Will Medical Debt Collection Legislation Finally End Up DOA?

Phil C. Solomon

U.S. Representative Heath Shuler introduced the Medical Debt Responsibility Act of 2011, H.R. 2086, with the support of three bipartisan Cosponsors. This bill intended to require credit agencies to remove paid or settled medical debt up to $2,500 per collection from credit reports within 45 days. This bill in its general form was reintroduced on 3/1/2012 as the Medical Debt Responsibility Act of 2012 and again introduced on January 28, 2013  as the S. 160: Medical Debt Responsibility Act of 2013.  The 2013 bill was referred to the Senate Banking, Housing, and Urban Affairs committee by its sponsors, Senator Jeff Merkley and co-sponsor Lacy Clay Jr.

Representative Heath Shuler, the initial sponsor of the legislation was quoted as saying that “Small amounts of medical debt cause huge credit problems for millions of responsible, hard-working Americans who have suffered an illness or accident,”. “This legislation would be a win for consumers and the economy. By keeping cleared medical debt off of credit reports, this bill will allow more Americans to have the credit score they deserve and need to buy homes and stimulate economic growth in their communities.”

Currently, medical debt that has been paid or settled can remain on consumer credit reports for up to seven years. An estimated 44 million Americans under the age of 65 have medical debt or medical bills being paid off over time and today 30,000,000 working-age American adults were contacted by a collection agency for unpaid medical bills. Medical bills account for more than half of all non-credit related collection actions reported to consumer credit reporting agencies. According to the Commonwealth Fund, medical bill problems or accrued medical debt affects roughly 73,000,000 working-age adults in America.

The passing of any of the aforementioned congressional bills would benefit the economy and consumers; however, it could also benefit medical providers and collection agencies. Providers have written off millions of dollars from consumers who have skipped payment on their self-pay balances, leaving their medical bills unpaid. Should any of these bills pass in their general form, it could give consumers the motivation to keep their credit clear and pay their outstanding medical bills under the $2,500 threshold. If consumers are moved by new medical debt laws and begin to pay a greater portion of their medical bills that are under the threshold, it could add millions of dollars to providers bank accounts.

Rep. Nydia Velazquez (D-NY), a Ranking Member of the House Small Business Committee an original cosponsor of H.R. 2086 bill said “Medical debt is not a reliable indicator of credit risk, yet nearly a quarter of Americans has seen their credit scores plummet because of small, routine medical bills,” “This bill provides a commonsense, simple solution to address this problem now and protect consumers in the future.” Rep. Ralph Hall (R-TX) said “I am pleased to be a sponsor of the Medical Debt Responsibility Act,” said . “This bill, which costs the taxpayer nothing to implement, is a bipartisan effort that recognizes the difficulties and inconsistencies relating to medical debt. At a time when our economy is unstable, this is a small but important step to bolstering financial certainty for Americans.”

To some, this information is old news. This subject has been discussed at nauseam over the past three years. The fact that this bill still sits in the Senate Banking, Housing, and Urban Affairs committee makes me wonder what our lawmakers are really doing in Washington? The website Govtrack.us still says the bill has a 1% chance of passing. It’s really comical…. the world is changing at warp speed yet our legislators often move at a snail’s pace. Do they spend some of their time creating bills that have little chance of passing just so they can put their publicists to work creating positive public relations stories?

If this legislation should ever pass (the chances are slim to none), do you believe it will bolster financial certainly as Representative Ralph Hall believes? I don’t think so. Do you believe that Medical Debt legislation could pass in the near term or will future efforts to legislate Medical Debt collection end up Dead on Arrival? I say, DOA!

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Phil C. Solomon is a healthcare finance and revenue cycle BPO strategist with experience spanning three decades. He is a sales, business development and marketing professional who provides business solutions for hospitals, health systems, large physician groups and channel partners. Phil has deep domain knowledge and expertise in revenue cycle optimization, clinical documentation improvement, healthcare technology integration and BPO outsourcing He is the publisher of Revenue Cycle News, a healthcare revenue cycle blog and is a featured speaker at many HFMA, NAHAM and AAHAM healthcare educational conferences.