State legislatures in New Mexico and Nevada enacted laws this session targeting medical debt collections. Both laws have been signed by the states’ Governors and take effect July 1, 2021.
The New Mexico Patients Debt Collection Practices Act places a number of requirements on health care facilities and debt collectors and buyers.
Notably, the Act prohibits collection actions against indigent patients, who are defined as those making less than 200% above the poverty limit. “Collection actions” are defined to include selling debts, and filing lawsuits, lien, or garnishments. Health care facilities and third-party health care providers are also required to send annual reports to the human services department related to indigent care funds and safety net care funds under the Indigent Hospital and County Health Care Act and funds raised to cover the cost of operating and maintain certain hospitals pursuant to the Hospital Funding Act.
Health care facilities are also required to offer to provide certain health insurance verification services to patients before seeking payment for medical care. The facility must offer to verify that a patient has health insurance, and, if the patient is uninsured, provide information about public insurance, public programs, and any financial assistance offered by the facility. The facility must also offer to assist with applying to any applicable programs. If a third-party health care provider will bill the patient, the facility must send the information gathered during the insurance verification process to the third-party provider. The health care facility may not seek payment for the medical care until the third-party health care provider has received that information.
The Act also includes new requirements for billing statements. Billing statements sent to the patients must include: (1) a description of the date, amount and nature of all charges: (2) whether the patient’s insurance has been verified; (3) if the patient was screened for programs that assist with health care costs; and (4) if the health care facility or third-party health care provider has or will bill insurance or public programs to assist with the health care costs. This billing statement must also be provided to debt collectors and debt buyers before they can communicate with the consumer or take any collection action.
In communications with the debtor, health care facilities, third-party health care providers, creditors, debt collectors, and debt buyers must offer to provide the debtor with the information listed in the billing statement. However, this information must only be provided to the requesting debtor once every thirty days.
Additionally, within 30 days of receipt of payment on a medical debt, health care facilities, third-party health care providers, creditors, debt collectors, and debt buyers must send a receipt to the person who made the payment that shows: (1) the amount paid; (2) the date of the payment; (3) the new balance; (4) the interest rate and interest accrued since the last payment; (5) the account number; (6) the current owner of the debt, and the name of the creditor; and (7) if the payment was accepted as a payment in full of the debt. Payments must be applied on the date they were received, or if it was received after business hours, the next business day.
Finally, the Act prohibits agreements between a patient and a health care facility, provider, creditor, debt collector, or debt buyer that result in a patient waiving his or her right to resolve a dispute.
The Act gives the New Mexico Attorney General enforcement authority, and authorizes the Attorney General to adopt rules. The Act also tasks the Attorney General with establishing a complaint process for aggrieved patients or members of the public to file their complaints against a health care facility, third-party health care provider, creditor, debt collector, or debt buyers who violates a provision of the Act.
Nevada’s new medical debt collection law applies to all debts for goods and services provided by medical facilities. “Medical debt” is defined broadly, and includes the financing or extension of credit for a third party if the sole purpose of the extension of credit is for the purchasing or goods or services from a health care facility or provider. The only express exemption from the definition of “medical debt” is open-end or closed-end extensions of credit made by a financial institution to a borrower, which the borrower can use for purposes other than the purchase of goods or services from a medical facility or provider, at the borrower’s discretion. “Medical facilities” has the same definition as provided under Nev. Rev. Stat. Ann. § 449.0151.
The law also provides for a 60-day notification period. During this period, collection agencies are prohibited from taking any action to collect a medical debt and are required to send the debtor a written notification, by registered or certified mail, that includes: (1) the name of the facility; (2) the date the goods and/or services were provided; (3) the principal amount of the debt; (4) the name of the collection agency; and (5) information regarding whether the debt has been assigned to a collection agency, or whether the collection agency has otherwise obtained the debt for collection. Debtors may opt to initiate contact with the collection agency during this 60-day period, but this does not allow the collection agency to take action before the expiration of the 60-day period.
Collection agencies are permitted to accept voluntary payments from the debtor during the 60-day notification period if the following conditions are met: (1) the debtor initiates the contact; and (2) the collection agency discloses to the debtor that a payment is not demanded or due during the 60-day period; and (3) the medical debt will not be reported to any credit reporting agency during the 60-day period. The law does not specify how this disclosure must be given to the borrower. Voluntary payments do not extend the applicable statute of limitations, admit liability, or waive any defense the borrower may have to the collection of the medical debt.
Additionally, the law prohibits collection agencies from taking confessions of judgment, commencing a civil action for debts less than $10,000, and charging or collecting fees of more than 5% of the debt. It also provides that the law’s requirements and prohibitions cannot be waived.