It’s a sign of the times in the tightening of how debt can be collected.

Not-for-profit hospitals have been ordered to stop “extraordinary” debt collection unless they can clearly show the patient does not qualify for financial assistance.
The industry waited over a year and a half for the IRS to come up with final regulations.

Now patients have roughly 6 months from the time of service to decide whether or not to apply for financial assistance, they then have another 6 months to complete the paperwork.  During that period, hospitals can no longer go to “extraordinary” measures to collect on the past due debt.

This applies to Not-For Profit Hospitals only.

This is an offshoot of the Affordable Care Act.  The Affordable Care Act requires not-for-profit hospitals to have “reasonable billling and collection rquirements” but it never defined reasonable.

The new definition is a negative definition.  Instead of defining reasonable, it defines what is Extraordinary, and therefore forbidden.

Specifically, the regulations prohibit nonprofit hospitals from engaging in “extraordinary collection actions” for up to 120 days after the patient gets his or her first bill. The regulations define “extraordinary” as:

  • Reporting a patient’s delinquent debt to a credit bureau’
  • Selling a patient’s debt to a third party;
  • Placing a lien on a patient’s property;
  • Foreclosing on a patient’s real property;
  • Attaching or seizing an a patient’s bank account or any other personal property;
  • Commencing a civil action against a patient;
  • Causing a patient’s arrest;
  • Causing a patient to be subject to a writ of body attachment; and,
  • Garnishing a patient’s wages.

Not-for-profit hospitals can still engage a third-party to collect a patient debt.

We have all seen this coming for some time.   We will offer more on this as it develops.

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