Most healthcare providers are not experts in consumer protection laws related to the collection of medical debt. All providers and revenue cycle vendors must comply with federal regulations, such as the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA). However, compounding the challenge of these federal regulations are additional consumer protections that vary by state, as well as industry rules set by credit reporting agencies.
State laws governing the collection of medical debts have several common denominators. Every state has laws to protect a patient’s assets and income, with different statutes for exempting a house, car and some wages from medical debt collection. Every state also has laws to protect lower-income patients from the high costs of medical care, with many states requiring financial assistance plans that must be published and disseminated.
There are other kinds of state-specific consumer protections in the area of medical billing. For example, at least six states—California, Connecticut, Florida, Illinois, Maryland and New York—have comprehensive laws to disallow providers from balance billing some patients, which can be a particular hardship when a patient receives out-of-network services and incurs out-of-network charges. (Balance billing is the process by which providers bill the difference between the charge and the amount covered by insurance.) Some states will cap the amount that can be billed or require the provider to provide certain notification about the potential for out-of-network charges before the patient may be billed.
Even though all states have laws intended to address common consumer protections, the differences are significant state to state, particularly for healthcare systems and their revenue cycle vendor partners that operate in multiple states. To comply with each state’s laws, a provider must deal with wide variances such as the intended scope of each state’s laws, different definitions and sometimes vastly different billing and conduct requirements.
Sometimes, due to the nature of revenue cycle operations, the laws are difficult or nearly impossible to comply with. For example, some states’ laws require a provider to give notice to patients that they could receive a bill from another, out-of-network provider involved in their care prior to receiving non-emergency services. A few state laws require that once a patient is stabilized, a provider has to give the patient the opportunity to elect that any post-stabilization treatment be performed by an in-network provider. The reality is that delivering care to stabilize a patient is a fluid process, and the care may be delivered in different parts of a hospital at different times. Complying with this law requires the hospital registration personnel to communicate with a patient multiple times. These laws simply do not take into account the nuances of hospital admissions and registration and how hospital care is provided.
Even more stringent legislation has been passed by some states. For instance, Tennessee now requires that providers give patients a list of in-network providers as well as an estimate of prices before non-emergency services are provided. It is not always possible to comply with the strict terms of Tennessee’s statute because it assumes providers can access insurance coverage information for out-of-network patients. It’s also difficult because, for emergency patients, a provider cannot discuss pricing or payment until a patient is stabilized and either admitted or discharged. Again, the law fails to consider how patients are admitted, registered and provided care.
Providers may unwittingly be operating without the compliance expertise or the resources to stay on top of the multitude and often conflicting compliance requirements, particularly for systems operating in multiple states. In that case, it’s critical to learn more about compliance, what it means to develop a culture of compliance, and how to ask questions of revenue cycle vendors to assess their ability to manage compliance.