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The Affordable Care Act and Medical Debt

Medicine is supposed to be about helping sick people, not hounding them about their debts. That should be a self-evident proposition in a culture that respects human dignity and values quality medical care.

But the high-pressure medical debt collection tactics allegedly used by Accretive Health, a collector hired by the Fairview Hospital system, have been documented by the Minnesota attorney general’s office. In May of 2012, Accretive admitted that it regularly called patients at home before medical procedures and talked with others in emergency rooms.

The Accretive case is a vivid reminder of the problems posed by medical debt, which is a common cause of personal bankruptcy. This article will discuss one of the protections for patients under the new federal healthcare law: the ability to apply for financial assistance.

Hospitals and Debt Collection

The recent federal healthcare law is also known as the Affordable Care Act (ACA). In June 2012, the U.S. Supreme Court upheld the key provisions of the law, particularly the requirement that individuals have health insurance. People who do not have insurance yet refuse to buy it will face financial penalties.

The legal challenge to the ACA was one of the highest profile Supreme Court cases in years. But the law also contains some provisions that are not well known at all concerning billing and collection procedures by medical providers.

In June, the U.S. Treasury Department proposed rules based on those provisions. The rules are intended to protect hospital patients from abusive debt collection practices.

One of the proposed rules gives patients some time to seek financial help before hospitals bring legal action against them or hand over their accounts to debt collection agencies. In the proposed rule, the period of time allowed for this is four months.

It’s true that the Affordable Care Act only applies to tax-exempt hospitals, also known as charitable hospitals. But most hospitals have that status, which saves them millions of dollars every year in taxes.

It’s only fair, then, that these hospitals have policies to provide financial assistance for those who need it. That is why the new rules will require each charitable hospital to establish financial aid policies, if it doesn’t have such policies already.

Charitable hospitals will also be required to provide information on those policies to patients and prospective patients.