1. (Medical Debt Freedom Program established) These provisions create a State Medical Debt Freedom Program with the purpose of discharging medical debt from state residents and authorize the state to partner with a medical debt relief coordinator (i.e. a nonprofit) to buy bundled debt at a fraction of its original cost.

• Sample language:

i. The Medical Debt Freedom Program is established within the [DEPARTMENT OF APPLICABLE STATE AGENCY hereinafter “Department”] for the purpose of discharging medical debt of eligible residents by  in-house or contracted medical debt relief coordinators. Contracted medical debt relief coordinators shall be from a nonprofit organization established for the purpose of providing both education and relief of medical debt.

ii. The Department is authorized to and shall establish an in-house medical debt relief coordinator or enter into a contract with a medical debt relief coordinator to purchase and discharge medical debt owed by an eligible resident with money allocated for the program.

iii. The Department  shall promulgate rules and guidance to meet the requirements of this section, including but not limited to income and state residency length eligibility criteria for residents receiving relief.

iv. For the purposes of this Act, “hospital” shall mean any inpatient or outpatient healthcare facility licensed as a hospital or as an off campus location under a hospital license pursuant to [STATE licensing law], a free standing emergency department, or a federally qualified health center as defined in the Federal Social Security Act, 42 U.S.C. Sec. 1395x (aa)(4).

2. (Financial assistance to eligible patients) These provisions require hospitals to provide free or discounted care to patients up to a certain income threshold.

• Sample language:

i. A hospital shall provide free, medically necessary services for patients whose family income is equal to or less than [300%] of the federal poverty level.

ii. A hospital shall provide medically necessary services at a discounted rate for patients whose family income is equal to or less than [301-500%] of the federal poverty level.

iii. A hospital shall screen patients for eligibility under this subsection and limit the amounts charged.

iv. Enforcement: If the Department determines that a hospital licensed in the state has violated this section, the Department may, after appropriate notice and opportunity to remedy violations, assess administrative penalties or suspend or revoke any license issued under this chapter to a hospital.

• Examples include: Maryland, Maine

3. (Reimbursement for incorrect charges) These provisions require hospitals to refund medical care costs collected from a patient eligible for free or discounted care within 60 days.

• Sample language:

i. If a hospital charged a patient eligible for free or discounted rates at a rate exceeding the free or discounted rate for such services, the hospital shall provide a refund to the patient in the amount of covered costs collected plus all reasonable attorney’s fees, If any, incurred to pursue a regulatory complaint or litigation for the pursuit of action against the hospital within 60 days. 

ii. If a patient prevails in securing a refund for services pursuant to this section through regulatory complaint or litigation, the Department or a court may assess an additional amount in damages or fines to the hospital, the entirety of which shall be paid to the patient, if the Department or a court determines excessive charges caused harm to the patient. When assessing an additional amount in damages or fines against a hospital, the Department or a court shall determine the appropriate amount in damages payable to the patient based on one or more factors, as applicable, including:

1. The nature, scope, and gravity of the violation; 

2. The extent to which the hospital has had repeat similar violations; 

3. The severity of the potential harm to the patient including loss of life or health, or financial harm; 

4. The nature and extent to which the hospital cooperated with the Department;

5. The nature and extent to which the hospital aggravated or mitigated any injury or damage caused by the violation; and

6. The nature and extent to which the hospital has taken corrective action to ensure the violation will not recur.

• Examples include: Maryland

4. (Requires a payment plan for medical debt) These provisions require hospitals and medical debt collectors to provide patients with a payment plan for medical debt, limit monthly payments to 3% of a patient’s monthly income, and discharge the debt once the patient has made 36 payments.

• Sample language:

i. Hospitals and medical debt collectors shall:

1. Limit the amounts charged for medically necessary services for patients, if a patient is screened and determined to be eligible for free or discounted services, to not more than the free or discounted rates established;  

2. Offer to any patient with outstanding medical debt a payment plan; 

3. Collect amounts charged in monthly installments such that the patient is not paying more than three percent of the patient’s monthly household income on a bill from a hospital or medical debt collecting party;

4. Create a process to assess the total amount of outstanding medical debt owed by the patient to set the payment plan established in this subsection; and 

5. After a cumulative thirty-six months of payments, consider the patient’s bill paid in full and permanently cease any and all collection activities on any balance that remains unpaid.

• Examples include: Colorado, Virginia

5. (Caps interest rates) These provisions prohibit hospitals and medical debt collectors from charging interest or fees on any debt incurred by a patient on their medical debt.

• Sample language:

i. Hospitals and medical debt collectors are prohibited from charging interest on a patient’s medical debt.

• Examples include: Delaware, Maine

6. (Prohibits credit reporting) These provisions prohibit medical debt from being reported to consumer reporting agencies.

• Sample language:

i. A medical debt collecting party shall not report to a credit reporting agency any medical debt that the collecting party knows or should know is or was originally owed to a healthcare facility or licensed healthcare provider.

ii. No consumer credit reporting agency shall make any consumer credit report containing items of information that includes medical debt.

• Examples include: Minnesota, Virginia, Washington

7. (Prohibits home liens, wage garnishments, and arrest warrants) These provisions prohibit medical debt collectors from requesting a lien against a patient’s real property or writ of garnishment of wages, filing an action resulting in an attachment of wages, or pursuing arrest warrants due to nonpayment of medical debt.

• Sample language:

i. No medical debt collector shall use any of the following actions to collect medical debts:

1. Causing an individual’s arrest;

2. Causing an individual to be subject to a writ of body attachment;

3. Foreclosing on an individual’s real property;

4. Placing a lien on an individual’s personal property; or

5. Garnishing the wages of an individual.

• Examples include: Maryland, Virginia