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The State of Medical Collections

Medical debt accounts for one of the largest markets in collections.  While the Fair Debt Collection Practices Act regulates debt collection in general, the American Hospital Association (AHA), the national organization that represents and serves hospitals, health care networks and their patients, created a set of guidelines for member hospitals to follow regarding their billing and collection practices.

Other state hospital associations have implemented their own guidelines as well. ACA members who collect medical debt should be aware of both state and federal guidelines for hospital billing and collections.  The guidelines introduced by AHA include several objectives member hospitals are to set into practice to better serve their patients. The guidelines include substantive criteria under the following headlines:

Communicating Effectively

Helping Patients Qualify for Coverage

Ensuring Hospital Policies are Applied Accurately and Consistently 

Making Care More Affordable for Patients with Limited Means

Ensuring Fair Billing and Collection Practices

In addition to the AHA guidelines, state hospital associations have adopted their own guidelines for their members to follow. While the state association guidelines tend to mirror those of the AHA, each has added its own specific language or requirements. Not to be left out, some states have even enacted legislation governing hospital billing practices.

A few states have robust legislation concerning hospital billing. One state’s hospital billing act requires each hospital in the state to establish a written policy about when and under whose authority patient debt is advanced for recovery efforts. 

Any debt collectors who contract with the hospital must follow its policy. Among other things, debt collectors in this particular state must have a written agreement with the hospital for which they are collecting.  The law also limits the ability of the hospital and its agents to use wage garnishments or liens on primary residences as a means of collecting unpaid hospital bills.  Other states with hospital billing requirements are not as robust as the one previously mentioned. 

These states have requirements that can include things such as giving notice to the patient as to whether the hospital deems her to be insured or uninsured, and the reason for such determination; not employing a third-party to use physical or legal means to compel the patient or responsible party to appear in court; and not furnishing a negative consumer report or filing suit until 120 days have passed.

It’s imperative that debt collectors who collect medical debt ensure they are aware of the state laws concerning hospital billing. ACA SearchPoint document #2805, State Hospital Billing and Collection Practices, provides an analysis of state and federal laws that deal with state medical billing and collection practices.

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