Strengthening Consumer Protections and Medical Debt Transparency Act

II 116TH CONGRESS 2D SESSION S. 4697 To amend the Public Health Service Act to provide additional transparency and consumer protections relating to medical debt collection practices. IN THE SENATE OF THE UNITED STATES SEPTEMBER 24, 2020 Mr. MURPHY (for himself and Mr. VAN HOLLEN) introduced the following bill; which was read twice and referred to the Committee on Health, Edu- cation, Labor, and Pensions A BILL To amend the Public Health Service Act to provide additional transparency and consumer protections relating to med- ical debt collection practices. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Strengthening Con- 4 sumer Protections and Medical Debt Transparency Act’’. 5 SEC. 2. MEDICAL DEBT COLLECTIONS. 6 (a) IN GENERAL.—Part C of title XXVII of the Pub- 7 lic Health Service Act (42 U.S.C. 300gg–91 et seq.) is 8 amended by adding at the end the following: 9 VerDate Sep 11 2014 22:29 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4697.IS S4697 kjohnson on DSK79L0C42PROD with BILLS 2 •S 4697 IS ‘‘SEC. 2795. MEDICAL DEBT COLLECTIONS. 1 ‘‘(a) DEFINITIONS.— 2 ‘‘(1) IN GENERAL.—In this section: 3 ‘‘(A) DATABASE.—The term ‘database’ 4 means the medical debt collection database es- 5 tablished under subsection (e). 6 ‘‘(B) DEBT COLLECTOR.—The term ‘debt 7 collector’ has the meaning as defined under the 8 Fair Debt Collection Practices Act. 9 ‘‘(C) EXTRAORDINARY COLLECTION AC- 10 TION.—The term ‘extraordinary collection ac- 11 tion’ is as defined for purposes of section 12 501(r) of the Internal Revenue Code of 1986 13 (as in effect on the date of enactment of this 14 section). 15 ‘‘(D) HEALTH CARE ENTITY.—The term 16 ‘health care entity’ means an entity defined 17 pursuant to paragraph (2). 18 ‘‘(E) MEDICAL DEBT.—The term ‘medical 19 debt’ means debt arising from a patient’s re- 20 ceipt of medical services, products, or devices. 21 ‘‘(2) HEALTH CARE ENTITY.—For purposes of 22 this section, the Secretary shall develop a definition 23 of the term ‘health care entity’ that shall include— 24 VerDate Sep 11 2014 22:29 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4697.IS S4697 kjohnson on DSK79L0C42PROD with BILLS 3 •S 4697 IS ‘‘(A) nonprofit, for-profit, critical access, 1 and cancer hospitals, including hospital-owned 2 facilities; 3 ‘‘(B) independently licensed outpatient, 4 ambulatory, behavioral, optical, radiology, lab- 5 oratory, dental, and emergency departments; 6 ‘‘(C) physician group practices, with an ex- 7 emption for small practices, as determined by 8 the Secretary; 9 ‘‘(D) physician staffing firms or physician 10 services companies; 11 ‘‘(E) any health care agent of an entity de- 12 scribed in this paragraph; and 13 ‘‘(F) other entities as specified by the Sec- 14 retary. 15 ‘‘(b) REQUIREMENTS AND PROHIBITIONS.— 16 ‘‘(1) DEBT COLLECTION.—A health care entity, 17 or its debt collector, shall not commence, or shall 18 halt, an extraordinary collection action with respect 19 to a patient if the entity or its designee is notified 20 by any party that a health insurance appeal is pend- 21 ing. 22 ‘‘(2) DETERMINATION OF ELIGIBILITY FOR AS- 23 SISTANCE.—A health care entity, or its debt col- 24 lector, shall not commence any extraordinary collec- 25 VerDate Sep 11 2014 22:29 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4697.IS S4697 kjohnson on DSK79L0C42PROD with BILLS 4 •S 4697 IS tion actions with respect to a patient until the entity 1 determines whether the patient qualifies for assist- 2 ance, either through enrollment in a Federal or 3 State program or through the entity’s charity care 4 or financial assistance policy, with respect to such 5 debt. The entity shall refer such patient to any such 6 assistance where available. 7 ‘‘(3) PROHIBITION ON EXTRAORDINARY COL- 8 LECTION.—With respect to medical debt collection 9 relating to a patient, a health care entity, or its debt 10 collector, shall not take any extraordinary collection 11 actions (including an action described in sections 12 1.501(r)–6(a)(2) of title 26, Code of Federal Regu- 13 lations (as in effect on the date of enactment of this 14 section)) until the expiration of the 180-day period 15 beginning on the date on which the initial bill is sent 16 to the patient, or a later date if applicable. 17 ‘‘(4) PROVIDING INFORMATION TO PATIENTS.— 18 A health care entity or its debt collector shall pro- 19 vide a patient with— 20 ‘‘(A) an easy-to-understand itemized state- 21 ment of the medical debt owed by the patient 22 to the health care entity prior to such entity, or 23 the debt collector acting on behalf of the entity, 24 VerDate Sep 11 2014 22:29 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4697.IS S4697 kjohnson on DSK79L0C42PROD with BILLS 5 •S 4697 IS commencing collection activities relating to such 1 debt; and 2 ‘‘(B) a copy of the detailed receipts of any 3 payments made to the entity or its debt col- 4 lector by the patient relating to the medical 5 debt involved within 30 days of such payments. 6 ‘‘(5) LIMITATION ON RECOVERY BY NONPROFIT 7 ENTITIES.—A health care entity that is a nonprofit 8 entity, or its debt collector, shall not collect amounts 9 for the medical debt of a patient who is not enrolled 10 in health insurance coverage, that are in excess of 11 the amount generally billed, as described in sections 12 1.501(r)–1(b)(1) and 1.501(r)–5(b) of title 26, Code 13 of Federal Regulations. 14 ‘‘(6) REQUIREMENT OF HEALTH CARE ENTITY 15 OR ITS DEBT COLLECTOR.—Prior to commencing 16 any debt collection activity with respect to a medical 17 debt, the health care entity or its debt collector shall 18 make all reasonable efforts to confirm the identity of 19 the debtor. 20 ‘‘(7) LIMIT ON MEDICAL DEBT INTEREST.—The 21 interest rate growth applied with respect to any 22 medical debt collected under this section shall be set 23 forth on the initial medical bill, but shall not exceed 24 5 percent annually or the annual rate set forth 25 VerDate Sep 11 2014 22:29 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4697.IS S4697 kjohnson on DSK79L0C42PROD with BILLS 6 •S 4697 IS under section 1961 of title 28, United States Code, 1 for the calendar week preceding the date of the ini- 2 tial medical bill plus 2 percent, whichever is lower. 3 This subsection shall not be construed to limit as- 4 sistance or a lower interest rate for a patient who 5 is otherwise eligible for financial assistance. 6 ‘‘(c) PENALTIES.—Except as provided in this section, 7 a health care entity, or its debt collector, that fails to com- 8 ply with any provision of this section with respect to a 9 patient shall be liable to such patient for damages in an 10 amount equal to the sum of— 11 ‘‘(1) any actual damages sustained by such pa- 12 tient as a result of such failure to comply; 13 ‘‘(2) in the case of an action commenced— 14 ‘‘(A) by an individual, any additional dam- 15 ages as the court may permit, but not to exceed 16 $1,000 for each failure to comply; or 17 ‘‘(B) by a class of patients— 18 ‘‘(i) such amount for each named 19 plaintiff as could be recovered under para- 20 graph (1) and subparagraph (A); and 21 ‘‘(ii) such amount as the court may 22 allow for all other class members, without 23 regard to a minimum individual recovery, 24 not to exceed the lesser of $2,000,000 or 25 VerDate Sep 11 2014 22:29 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4697.IS S4697 kjohnson on DSK79L0C42PROD with BILLS 7 •S 4697 IS 1 percent of the annual net income of the 1 covered provider; and 2 ‘‘(3) in the case of any successful action under 3 this section, the costs of the action, together with a 4 reasonable attorney’s fee as determined appropriate 5 by the court. 6 ‘‘(d) ESTABLISHMENT OF DATABASE.— 7 ‘‘(1) IN GENERAL.—The Secretary shall estab- 8 lish and regularly update a medical debt collection 9 public database. 10 ‘‘(2) REQUIRED INFORMATION.—Not later than 11 12 months after the date of enactment of this sec- 12 tion, and annually thereafter, a health care entity 13 shall submit to the database a debt collection report 14 that shall include— 15 ‘‘(A) the name and contact information of 16 any debt collector owned, utilized, or retained 17 by the entity or to which the entity assigned or 18 sold medical debt during the year; 19 ‘‘(B) a description, or link to such descrip- 20 tion, of the processes and policies of the entity 21 for assigning a medical debt to the debt col- 22 lector and for compensating such collector for 23 services provided to the entity; 24 VerDate Sep 11 2014 22:29 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4697.IS S4697 kjohnson on DSK79L0C42PROD with BILLS 8 •S 4697 IS ‘‘(C) the type and number of extraordinary 1 collection practices the entity, or debt collector 2 reported by the entity pursuant to subpara- 3 graph (A), undertakes or seeks to undertake, 4 such as wage garnishment, bank account at- 5 tachments, liens, arrest warrants, reporting to a 6 consumer reporting agency, and lawsuits; 7 ‘‘(D) the breakdown, by zip code, of med- 8 ical debt collection accounts referred to a debt 9 collector; 10 ‘‘(E) the recovery rate on medical debt col- 11 lection cases assigned to the debt collector, as 12 defined by the Secretary; 13 ‘‘(F) the number of bills paid using a cred- 14 it card; and 15 ‘‘(G) any other information determined ap- 16 propriate by the Secretary. 17 ‘‘(3) AVAILABILITY OF INFORMATION.—The in- 18 formation contained in the database shall be avail- 19 able on a public, searchable internet website regu- 20 larly updated by the Secretary. The Secretary shall 21 annually publish a public list on HHS.gov of any 22 health care entity that fails to submit such required 23 information. 24 VerDate Sep 11 2014 22:29 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4697.IS S4697 kjohnson on DSK79L0C42PROD with BILLS 9 •S 4697 IS ‘‘(4) CFPB REPORT.—Not later than 12 1 months after the expiration of two annual reporting 2 periods under paragraph (2), the Director of the 3 Consumer Financial Protection Bureau shall submit 4 to Congress a report containing an analysis of the 5 reports submitted under that paragraph and an ex- 6 planation of whether the findings based on the data- 7 base under this subsection are a useful tool for the 8 agency’s Supervision of Nondepository Covered Per- 9 sons, including the Risk-Based Supervision Program 10 (under section 1024 of Public Law 111–203). Such 11 report shall include recommendations to improve the 12 disclosures by health care entities for the purposes 13 of supervising the medical debt industry, including 14 for predictive analytics, machine learning, or other 15 analysis techniques used in its Risk-Based Super- 16 vision Program.’’. 17 (b) CFPB REPORT.—Not later than 12 months after 18 the date of enactment of this Act, and every 2 years there- 19 after, the Consumer Financial Protection Bureau shall 20 publicly report on medical debt collections, incorporating 21 data from the medical debt collection public database es- 22 tablished pursuant to section 2795(a) of the Public Health 23 Service Act, anonymized data from the three largest credit 24 bureaus, the Consumer Financial Protection Bureau data- 25 VerDate Sep 11 2014 22:29 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4697.IS S4697 kjohnson on DSK79L0C42PROD with BILLS 10 •S 4697 IS base of consumer complaints, information from the Con- 1 sumer Financial Protection Bureau’s Supervision of Non- 2 depository Covered Persons program including the Risk- 3 Based Supervision Program, and relevant complaints and 4 information from other sources as available. 5 Æ VerDate Sep 11 2014 22:29 Oct 14, 2020 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\S4697.IS S4697 kjohnson on DSK79L0C42PROD with BILLS