Minnesota laws and programs that help with medical debt collectors
Minnesota has an agreement in place with medical providers and hospitals in which they need to charge a fair price for health care services, and they also agreed that they will be less aggressive in collection efforts of unpaid medical debts and bills.
Per the current agreement in place, both underinsured and uninsured patients whose income is less than $125,000 per year will receive the same discounts on their medical bills that insurance companies have negotiated directly with the hospitals. What this means is that people can receive a 40 to 60 percent price reduction on their medical bills. In addition, the Minnesota law also changed hospital debt collection efforts in several ways, including:
- A process needs to be developed by hospitals for patients to use when they want to dispute or challenge their medical bills or debts. Hospitals, medical providers, and debt collection agencies can’t file judgments against against patients and need to stop collection efforts until they are given time to respond to the guidelines of the process in place.
- Minnesota requires that before filing lawsuits against patients, hospital administrators and debt collectors must review the patient records to ensure that any health insurance companies have been billed. They also need to confirm that any payment plans, as well as any free or discounted health care, has been offered to eligible patients to assist them with paying their bill.
- It is illegal for hospitals to withdraw funds directly from a patients’ bank accounts without the prior approval from a court, or from a legal judgment that authorizes them to do so.
- The state instituted a zero tolerance policy that will be used to prevent medical debt collectors from engaging in abusive collection practices. Collection agencies they outsource to are also impacted by this regulation and would need to stop their efforts. The law also requires that hospital boards must review their debt collection practices frequently and update them to unsure they are fair.
- The interest rate charged on outstanding medical debt can’t exceed a certain interest rate. For example, in 2009, the Minnesota Attorney General came to a settlement with a nonprofit hospital and clinic system that addressed the interest rate they charge patients on outstanding medical debts. Prior to this lawsuit, Allina Hospitals and Clinics had offered to finance patients’ medical debt through their own financial program that is known as MedCredit that charged patients an 18 percent interest rate on their debt. However, Minnesota has a law that sets the allowable interest rate under this type of agreement at 8 percent.