You’re a cost-conscious adult who religiously sticks to living within their means.
One day, you’re involved in a serious accident that necessitates transport to a hospital emergency room.
There, you’re treated by an ER doctor and various support staff.
Thankfully, you recover from your injuries but soon receive something in the mail that again knocks you off your feet.
That ambulance that brought you to the hospital was outside the network covered by your private insurance.
The same for that ER doctor.
Suddenly, you’re on the hook for thousands of dollars in unexpected medical bills.
And if you’re unable to pay off these bills within the allotted time, that unpaid debt can be reported to the major consumer credit agencies.
While there’s a federal law in place to shield individuals from surprise medical bills, it doesn’t cover every situation, leaving those in medical debt exposed to credit-agency downgrades.
It’s that gap that recent proposals announced by Gov. Maura Healey aim to address.
They would prohibit the state’s licensed health-care providers and debt collectors working on their behalf from reporting medical debt to credit bureaus, helping protect patients from long-term financial harm after an unexpected illness or medical emergency.
“Medical debt shouldn’t make it harder to buy a home, rent an apartment or get a loan years after you’ve recovered and when you’re working hard to make your payments,” said Healey.
“… Regardless of the federal government’s approach, in Massachusetts we’re committed to building a more affordable, more sustainable health-care system that puts consumers first,” said Dr. Kiame Mahaniah, the state’s Health & Human Services secretary.
The federal No Surprises Act, signed by President Trump in 2020, protects individuals covered by private insurance from unexpected out-of-network medical bills in emergencies at in-network facilities, and for air ambulances.
It limits costs to in-network rates and completely prevents surprise “balance billing” in most situations.
However, it doesn’t extend balance billing protections to ground service ambulances.
The law typically also doesn’t apply to federal insurance programs like Medicare, Medicaid or the VA because they already have existing federal protections.
Currently, paid medical bills don’t appear on credit reports or affect credit scores. In April 2023, unpaid medical bills with a starting balance of less than $500 were removed from reports.
Also, as of July 2022, paid medical collections were erased from credit reports, and they’re no longer reported to the three major credit bureaus — Equifax, Experian and TransUnion.
Despite the changes, a Consumer Financial Protection Bureau report found that more than 15 million Americans still had medical collections on their credit reports as of June 2023.
“… This action will give families across the state something they all deserve – peace of mind to get the medical help they need without fear of sacrificing financial security,” said Public Health Commissioner Robbie Goldstein.
The Department of Public Health developed the proposed regulations and all 23 of the Department’s licensing boards voted to advance them for public comment.
The Department is now accepting written public comments on the proposed regulations and will hold public hearings on July 27 and 28 before finalizing the rules.
After these hearings, the DPH will evaluate all comments received and finalize the proposed regulation.
Medical debt can have long-lasting consequences that extend well beyond a hospital bill. A serious illness, cancer diagnosis, complicated pregnancy or trip to the emergency room can leave people with bills they never anticipated and often cannot afford.
When medical debt appears on a consumer credit report, it can make it harder to buy a home, rent an apartment, finance a car or qualify for a loan, even for people who have health insurance and are working to pay their bills.
Unlike most forms of consumer debt, medical debt is often unavoidable. No one chooses to get sick, be diagnosed with cancer or take their child to the emergency room.
These proposed regulations recognize that patients shouldn’t face years of financial consequences simply because they needed medical care.
“Medical debt isn’t a choice, it’s unforeseen and is not a reliable predictor of credit risk so it has no place on credit reports. We commend Governor Healey for taking decisive action to ban credit reporting of medical debt in Massachusetts,” said Jennifer Lemmerman, executive director of Health Care for All.
“We hear regularly on our HelpLine from patients struggling with medical bills they can’t pay or who avoid care altogether out of fear of financial ruin. “
We would have hoped that medical facilities and consumer reporting agencies would have enough common- and business sense to make a distinction between unanticipated medical debt and recurring expenses.
But since that’s apparently not the case, we welcome initiatives proposed by the governor to remove that deadbeat scarlet letter from those burdened with these surprise medical bills.