New State Medical Regs Could Benefit Collectors

If more states pass legislation regulating how creditors collect medical care debt, hospitals and other health care providers will need the help of ARM professionals to understand and navigate the new laws, according to a report published Friday by Kaulkin Media’s Analyst Group.

Previously, hospitals were exempt from the federal Fair Debt Collection Practices Act (FDCPA). But at least one state, Nevada, is requiring that hospitals there comply with the law, according to the “Curses or Cures” report.

“This is a major development for hospitals in Nevada,” said Michael Klozotsky, Kaulkin Media’s healthcare analyst. “A hospital could be sued for violating the law.”

California, Illinois and North Dakota also passed or enacted legislation this year designed to ensure creditors and collection professionals don’t abuse consumers. The measures include holding hospitals accountable for the actions of the collection agencies they hire.

“That’s a high level of activity for one year,” Klozotsky said, adding that he believes other states could follow suit and pass similar laws regulating medical debt collections.  “Hospitals in other states will have to pay attention (to the new regulations). A law like AB 247 in Nevada creates a model for other states to enact legislation.”

The upshot is that hospitals will have to create or expand in house departments to ensure they abide by the new laws, or hire professionals to do it for them, Klozotsky said. Given that the latter is more likely, collection agencies could receive more process outsourcing work or serve as customer care advisors, given their familiarity with FDCPA, he said.

Klozotsky is predicting that collection law firms, currently the smallest sector of the ARM industry, will see the most growth if more states adopt medical debt collection regulations. In addition to defending hospitals against lawsuits for alleged FDCPA violations, collection law firms will see more work as general creditor rights advisors, he said.

“Now suddenly a firm licensed in seven states has exponentially expanded the market for their services,” Klozotsky said.