Medical debt, as we know, is a significant issue in the U.S., affecting millions of households and impacts both the health and finances of those seeking medical care. More than one in seven working-age adults have past-due medical bills, with many owing over $1,000. This debt can damage credit, deter people from seeking care, and deplete savings. Federal policymakers are exploring solutions like debt cancellation or rules to exclude medical debt from credit applications to help ease the burden of medical debt on consumers.
The Commonwealth Fund recently posted an article outlining the early results from the implementation of medical debt laws in a handful of states. To address gaps in federal policy, several states, including Colorado, Illinois, Maryland, and New Mexico have implemented consumer protections. These include setting standards for hospital financial assistance, streamlining application processes, and mandating free care for low-income patients. Some states also limit aggressive debt collection practices like liens or foreclosures on primary residences.
A new Urban Institute brief highlights the effectiveness of these policies, showing that they have led hospitals to modify billing practices and increase financial assistance. However, barriers like patient awareness, income documentation, and administrative challenges remain. States have also mandated data reporting to monitor compliance, though delays and challenges persist in gathering consistent data.
Hospitals employ different methods to determine if patients are eligible for financial assistance based on their income, such as relying on self-reported information, using technology tools that analyze consumer credit and financial data, and verifying income through pay stubs or tax returns. However, they don’t always gather this information before or after patients leave the facility. Additionally, hospitals face administrative difficulties in restructuring billing procedures, training and hiring staff, and setting up systems to share screening results with independent providers who bill patients separately.
Fortunately for providers, this is where Salud shines. Contracting with a company such as Salud that specializes in billing, AR, and coding services can increase revenue and efficiency and provides targeted expertise in areas that providers just don’t have the time and money to staff adequately. On top of this, Salud employees are aware of financial resources unique to states and individual providers and can help organizations steer patients to those resources that will be most helpful.
States can further improve these policies by simplifying application processes and integrating electronic data to verify income. However, concerns remain that such laws could push hospitals toward prepayment or medical credit cards, potentially worsening access to care for low-income patients. Overall, while state-level protections show promise, addressing the root causes of medical debt—such as high healthcare costs and lack of universal coverage—remains critical.