Colorado poised to pass bill requiring hospital price transparency for medical debt collection
House Bill 1285 unanimously passed Third Reading in the Senate on Tuesday, positioning the bill to be signed into law by Gov. Jared Polis. The bill would prohibit a hospital from pursuing collection actions against a patient for medical services if the hospital is not in compliance with federal hospital price transparency laws.
According to a report from PatientRightsAdvocate.org, only 6% of hospitals in the state were in full compliance with the price transparency law at the end of 2021. The national average of compliance was 14.3%.
The Colorado Hospital Association (CHA) said in a statement to State of Reform that more than 90 percent of its hospitals were reported to be in full compliance with the federal price transparency regulation as of this spring.
“Since the introduction of House Bill 22-1285, CHA has worked closely with the legislative sponsors and other key stakeholders to find possible solutions to our many concerns with the initial draft. Amendments added to the bill in both the House and Senate have significantly improved the legislation. We remain still concerned that the bill will encourage costly litigation and incentivize patients to avoid paying their health care bills, both of which will significantly increase health care costs. CHA will continue to work closely with our hospitals and health systems to ensure continued compliance with the federal price transparency rules to limit liability if this bill passes and becomes law,” read the CHA statement.
If enacted, the legislation would ban Colorado hospitals that are noncompliant with federal price transparency laws from using debt collectors, filing negative credit reports against patients, and obtaining state court judgements for outstanding debts. Hospitals could still bill for services but would be required to refund any debt paid by the patient, in addition to all legal fees should collection actions be pursued.
Bipartisan bill sponsors argue that the HB 1285 encourages more transparency around fees and charges so patients know the costs of procedures beforehand and can shop around at different providers for more economical services.
Several Republican lawmakers voiced concerns on the Senate floor on Monday citing the bill would invite an increase in individual private action lawsuits against a complicated set of federal laws and regulation.
“… These are halcyon days for trial lawyers,” said Senator (R – Colorado Springs) Bob Gardner. And House Bill 1285 will provide compensation and livelihood for many, many trial lawyers. Now, the bill presents something of a dilemma because we all support transparency and hospital charges … 1285 chooses a mechanism to enforce that that the federal government, which is the author of the [No Surprises Act], did not intend and worded simply to say you can’t collect, Hospital, if you haven’t met the transparency standard.”
Members, we spent a lot of time over the last two, three years worrying about hospital availability. About hospital bed availability. And now we bring a piece of legislation that is going to fly in the face of that goal. Now I’m no great apologist for hospitals. But we need to make good public policy for every actor in the system, every stakeholder in the system, and House Bill 1285 is not it.”
The Senate amended the bill to limit complaints brought by patients against noncompliant hospitals to only those procedures relevant to their own care.
House amendments made last month gave smaller critical access hospitals with less than 25 beds more time to comply. With these amendments, the bill would go into effect in February for these smaller hospitals, while going into effect for all other hospitals this August.
The compromises led to a unanimous 35-0 vote in the Senate. The bill will now go back to the House for final approval to the changes before making its way to the Governor’s desk.