Understanding the Real Effects of New York's Medical Debt Removal on New Yorkers. The Mixed Impact of Removing Medical Debt from Credit Reports.
Takeaways
The new law:
New York has passed the "Fair Medical Debt Reporting Act," which prohibits hospitals, healthcare professionals, and ambulance services from reporting medical debt to credit agencies. The medical care affected by this act includes:
Hospitals licensed under Article 28 of the Public Health Law.
Healthcare professionals authorized under Title Eight of the Education Law.
Ambulance services certified under Article 30 of the Public Health Law.
This move, while aimed at protecting patients from the financial burden of medical debt, has sparked a wave of concerns within the medical and debt collection sectors. This article delves into the four primary concerns raised by this new legislation, exploring its potential impacts on healthcare providers, debt collectors, and the financial accountability of patients.
Refusal To Pay For Medical Treatment By Bad Players:
In our office, we encounter numerous instances where individuals, including those who are financially well-off, refuse to pay for medical treatment. A common occurrence involves patients pocketing checks provided by their insurance companies, intended for healthcare providers, and using these funds for personal purposes. With the new legislation, our ability to recover such debts is likely to decrease, and I fear that these kinds of fraudulent behaviors will increase. The absence of credit-reporting repercussions removes a significant deterrent for those who can pay but choose not to.
Increased Medical Costs for Responsible Payers:
The inability to report healthcare debt is likely to lead to an accumulation of unpaid medical bills. This financial shortfall will have to be compensated for, and the burden will inevitably shift to the paying customers. As a result, individuals who regularly meet their healthcare financial obligations could face increased costs, essentially penalizing them for the irresponsibility of others. This redistribution of costs is unfair to those who pay their bills diligently.
Impact on Healthcare Providers' Payment Policies:
An immediate and concerning consequence of this act is the potential shift in healthcare providers' payment policies. There are already indications from medical and dental practices of a move towards demanding full payment upfront, as opposed to offering payment plans. This change is driven by providers' apprehensions about their ability to collect on these plans in the absence of credit reporting. Such a shift could severely impact patients who rely on staggered payment plans, potentially limiting their access to necessary medical services.
A recent class action lawsuit filed by Dermatologist Dr. Derrick Adams against the major credit reporting agencies (CRAs) highlights a critical issue that resonates strongly with the medical community, especially in the context of New York's new law on medical debt reporting. This law, which goes even further than the CRAs' decision, could have even more profound repercussions on healthcare providers.
The situation underscores a growing concern among medical professionals: that laws like New York's, while intended to protect consumers, might inadvertently harm doctors and restrict access to healthcare, calling for a reevaluation of such policies in light of their broader impacts.
Moreover, the law overlooks the state's responsibility in healthcare coverage. Rather than burdening providers and paying patients, the state should ensure that those struggling financially are enrolled in suitable programs like Medicaid or Medicare. This approach would balance patient protection with the healthcare system's sustainability.
This law, though well-intentioned in protecting patients from the burden of medical debt, seems short-sighted. It risks fostering a culture of financial delinquency, imposes additional costs on responsible patients, and restricts access to healthcare due to more stringent payment policies. The law fails to strike a necessary balance between protecting patients from debt and maintaining a fair and functional healthcare payment system. A more nuanced approach is needed, one that safeguards patient interests without compromising the financial ethics and sustainability of healthcare provision.
What Medical Providers Should Know and Do:
1. Confirm Applicability of the Legislation: The first step is to verify if your practice falls under the new legislation. If it does, consider reevaluating your financial strategy to assess potential impacts.
2. Review Credit Policies: Reassess your policies on extending credit to patients. Weigh the potential increase in default rates against the possible difficulties collection agencies may face in recouping those debts.
3. Explore Upfront Payment Options: Explore options for requiring higher upfront payments from patients to mitigate your financial risk.
4. Prepare for Debt Collection: Anticipate the possibility of incurring higher debt collection fees and needing to file small claims or civil lawsuits when deemed necessary. To protect your finances, consider adding a clause to your patient agreement holding them responsible for any costs associated with late payments, including debt collection fees, legal fees, and court costs (on top of any existing interest and late fees).
5. Ensure Clause Enforceability: Consult with your attorney to ensure the enforceability of such a clause. Here's a sample clause for your reference:
Sample Clause:
I understand and agree that I am responsible for all charges incurred for my medical services. If I fail to pay for my services in full and on time, I agree to be held responsible for any and all associated costs, including but not limited to, late fees, interest charges, debt collection fees, legal fees, and court costs.
Note: This is just a sample. Consult with your attorney for legal advice.
