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Aggressive Hospital Debt Collection Could Be Curbed By Treasury Department Rules

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New rules proposed by the Treasury would require hospitals to give patients a four-month grace period to seek financial assistance before turning over their debt to a collection agency.
New rules proposed by the Treasury would require hospitals to give patients a four-month grace period to seek financial assistance before turning over their debt to a collection agency.

When it comes to settling hospital bills, government officials want to give patients a little bit of breathing room.

New rules proposed last Friday by the Treasury Department would require non-profit hospitals to give patients a four-month grace period to seek financial assistance to pay their bills before the hospitals could turn over the debt to a collection agency, according to a release on the Treasury web site.

The proposed rules are almost certainly a response, at least in part, to recent horror stories about Accretive Health, the Chicago-based debt collection company that's been accused of violating privacy laws and strong-arming Minnesota hospital patients while they try to get medical care.

Just a few months ago, Accretive had partnerships with three hospital companies in Minnesota. Now two of the three companies have cut ties with Accretive, and one of those companies, Fairview Health Services, has also jettisoned its CEO. Lori Swanson, Minnesota's attorney general, sued Accretive in January, and Senator Al Franken has led hearings into the company's practices.

The Treasury's proposals appear an attempt to civilize the whole process of paying medical bills -- at least at non-profit hospitals, which account for a little more than half of all hospitals in the country, according to The Wall Street Journal.

Despite the move, the hospital debt problem isn't likely to go away anytime soon. In 2010, hospitals provided more than $39 billion worth of care to people who could not afford to pay, according to The New York Times. Many facilities are operating under intense financial strain.

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