Financial Assistance and Debt Collection Policy Legislation

Enacted By the Maryland General Assembly in the 2009 Session

Prepared by Louise M. Carwell

Senior Attorney for Consumer Law

Overview:

Governor Martin O’Malley signed into law HB 1069 and SB 776 on May 7, 2009. These cross filed bills, sponsored by Del. Peter Hammen of BaltimoreCity and Sen. George Della of Baltimore City were in response to a series in the Baltimore Sun that ran in late 2008 regarding the billing and collection of medical bills. Of particular concern to our clients were hospitals that failed to bill medical assistance and then took collection action against the patient or hospitals that failed to reach out to patients to ensure that they took advantage of financial assistance programs that hospitals were required to make available to patients who could not afford to pay part or all of a medical bill.

Collection action that was taken against patients resulted in collection letters, reports to credit reporting agencies, lawsuits, judgments entered, and lien on homes, bank accounts and wages.

The Enacted Legislation

The legislation that was signed on May 7, 2009 was called Health Services Cost Review Commission – Financial Assistance and Debt Collection Policies.

The Purpose

The purpose of the legislation is to require most hospitals to develop financial assistance policies to certain patients. The policies will have to be uniform and those persons at 150% of poverty or below will be eligible for free care for medically necessary care. The 150% figure may be higher in certain parts of the state and for certain hospitals. All patients or their agents must be given, in writing, the financial assistance policy of the hospital before they are discharged and the policy must also be posted in the hospital billing office. Hospitals thus far are reading the law to apply to in patients only. Further, the information given and the implementation will be reviewed by the Health Services Cost Review Commission to ensure compliance and because the Commission will be establishing the uniform policies and procedures. The Commission must report its findings and recommendations to the Governor by October 1, 2009.

Where You Find the Legislation in the Annotated Code

You will find the changes to current law in the Health General Articles at Ann. Code of Md., Health Gen. Art., at amended 19-214, 19-214.1, with newly added sections, 19-214.2 and 19-214.3.

When Does the Law Go Into Effect?

The law becomes effective June 1, 2009. The Health Services Cost Review Commission issued initial regulations that gave guidance to the hospitals that must comply with the new legislation regarding suggestions on what information they should include with the Patient Information sheet. The Health Services Cost Review Commission will also conduct meetings via a work group that will review the information sheets that all hospitals must submit to it and issue final regulations in the fall of 2009. The final regulations will be located in COMAR.

What Hospitals Are Covered?

In Maryland there are approximately 46 hospitals covered and they are hospitals that deliver “acute” care. You should think about these hospitals as the ones that are in your community and that deliver all manner of services and are not specialty facilities or for particular mental or emotional care.

What Does the Law Require or Do?

  • Acute care hospital must develop a financial assistance policy for the provision of free and reduced cost care to patients who have no medical insurance or whose medical insurance does not fully cover the bill.

The policy the hospital develops will have to provide at least that for (1) a patient with family income at or below 150% of poverty, free care for medically necessary care;

(2) Reduced cost medically necessary care to patients with a family income above 150% of the federal poverty level, in accordance with the mission and service area of the hospital.

The Commission can establish income threshold levels that are higher than those stated above.

  • A uniform Patient Information Sheet that:

Describes the hospital’s financial assistance policy;

Describes the Patient’s rights and obligations with respect to the hospital’s billing and collection under the law;

Provides contact information for an office or person at the hospital that can help the patient, the patient’s family or authorized representative to understand the bill;

The patient’s rights and obligations as to the bill;

How to apply for free or reduced care;

How to apply for medical assistance or other programs that can help pay the bill;

Provide contact information for medical assistance

Include a statement that the physician’s charges are separately billed.

This sheet must be provided before discharge, with the bill, and upon request.

The hospital bill will refer to this sheet

  • Posting the financial assistance policy in the billing office, in addition to other conspicuous places.
  • The hospital must have on staff employees that are able to assist patients that seek financial assistance.
  • The Health Cost Review Commission will review the implementation and compliance with the new requirements.
  • If a hospital fails to comply with the new requirements, the Commission can impose a fine up to $50,000 per violation but must consider the appropriateness of the fine before imposition.
  • The Commission must establish a workgroup on these new provisions to the Health General Article that focus on debt collection and financial assistance.
  • The Commission will have to study, make recommendations and report on incentives for the hospitals to provide free and reduced care to certain patients.
  • At times set by the Commission, hospitals will have to report the hospital’s policy on the collection of debts owed by patients. The policy itself has to provide for (1) active oversight of those collecting debt for the hospital under a contract with the hospital; (2) prohibit selling of hospital debt; prohibit the charging of interest on bills of self pay patients before a judgment is entered; (3) describe in detail how the hospital considers a patient’s income, assets and other criteria and its procedures for collecting a debt and (4) when it will pursue a judgment.