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Consumer Groups Say Medical Debt Bill Is a First Step, But More Is Needed

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The Maryland Senate gave its unanimous support on Thursday to a bill that would help rein in hospital debt collection efforts that critics have said ensnare former patients — many of them still battling illness — in a cycle of poverty.

The 47-0 vote on SB 514, sponsored by Finance Committee Vice Chairman Brian J. Feldman (D-Montgomery) came after the chamber’s former Republican leaders — Sens. J.B. Jennings (Harford) and Stephen S. Hershey Jr. (Upper Shore) — signed on as co-sponsors.

Thursday’s action followed House passage of an identical bill, HB 565, on Monday, 134-0.

The bipartisan support for the measures reflected a growing recognition that consumers battling illness and financial hardship need new protection from debt-collection efforts, advocates said.

But they expressed regret that key provisions of the original bill were dropped during committee work sessions.

“We are pleased members of the House and Senate listened to their constituents who spoke out in support of the provisions of this bill,” the End Medical Debt Maryland coalition said in a statement.

“This legislation is a vital first step toward protecting patients from predatory hospital debt collection practices.”

The compromise versions of the bill bar hospitals or collection agencies from garnishing the wages of people who qualify for free or reduced-cost care.

They would also be prohibited from seeking to have a lien placed on the primary home of any former patient who has an unpaid bill, regardless of income.

In addition, the measures require that institutions offer former patients a payment plan, with a stipulation that payments not exceed 5% of a person’s income.

Del. Lorig Charkoudian (D-Montgomery)

“There are some really important protections in these bills,” said the House sponsor, Del. Lorig Charkoudian (D-Montgomery). “Coming out of this pandemic, there’s a greater awareness of what it means to struggle with finances generally — and medical catastrophe specifically.”

While they cheered the passage of the Charkoudian/Feldman bills, advocates were stung by the removal of a provision that would have prevented institutions from suing to collect relatively small amounts of money.

“That was an enormous disappointment for our coalition,” said Lindsey Muniak, a spokeswoman for End Medical Debt Maryland.

That provision was taken out of the bill in a House Health and Government Operations subcommittee as part of negotiations with the Maryland Hospital Association, which opposed the legislation.

“I don’t think it’s appropriate for the government to put that in a law, because it sends a message that if you get a bill under that amount technically the hospitals can’t collect,” said House Minority Leader Nicholaus R. Kipke (R-Anne Arundel), a member of HGO.

“There are broad and meaningful new protections and restrictions being added in this bill to help people who are in poverty,” he added. “At the same time, people who can afford to pay definitely should, as it would be wrong to let them off the hook.”

Charkoudian said that provision will be one of several she hopes the legislature will consider next year.

“Hospitals need to be able to collect, otherwise the uncompensated care spreads over everybody and rates just go up for everyone,” she said. “But there is a question of what is really the value of a hospital suing a poor person for $250.”

End Medical Debt Maryland, a coalition of social justice, labor and consumer organizations, also sought a 1.5% per year cap on interest that hospitals could add to unpaid balances, , but that provision was amended out in committee as well.

The bill requires that hospitals document the steps they took to inform patients about payment plans and financial assistance.

And it requires that institutions report annually on the number of lawsuits they file.

Patient advocates want the state’s Health Services Cost Review Commission to disclose an annual tally for each hospital or system, so the public knows which “are the most egregious,” said Muniak.

Added Valerie Hsu, another coalition spokeswoman: “If hospitals have nothing to hide, they should not be afraid of this data being published.”

An October survey by Gonzales Polls, Inc. found that 92% of Maryland residents believe hospitals should not be able to “zero out” a patient’s bank account to collect a debt.

The survey also found that 88% of residents oppose the placement of a lien a patient’s car or home by a hospital or debt collection agency.

The poll was commissioned by the Maryland Consumer Rights Coalition.

Nearly four of every five people surveyed said hospitals should not be able to garnish a person’s wages to collect a debt for medically necessary care.

One in six people polled said they had put off medical care due to cost concerns, and 12% said that they or a family member had medical debts they would not be able to clear in the next 12 months, including one in five African-Americans.

After the Senate vote Thursday, Nicole Stallings, Maryland Hospital Association senior vice president for Government Affairs & Policy, said in a statement, “Maryland hospitals have remained committed to delivering the care people need without imposing financial hardship. Hospitals already have taken many steps to ensure that people who are uninsured or whose insurance coverage has large gaps receive the support they need. We appreciate legislators’ recognition of the complexity of this issue and their willingness to work to achieve a balanced approach.”

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Consumer Groups Say Medical Debt Bill Is a First Step, But More Is Needed