Federal Proposals Would Limit Aggressive Hospital Collections Practices

Margaret Dick Tocknell, for HealthLeaders Media , July 3, 2012

The proposed Treasury regulations would require charitable hospitals to establish and publicize financial assistance programs (FAP), establish billing and collections protections for patients eligible for the assistance programs, and develop a written policy for emergency medical care. The hospitals would also be prohibited from taking "extraordinary collection actions" against FAP-eligible individuals.


"In recent months, we have heard concerns about aggressive hospital debt collection activities, including allowing debt collectors to pursue collections in emergency rooms. These practices jeopardize patient care, and our proposed rules will help ensure they don’t happen in charitable hospitals," Emily McMahon, acting assistant secretary for tax policy in the Treasury Department, said in a press statement.

Among the prohibited practices are aggressive third-party actions, foreclosures and liens, garnished wages, and the sale of an individual's debt to another party. The regulation notes that "after a hospital facility has sold a debt, it may have a more limited ability to control the purchaser's actions to collect the debt." The proposed regulations still allow debt to be contracted to a collections agent because a hospital facility "can presumably maintain greater control over its third-party agent."

The general requirements for an FAP include eligibility standards, description of the assistance in terms of free or discounted care, the basis for calculating charges, and a description of what steps the hospital will take in case of nonpayment.

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