Court Decision on Medical Debt Provides Physicians Reminder on Collecting from Patients
By Phil West

With news of a recent court ruling on medical debt, physician practices may wonder if they will need to reassess how they’re collecting payment from patients. However, the court’s decision should not impact practice operations, as the rule the court struck down had never gone into effect. 

On July 11, U.S. District Court Judge Sean Jordan (of Texas’ Eastern District) ordered a Consumer Finance Protection Bureau (CFPB) rule removing medical debt from credit reports and prohibiting lenders from making credit decisions based on medical debt be vacated.  

The judge determined CFPB overstepped its authority in issuing the rule, which was finalized in January but delayed pending court review. While Equifax, Experian, and TransUnion decided in recent years to remove unpaid medical debts under $500 or less than a year old – as well as paid medical debts – from their credit reports, the July ruling likely ends the CFPB’s recent effort to keep larger medical debts off credit reports.   

With consumers still facing the potential impact of medical debt, Texas Medical Association staff offer physicians these tips for policies around collecting payment: 

• Obtain insurance information, verify benefits, and inform patients of their financial responsibility before their appointments.  

• Inform patients of your collection policies at time of service. Make sure those policies are clearly displayed on your practice website, along with a list of insurance carriers with whom you are in-network.    

• Make sure patients authorize credit cards to be kept on file for balance billing when appropriate.    

• Provide patients with cost estimates for future medical or surgical care consistent with state and federal law.  

• Confirm you have filed claims with a patient’s insurance carriers before billing those patients.    

• Make staff aware of and accountable for co-pay and co-insurance collection policies, as they are contractual obligations involving the patient, the physician, and the insurance carrier.   

• Offer patients reasonable payment plans and determine if they have resources that could help them reduce medical debt. For example, patients with high-deductible health plans may have access to health savings accounts or flexible spending accounts to offset those costs.  

Consider these factors

TMA staff suggest physicians coordinate with an accountant to determine which old, unpaid patient balances are better to write off as bad debt loss (as the Internal Revenue Service defines it).  

While a physician can dismiss a patient for nonpayment, the physician should closely evaluate the need for continuity of care, only using this as a last resort. The physician should also be mindful of Texas law regarding abandonment and provide the patient with what Texas law stipulates as “reasonable notice,” in writing, giving that patient time to find a new doctor.  

For additional information, see TMA’s whitepaper on Termination of the Patient-Physician Relationship, available as an association members-only benefit. 

Physicians should also be aware of medical billing changes in recent state and federal laws that restrict certain out-of-network providers and facilities from balance billing for certain health care services.   

Physicians may also have questions about the applicability and requirements of Senate Bill 490, a 2023 law requiring certain licensed Texas health care entities (e.g. ambulatory surgical centers or hospitals) to provide a written, itemized bill detailing any services for which they’re attempting to collect payment. The statutory provisions from that legislation were amended during the most recent regular session by House Bill 216, which takes effect Sept. 1. Independent physician practices and federally qualified health centers are still exempt from this requirement. 

However, Texas has long had requirements for physicians to provide a patient with an itemized statement of charges for professional services or supplies not later than the 10th business day after the date on which the statement is requested if the patient requests the statement not later than the first anniversary of the date on which the health care services or supplies were provided. This requirement is distinct from SB 490 and HB 216 and remains current Texas law. 

Visit the TMA website for more information on billing and collections, as well as an array of practice management resources.  

Disclaimer. This information is provided as general information and is not intended to provide advice on any specific legal matter. This information should NOT be considered legal advice and receipt of it does not create an attorney-client relationship. This is not a substitute for the advice of an attorney. The TMA Office of the General Counsel provides this information with the express understanding that (1) no attorney-client relationship exists, (2) neither TMA nor its attorneys are engaged in providing legal advice, and (3) the information is of a general character. Although TMA has attempted to present materials that are accurate and useful, some material may be outdated, and TMA shall not be liable to anyone for any inaccuracy, error or omission, regardless of cause, or for any damages resulting therefrom. You should not rely on this information when dealing with personal legal matters; rather legal advice from retained legal counsel should be sought. Any forms are only provided for the use of physicians in consultation with their attorneys.  

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