{"id":5718,"date":"2020-09-15T16:10:55","date_gmt":"2020-09-15T20:10:55","guid":{"rendered":"http:\/\/chirblog.org\/?p=5718"},"modified":"2020-09-15T16:10:55","modified_gmt":"2020-09-15T20:10:55","slug":"aggressive-medical-debt-collections-covid-related-consumer-protections-model-long-term-relief","status":"publish","type":"post","link":"https:\/\/chirblog.org\/aggressive-medical-debt-collections-covid-related-consumer-protections-model-long-term-relief\/","title":{"rendered":"Aggressive Medical Debt Collections: COVID-related Consumer Protections Could be a Model for Long-term Relief"},"content":{"rendered":"

During the COVID-19 pandemic, many of the most financially vulnerable Americans are finding that getting the care they need means opening a Pandora\u2019s box filled with a whole new set of problems. A recent investigative report<\/a> found that about two dozen hospital systems have sued up to hundreds of their own patients this year over unpaid medical bills. These legal actions are taking place in spite of the $175 billion for providers in federal COVID-19 relief funds<\/a>, at least some of which is supposed to<\/a> compensate them for treating uninsured COVID-19 patients. Even before the pandemic, aggressive practices to recover medical debt, including placing liens on patients\u2019 homes and garnishing wages, have stunted the financial vitality of families and even pushed some into poverty.<\/p>\n

Medical debt: a symptom of a broken health care system<\/em><\/strong><\/p>\n

Unpaid medical bills can either be a product of lack of health insurance coverage or having health insurance coverage that does not adequately protect from financial risk. Given the job losses we have seen during this pandemic, an estimated 3.5 million people<\/a> will join the ranks of the uninsured. Even those who have comprehensive insurance may still find themselves unable to afford rising deductibles<\/a> or subject to \u201csurprise\u201d or \u201cbalance\u201d bills<\/a> from out-of-network providers that they may have difficulty paying.<\/p>\n

After a patient receives medical care<\/a>, the provider first assesses the patient\u2019s eligibility for free or discounted care. Federal law requires nonprofit hospitals to have a Financial Assistance Policy<\/a>. Ten states<\/a> have requirements that for-profit and nonprofit hospitals provide free and discounted care, five have no minimum requirements, and 35 fall somewhere in the middle. A patient is required to go through an application process in order to be considered for financial assistance. According to Jenifer Bosco, a staff attorney at the National Consumer Law Center, hospital policies and application processes vary widely and there is some evidence that hospitals are not complying with the state standards in place.*<\/p>\n

If the patient is deemed ineligible for assistance, the provider bills the patient. In fact, in the wake of a hospitalization, patients may receive multiple bills from multiple providers. These bills can be challenging to decipher, and often the charges bear no resemblance<\/a> to the actual cost of the item or service. The bill is initially handled by the provider\u2019s internal billing department, but if it goes unpaid, the provider can contract with a collection agency or law firm to collect the debt. The collection agency may sue the patient and if they win, they can ask the court to garnish wages or bank accounts or to place liens on homes or other property. Alternatively, providers can sell debt to a \u201cdebt buyer.\u201d Given the opaque billing systems and the complicated tangle of entities involved, according to a report<\/a> by the Consumer Financial Protection Bureau, consumers face a lot of confusion and uncertainty about \u201cwhat they owe, to whom, when, or for what.\u201d<\/p>\n

Aggressive debt collection hits vulnerable communities the hardest<\/em><\/strong><\/p>\n

According to one report<\/a>, \u201cdebt claims [have grown] to dominate state civil court dockets in recent decades.\u201d The people sued rarely have legal representation and over 70% of debt collection lawsuits end in a default judgment, which is when a court rules in favor of the suing party if the defendant fails to respond to the lawsuit against them. Courts frequently require defendants in default judgments to pay court fees and accrued interest, meaning that even small debts can snowball into mammoth financial obligations. These small debt claims hit Black communities particularly hard. One report<\/a> found that \u201cdebt buyer lawsuits were far more numerous in [B]lack communities\u201d and in one of the cities studied, \u201cthe rate of judgments was about twice as high among middle-income, mostly [B]lack neighborhoods than among the middle-income, mostly white ones.\u201d<\/p>\n

Several<\/a> news<\/a> stories<\/a> have captured the devastation caused by medical debt collections practices, particularly during the pandemic, while shining a light on the less-than-savory practices of some of our marquee health care systems<\/a>. The personal stories about how people suddenly found that their paychecks were significantly cut down or that a much-awaited stimulus check has been seized by a debt collector are hard to read, particularly in light of the generous federal relief funds that have been given to hospital systems. In one case<\/a>, a hospital system that received $448 million in federal relief funds during the pandemic is continuing to pursue legal action against patients, asking the court for wage garnishments and liens.<\/p>\n

The COVID-19 crisis prompts calls for consumer protections<\/em><\/strong><\/p>\n

U.S. Senators Van Hollen and Murphy have introduced<\/a> a bill that would \u201csuspend all extraordinary collection actions by health care providers for all medical debt (e.g. wage garnishment, bank account seizure)\u201d during the\u00a0 COVID-19 emergency (defined as between February 1, 2020, and 60 days after the end of the federally declared public health emergency period). The proposed bill would also allow the suspension of existing repayment plans and implement consumer protections such as extensions of deadlines to submit health insurance appeals and a prohibition upon accrual of fees and interest on these debts. The bill would hold health care providers and their agents liable for failure to comply with these protections, but such liability would not apply to collections agencies and debt buyers who buy the debt from the hospital.<\/p>\n

A few states have also stepped in to protect patients during the COVID-19 crisis. For example:<\/p>\n