You may or may not already be aware that the Idaho Legislature is currently considering House Bill 425, a proposed solution to a perceived problem with medical debt collection practices throughout the state. This bill, however well intentioned, has the potential to dramatically impact your ability to pursue legal remedies when patients refuse to pay their medical bills.
In a nutshell, the bill places extra-ordinary burdens on the billing process before collection actions can be pursued and if you don’t comply, but still bring a case to collect, you may be liable to the patient for damages. The bill, a copy of which can be found here, is summarized as follows:
The bill defines “extraordinary collection action” to include commencing any judicial or legal action. If a health care provider is to bring legal action to collect an unpaid debt they must:
- Submit charges to the patient or their third-party payor within 45 days of service;
- Provide the patient within 60 days of services a “consolidated summary of services” which includes the name and contact information of the facility where the patient received services, the date and duration of the visit, a general description of the services provided including the name, number and address of each billing entity who provided services to the patient;
- Provide the patient a final statement;
- Not charge any interest for at least 60 days after the date of the final statement;
- Wait 180 days after the final statement and final resolution of all internal reviews, good faith disputes, appeals of charges or third-party payor obligations.
If providers don’t do all of the above, and then bring an action to collect, they will be prohibited from recovering litigation expenses.
Even if providers do comply with the above, there are other restrictions and limitations on a provider’s ability to recover fees in a successful collection action, but the provider or its collection/billing company is responsible for all of the patient’s litigation expenses if the provider doesn’t prevail in the collection action.
It is the providers burden to prove compliance with 1-5 above and the pleading burden in that action is greater than a regular claim.
If a provider brings a collection action that is not in compliance with the statute, the provider will be liable to the patient for the greater of the patient’s actual damages or $1000. That number could go up to $3000 if the court finds the failure to comply with 1-5 was willful.
The legislation purports to address a problem of excessive attorney’s fees and expenses in collection actions, but rather than addressing those issues directly, it attacks the billing practices, not the collection practices.
The bill is focused on the wrong problem, and perhaps one that does not even exist. To the extent patients in Idaho are experiencing problems relating to the collection of their medical expenses, those problems are rarely, if ever, driven by actions of the health care providers who provided their care or the coding and billing providers who serve the needs of those health care providers. The real problem patients face is associated with secondary litigation expenses arising when collection companies are forced to resort to litigation as a means of collection and then aggressively pursue (or exploit) existing legislatively and/or judicially established remedies. Uncompromising claim to accrued interest and attorney fees in securing judgments often doubles, triples, or even quadruples the patient obligation over the original principal. Even more problematic are the additional fees accrued against patients on existing judgments via supplemental collection proceedings. There are virtually no limits on the lengths to which a collection company can go in pursuing these supplemental proceedings and the fees they incur are tacked onto the underlying judgment amount automatically and without question.
Though the problem lies with collection agencies over-pursuing lawful remedies, the legislation only places burdens on health care providers and it places those burdens, curiously, in an area where the providers are already heavily burdened. The medical coding and billing process are intricate, complicated, and heavily regulated by volumes of federal law and this piece of legislation reveals a stunning lack of understanding of that process. In fact, it reveals a stunning lack of understanding of the health care process itself.
The bill purports to address a concern with patients being exposed to collection actions from providers of whom they had no knowledge, which does occur, but such is the inescapable result of a system where a patient’s care demands the expertise of multiple, separate providers across myriad specialties, some of whom may never have face-to-face interaction with the patient or each other. A fairly routine knee surgery, for example, may involve care provided by hospital staff, a surgeon, a radiologist, a pathologist, and others each involving a separate billing entity. While the surgeon and hospital may know the identity of all involved, the radiologist and pathologist would not have reason to know which, or even if, other professionals were involved. Nevertheless, the legislation burdens those professionals with the identification of all other providers in the documentation they provide to the patients. It is an impracticable burden.
Requiring compliance with Section 48-304 prior to pursuing a collection claim effectively strips providers of the ability to pursue legal remedies as a means of collection of unpaid medical debt. Requiring every provider to reveal the identity of every other provider in a process that frequently involves a series of multiple services from varying specialties renders compliance prohibitively impracticable, if not impossible. Further complicating compliance is the contractual limitations on billing practices demanded by third-party payors, including the federal health care programs.
If the legislature is committed to resolving the problems associated with collections, the legislative solution must address the actual problem, rather than effectively making collection actions unavailable for health care providers. In lieu of increasing the cost of health care operations and diminishing collectability of unpaid obligations, potentially exacerbating existing physician recruiting issues, the legislature should look to the source of the pre and post judgment increases in those obligations and resolve the systemic issues that allow those secondary expenses to increase and even exceed the original unpaid obligation. The current bill is not that solution.