Restrictive Debt Collection Language in Reform Bill Targets Hospitals, Not Debt Collectors

The healthcare reform bill that came out of the Senate Finance Committee is expected to have no negative impact on health care debt collectors. 

Press reports late last month indicated that the committee’s chairman, Sen. Max Baucus (D-Mont.), was going to focus on limiting what he called “aggressive debt collection practices” in his version of a health care reform bill. Some ARM professionals had feared the committee would propose delaying how soon non-profit hospitals could outsource certain receivables to collection agencies.

But Baucus’ mark up only seeks to limit collection practices at healthcare providers such as lawsuits, property liens, arrests and body attachments, tactics few medical collectors use.

ACA International’s Adam Peterman told insideARM that the organization views the proposal in the Senate Finance Committee bill to limit aggressive collection practices as “benign.”

“It’s a condition placed on providers’ administrators, not preventing debt collection agencies from being too aggressive,” said Peterman, ACA’s government affairs director. “As far as direct impact on our membership, we believe this to be negligible.  And through our discussions with Finance Committee staff, we expected its inclusion.”

Kaulkin Ginsberg Analyst Michael Klozotsky agreed that collection agencies have little to be concerned about, given that health care debt collectors have no power to file lawsuits or arrest patients who don’t pay their medical bills.

“The onus here is actually on healthcare providers to publish and communicate their financial assistance programs and policies to patients in an upfront and clear manner,” Klozotsky said. “This provision of the proposal seems both rational and financially sound from a healthcare finance perspective.”

Klozotsky said the law, however, may provide opportunities for medical debt collectors to broaden their services to provider clients.  He said collection agencies could consult on disclosure practices or develop letter campaigns to inform patients of their rights and options when they first enter a clinic or hospital.

While none of the health care reform bills out of Congress include provisions that could affect medical debt collections, Peterman said ACA will remain watchful because amendments could be introduced later, especially when the bill is out of the Senate Finance Committee and the Health, Education, Labor and Pension Committee are combined.

Immediate attention, however, will turn to how Consumer Financial Protection Agency legislation could impact ARM professionals.  Peterman said Congressman Barney Frank, chairman of the House Financial Services Committee, is expected to unveil a mark up on CFPA legislation next week.

Peterman said ACA doesn’t think the ARM industry is a good fit with the CFPA as it is currently fashioned. He said ACA has proposed an alternative structure that allows uniform state regulation similar to the structure put in place for the mortgage industry, rather than transfer ARM industry oversight to a federal regulator with rulemaking authority.  He said states responded very quickly to the option with 49 states agreeing to the uniformity proposal.

“We’re hoping this (uniform state regulation) shows promise for our industry.  This is a program that could work and be successful regardless of whether CFPA passes or doesn’t pass,” Peterman said.