WASHINGTON—U.S. Senators Chris Murphy (D-Conn.) and Chris Van Hollen (D-Md.) on Wednesday reintroduced legislation to strengthen consumer protections and reform medical debt practices. The Strengthening Consumer Protections and Medical Debt Transparency Act would put in place standard practices to make sure that health care entities communicate with consumers about any debt that is owed and cap the annual interest rate growth for medical debt. The legislation also directs the U.S. Department of Health and Human Services (HHS) to create a public database to collect information from health care entities about their debt collection practices.

“Forcing people to go bankrupt just because they get sick is immoral - plain and simple,” said Murphy. “We need to shed light on the hospitals out there who are abusing patients with overly aggressive debt collection practices. I hope we can get our legislation to increase transparency and reform hospital practices across the finish line.” 

“When folks are sick or in the hospital the last thing they should be worried about is whether they’ll lose their house or their wages for seeking care. But for many Americans these concerns are top of mind as medical debt has taken a devastating toll on hard-working families. I’m proud to team up with Senator Murphy to enhance consumer protections and stop the unjust, exploitative practices used to collect medical debt. This legislation puts safeguards in place to ensure transparency, cap interest rates, and keep the focus on patients’ health and wellbeing so they can get the care they need,” said Van Hollen. 

A report from the Kaiser Family Foundation this summer found that medical debt was a widespread issue impacting an estimated 41% of Americans — or about 100 million adults. The report also found that in their efforts to pay what was owed, adults report making “a number of sacrifices and enduring substantial financial consequences.” And those with lower incomes and people of color were more likely to report being contacted by collection agencies, being denied subsequent care, or changing their housing situation to pay down their medical debt.

The Strengthening Consumer Protections and Medical Debt Transparency Act would require that:

  1. The Department of Health and Human Services (HHS) create a publicly available database of annual reporting from hospitals, freestanding facilities, and large provider practices with information about whether they use collection agents, the process for assigning debt to a collection agent, and the number of Extraordinary Collection Actions, as defined by the IRS, they have initiated. HHS will maintain a public list of any health care entity that does not submit the required information each year.
  2. Medical debt interest rates should be capped at the annual rate set by the federal post-judgment interest rate or 5 percentage points annual growth, whichever is lower, to protect patients from uncontrolled rate increases that multiply debts.
  3. Before an entity can send debt into collections, health care entities should ensure that all insurance coverage appeals have been resolved and determine whether the patient qualifies for assistance.
  4. Health care entities, or their contracted debt collection agencies, shall not enter into extraordinary collection until 180 days after an initial bill is sent and the debtor’s identity has been confirmed.
  5. Health care entities provide the patient with an itemized statement of the debt owed as well as detailed receipts of payments made within 30 days.
  6. A health care entity or its agent who fail to comply with changes under the Act is liable to the patient for actual damages and up to $1,000. In the case of a class action suit, damages are the amount each plaintiff could have recovered, not to exceed $2 million. If the patient is successful, then attorney’s fees and other costs also can be recovered.
  7. The Consumer Financial Protection Bureau (CFPB) issue a biennial report on medical debt and review the public database for its application to the CFPB’s risk supervision program.

 "Medical debt has reached epidemic proportions in our country. The UCONN Health Disparities Institute has been working tirelessly to understand its root causes, to measure it and to shed light on its devastating consequences on peoples' health, their financial wellbeing and on widening healthcare disparities among people of color,” said Victor G. Villagra, MD with University of Connecticut’s Health Disparities Institute. “But in the absence of a federal law that requires public reporting of debt collection practices by hospitals and other healthcare entities finding reliable data can greatly hamper such efforts. We are grateful to Sens. Chris Murphy and Chris Van Hollen for introducing this bill. It not only provides for a transparent public source of information but coupled with previous legislation against garnishment of debtors' wages for COVID-19 related debt, it introduces  broader consumer protections such as requiring timely, itemized, lay-person understandable explanations of what is owed and a sensible cap on interest rates charged. Medical debt is the only source of involuntary debt plaguing Americans; this bill could not be more welcomed."

“Medical debt is different from all other forms of debt. Medical care is involuntary and not optional. Also, patients usually have no way of knowing the price before they buy. That’s why people who owe medical debt deserve the additional, common sense protections proposed in this bill, such as an itemized statement, or having the debt collector verify that there is no charity care or other aid program that could help the family. Families struggling with the physical and emotional toll of serious disease or injury deserve to be treated with basic fairness and dignity by medical debt collectors, and this bill goes a long way toward making that a reality in Connecticut and all over America,” said Ted Doolittle, Connecticut’s State Healthcare Advocate.

 “We applaud Senators Murphy and Van Hollen for taking steps to limit the use of aggressive medical debt collection practices for people struggling to pay unaffordable health care costs. These collection actions disproportionately harm people of color who are more likely to have medical debt because they face unfair and discriminatory barriers to health and economic security,” said Emily Stewart, executive director of Community Catalyst. “This legislation would extend protections to millions of hard-working people who had the misfortune of getting sick while having inadequate insurance.”

"Medical debt is hurting families across the country, and falls even more heavily on people of color. Senator Murphy and Senator Van Hollen are championing fair, common-sense reforms to help patients get back on their feet after a health crisis and to protect families from punitive consequences of medical debt," said Jenifer Bosco, Attorney, National Consumer Law Center.