HHS to factor medical debt practices into grant decisions

The Health and Human Services Department will soon request data from more than 2,000 providers related to medical debt, the White House announced Monday.

Providers may be asked to submit information on their medical bill collection practices, lawsuits against patients, financial assistance, financial product offerings and third-party contracting or debt-buying practices.

HHS will use the information when making grantmaking decisions. The department also will make some of the data public and share potential violations with enforcement agencies.

“The federal government pays roughly $1.5 trillion a year into the health care system to provide patients with quality care and services. Providers receiving that funding should make it easy for eligible patients to receive the financial assistance they are entitled to, and should not directly or indirectly subject patients to illegal and harassing debt collection practices,” the announcement said.

The announcement follows an executive order from President Joe Biden earlier this month to make health coverage more affordable and higher quality. The order specifically directed federal agencies to reduce medical debt burden, which disproportionately impacts Black and Hispanic households.

HHS will hold listening sessions with providers, consumers and others on how to confront medical debt, a spokesperson said in an email. HHS did not respond to questions about a timeline for the initiative, how the department will choose which providers to ask for data or what guidelines the department will use to incorporate the information into grant decisions.

Health systems that already post their financial assistance policies shouldn’t be alarmed by this announcement, said Rick Kes, audit partner and health care senior industry analyst at consulting firm RSM.

But HHS factoring collection-related information into grantmaking decisions puts some teeth behind the announcement, Kes said. Guidance on how HHS will use the information for grant decisions is needed, though, he added.

“That’s a whole new twist to this that didn’t exist before,” he said, adding that he hioes HHS won’t be too subjective in its decision-making.

The American Hospital Association looks forward to hearing more about the initiative, Executive Vice President Stacey Hughes said in an email. Hospitals already provide billions of dollars in uncompensated care to those who can’t pay, but the system needs to be adequately financed so hospitals can keep their doors open, Hughes said.

Consumer credit reports showed $88 billion in medical debt as of last June, and 58% of all third-party debt collections were for medical debt in the second quarter of 2021, according to a recent report from the Consumer Financial Protection Bureau. The three top credit reporting agencies in the U.S.—Equifax, TransUnion and Experian—announced last month they will drop medical debt that has been repaid from reports.