegal garnishments," the groups wrote.

THE LARGER TREND

Unpaid healthcare bills are one of the largest sources of debt for Americans, reaching $140 billion in 2020, according to a 2021 JAMA analysis.

In June 2020, an estimated 17.8% of individuals had medical debt, with 13% accruing debt during the prior year. The mean amount was $429, with $311 accrued during the prior year.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com