BOSTON — Gov. Maura Healey’s effort to crack down on medical debt reporting has drawn resistance from debt collectors and some healthcare providers who say the regulatory scheme could compromise the accuracy of credit reports and create financial struggles for smaller practices.
The Department of Public Health rolled out proposed regulations in June blocking licensed healthcare providers and facilities from reporting medical debt to consumer credit agencies. Healey framed the regulations as an attempt to alleviate soaring healthcare costs and protect Bay Staters from wrecked credit scores that impede their ability to buy a home, rent an apartment or secure loans.
In written testimony, however, industry trade groups and medical organizations are calling on DPH to reconsider or modify the proposed rules. The president of ACA International, or the Association of Credit and Collection Professionals, said the looming constraints on medical debt reporting would cause “economic harm to Massachusetts consumers and businesses.”
“The suppression of medical debt information undermines the accuracy and fairness of the credit reporting system,” Jeff DiMatteo, who’s president of Franklin-based debt collection agency American Profit Recovery, said in written testimony to DPH.
“This could lead to higher borrowing costs and less accurate credit decisions,” DiMatteo continued. “The timely recovery of medical debt provides the essential cash flow needed to pay doctors and nurses and keep local hospitals operational without increasing costs and requiring patient payments in advance.”
The biennial Massachusetts Health Insurance Survey found 13.5% of residents had family medical debt, with the vast majority incurring debt while they and all their household family members had insurance coverage. The most common services that led to medical debt were tests, surgical procedures, ongoing care for a chronic condition or long-term health problem, dental care and emergency care, according to the survey.
“People need protection from potential financial ruin, and they need it today,” Health and Human Services Secretary Kiame Mahaniah said at a June 30 press conference at Health Care For All’s office. “Medical debt is a unique burden. Unlike traditional consumer debt, it is not a choice.”
DPH held two hearings on the proposed regulations in late July, and Healey has said she wants the rules “implemented as soon as possible.” The pair of medical debt regulations deal with healthcare providers and facilities licensed by DPH, as well as providers licensed by boards within DPH.
Health Care For All Policy Manager Marcella Lampon described medical debt as a social determinant of health that disproportionately affects people of color.
“More than 28% of Massachusetts residents say they or a family member have delayed or gone without needed care because of the cost and emerging financial toxicity research has found that decreases in credit score can increase a cancer patient’s mortality,” Lampon said in written testimony. “The added financial distress from medical debt and subsequent collection practices can also trap people in a complicated cycle of poverty.”
Jay Gonsalves, who sits on the board of the New England Collectors Association, said hospitals and healthcare providers deliver “billions of dollars in uncompensated care each year.” In Massachusetts, the fund that covers the cost of care for uninsured and underinsured residents is expected to hit a $600 million deficit by fiscal 2028 as patients, providers and healthcare systems struggle to cope with insurance losses tied to federal policy changes.
“While recovery rates vary among providers, the ability to report legitimate medical debt has long been recognized within the healthcare revenue cycle industry as an important factor encouraging consumers to resolve outstanding balances,” Gonsalves, who’s CEO of Middleborough-based Action Collection Agencies, wrote to DPH. “Improved recoveries help providers remain financially stable, reduce uncompensated care, and lessen the financial burden ultimately borne by insured patients and taxpayers.”
Providers and healthcare facilities that don’t comply with the proposed regulations could lose their license to practice. But the DPH commissioner could grant waivers after determining requirements impose an “undue hardship,” according to the regulations.
David Sipala, president of the Massachusetts Foot and Ankle Society, implored DPH to make a broader exemption, arguing solo healthcare practices should not be subject to the medical debt reporting ban.
Sipala said the draft regulations treat large hospital systems, corporate healthcare organizations and solo healthcare practitioners equally — without recognizing their different financial circumstances. Solo practices, for example, “often lack the reserves, collection departments, and access to capital available to larger institutions,” he said.
“A meaningful level of uncollected debt can affect the practice’s ability to retain staff, purchase equipment, participate in public insurance programs, and continue serving the community,” Sipala wrote to DPH. “An individual hardship-waiver process is not a sufficient substitute for a clearly defined exemption. The proposed waiver process itself would require solo practitioners to incur administrative and potentially legal expenses before knowing whether relief will be granted, and it could produce inconsistent results among similarly situated practitioners.”
If DPH isn’t willing to embrace the solo practitioner exemption, Sipala suggested that public health officials develop a “limited exception” framework. Providers could still report “substantial, valid, and delinquent” medical debt once a string of conditions are met, including that the unpaid balance is at least $1,500, the outstanding debt period has spanned at least 180 days, three written notices have been delivered to the patient, and the patient was given an opportunity to dispute the debt.
Michael Ryan, Carver’s chief of emergency medical services, registered his opposition to subjecting EMS to the proposed rules. He said EMS does not receive the same state or federal funding as other entities that are licensed by DPH.
“The burden of covering the operating costs rests solely” on taxpayers, Ryan said in written testimony, noting that revenues generated from ambulance transports goes “back to the community, in most cases, to offset municipal costs.”
He added, “There should be some accountability for the owed costs for using these services placed on the people who utilize the resource instead of pushing the costs onto the tax payors [sic] themselves.”
Lampon, of Health Care For All, wants DPH to scrap the hardship waiver for providers to avoid a “patchwork” approach to medical debt reporting.
“If this section cannot be eliminated, we recommend that the Department propose narrow and specific regulations indicating the criteria providers must meet to be approved for a waiver,” Lampon said. “Providing clear criteria will ensure that the waiver option does not dilute the effectiveness of the regulations by creating a loophole that most providers are able to utilize.”
Asked about the timeline to finalize the regulations, a spokesperson for the Executive Office of Health and Human Services said DPH is reviewing public comments.
DPH’s Public Health Council, which is tasked with promulgating regulations, is scheduled to meet Wednesday. The agenda does not list any expected votes on regulatory matters. The council will need to vote on the medical debt regulations tied to providers and facilities licensed by DPH, according to the EOHHS spokesperson.
Alison Kuznitz is a reporter for State House News Service and State Affairs Pro Massachusetts. Reach her at [email protected].
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