FILED SENATE
Mar 16, 2023
GENERAL ASSEMBLY OF NORTH CAROLINA
S.B. 321
SESSION 2023 PRINCIPAL CLERK
S D
SENATE BILL DRS55031-NHa-62A
Short Title: Medical Debt De-Weaponization Act. (Public)
Sponsors: Senators Krawiec, Ford, and Burgin (Primary Sponsors).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO ADOPT THE PRO-FAMILY, PRO-CONSUMER MEDICAL DEBT
3 PROTECTION ACT TO SET TRANSPARENT PARAMETERS AROUND THE
4 PROVISION OF FINANCIAL ASSISTANCE FOR IMPOVERISHED FAMILIES AND
5 LIMIT THE ABILITY OF LARGE MEDICAL FACILITIES TO CHARGE
6 UNREASONABLE INTEREST RATES AND EMPLOY UNFAIR TACTICS IN DEBT
7 COLLECTION.
8 The General Assembly of North Carolina enacts:
9 SECTION 1. Chapter 131E of the General Statutes is amended by adding a new
10 Article to read:
11 "Article 11C.
12 "Medical Debt Protection Act.
13 "§ 131E-214.21. Short title and purpose.
14 This Article may be cited as the "Medical Debt Protection Act." The purpose of this Article
15 is to reduce burdensome medical debt and to protect patients in their dealings with medical
16 creditors, medical debt buyers, and medical debt collectors with respect to such debt. This Article
17 is a consumer protection statute and shall be liberally and remedially construed to effectuate its
18 purposes.
19 "§ 131E-214.22. Definitions.
20 The following definitions apply in this Article:
21 (1) Consumer. – A natural person who has incurred a debt or alleged debt for
22 primarily personal, family, or household purposes.
23 (2) Consumer reporting agency. – Any person, which, for monetary fees, dues, or
24 on a cooperative nonprofit basis, regularly engages in whole or in part in the
25 practice of assembling or evaluating consumer credit information or other
26 information on consumers for the purpose of furnishing consumer reports to
27 third parties.
28 (3) External review. – Review of an adverse benefit determination, including a
29 final internal adverse benefit determination, conducted pursuant to an
30 applicable State external review process as described in Part 4 of Article 50
31 of Chapter 58 of the General Statutes, a federal external review process as
32 described in 42 U.S.C. § 300gg-19, a review pursuant to 29 U.S.C. § 1133, a
33 Medicare appeals process, a Medicaid appeals process, or another applicable
34 appeals process.
35 (4) Extraordinary collection action. – An extraordinary collection action includes
36 any of the following:
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1 a. Selling an individual's debt to another party, except if prior to the sale,
2 the medical creditor enters into a legally binding written agreement
3 with the medical debt buyer which includes the following provisions:
4 1. The medical debt buyer or collector is prohibited from
5 engaging in any extraordinary collection actions to obtain
6 payment for the care.
7 2. The medical debt buyer is prohibited from charging interest on
8 the debt in excess of that described in G.S. 131E-214.23.
9 3. The debt is returnable to or recallable by the medical creditor
10 upon a determination by the medical creditor or medical debt
11 buyer that the individual is eligible for financial assistance.
12 4. If the individual is determined to be eligible for financial
13 assistance and the debt is not returned to or recalled by the
14 medical creditor, the medical debt buyer is required to adhere
15 to procedures which shall be specified in the agreement that
16 ensure that the individual does not pay, and has no obligation
17 to pay, the medical debt buyer and the medical creditor
18 together more than he or she is personally responsible for
19 paying in compliance with this Article.
20 b. Reporting adverse information about the patient to a consumer
21 reporting agency.
22 c. Actions that require a legal or judicial process, including, but not
23 limited to:
24 1. Placing a lien on an individual's property.
25 2. Attaching or seizing an individual's bank account or any other
26 personal property.
27 3. Commencing a civil action against an individual.
28 4. Garnishing an individual's wages.
29 (5) Gross charges. – A covered health care provider's full, established price for
30 health care services that the covered health care provider charges uninsured
31 patients before applying any contractual allowances, discounts, or deductions.
32 (6) Health care services. – Services for the diagnosis, prevention, treatment, cure,
33 or relief of a physical, dental, behavioral, substance use disorder or mental
34 health condition, illness, injury, or disease. These services include, but are not
35 limited to, any procedures, products, devices, or medications.
36 (7) Household income. – Income calculated by using the methods used to
37 calculate Medicaid eligibility, as set forth in 42 C.F.R. § 435.603, unless that
38 law should be repealed, then by applicable State law.
39 (8) Internal review or internal appeal. – Review by a health insurance plan or other
40 insurer of an adverse benefit determination.
41 (9) Large health care facility. – Includes any of the following entities:
42 a. Any hospital licensed under this Chapter or Chapter 122C of the
43 General Statutes, whether a nonprofit subject to 26 U.S.C. § 501(c)(3),
44 a hospital owned by a county, municipality, the State, or a for-profit
45 entity.
46 b. Any outpatient clinic or facility affiliated with a hospital or operating
47 under the license of a hospital described in sub-subdivision a. of this
48 subdivision.
49 c. Any ambulatory surgical center licensed under this Chapter.
50 d. Any practice which provides outpatient medical, behavioral, optical,
51 radiology, laboratory, dental, or other health care services with
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1 revenues of at least twenty million dollars ($20,000,000) annually and
2 is licensed under this Chapter or has medical providers performing
3 health care services pursuant to a license issued under Chapter 90 of
4 the General Statutes.
5 e. Any licensed health care professional who provides health care
6 services in one or more of the settings listed in sub-subdivisions a.
7 through d. of this subdivision and bills patients independently.
8 (10) Medical creditor. – Any entity that provides health care services and to whom
9 the consumer owes money for health care services, or the entity that provided
10 health care services and to whom the consumer previously owed money if the
11 medical debt has been purchased by one or more debt buyers.
12 (11) Medical debt. – A debt arising from the receipt of health care services.
13 (12) Medical debt buyer. – A person or entity that is engaged in the business of
14 purchasing medical debts for collection purposes, whether it collects the debt
15 itself or hires a third party for collection or an attorney-at-law for litigation in
16 order to collect such debt.
17 (13) Medical debt collector. – Any person that regularly collects or attempts to
18 collect, directly or indirectly, medical debts originally owed or due or asserted
19 to be owed or due another. A medical debt buyer is considered to be a medical
20 debt collector for all purposes.
21 (14) Medical debt mitigation policy (MDMP). – A written financial assistance
22 policy which includes:
23 a. Eligibility criteria for financial assistance, including when such
24 assistance includes free or discounted care.
25 b. The basis for calculating amounts charged to patients.
26 c. The method for applying for financial assistance.
27 d. The billing and collections policy containing the actions the covered
28 health care provider may take in the event of nonpayment, including
29 collections action and reporting to credit agencies.
30 e. Measures to widely publicize the policy within the community to be
31 served by the covered health care provider.
32 (15) Patient. – The person who received health care services and, for the purposes
33 of this Article, shall include a parent if the patient is a minor or a legal guardian
34 if the patient is an adult under guardianship.
35 "§ 131E-214.23. Medical debt mitigation policy for large health care facilities.
36 (a) All large health care facilities are required to develop a written MDMP that complies
37 with this Article and any implementing rules. This requirement shall apply whether or not the
38 large health care facility is required to develop a financial assistance policy under 26 U.S.C. §
39 501(r)(4) and implementing regulations.
40 (b) The MDMP must, at a minimum, include the following:
41 (1) A written financial assistance policy that applies to all emergency and other
42 medically necessary health care services offered by the covered health care
43 provider.
44 (2) A plain language summary of the financial assistance policy, which shall not
45 exceed two pages in length.
46 (3) The eligibility criteria for financial assistance and a summary of the type of
47 assistance that is available as set forth in this Article.
48 (4) The method and application process that patients are to use to apply for
49 financial assistance.
50 (5) The information and documentation the large health care facility may require
51 an individual to provide as part of the application.
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1 (6) The reasonable steps that the provider will take to determine whether a patient
2 is eligible for financial assistance.
3 (7) The billing and collections policy, including the actions that may be taken in
4 the event of nonpayment, which shall comply with all applicable parts of this
5 Article and other applicable municipal, State, or federal laws.
6 (c) The MDMP must be approved by the owners or governing body of a health care
7 provider and shall be reviewed by the owners or governing board annually.
8 "§ 131E-214.24. Implementation of the medical debt mitigation policy.
9 (a) In addition to any other actions required by applicable municipal, State, or federal
10 law, large health care facilities must take the following steps before seeking payment for any
11 emergency or medically necessary care:
12 (1) Determine whether the patient has health insurance.
13 (2) If the patient is uninsured, offer to screen the patient for public or private
14 insurance eligibility and offer assistance if the patient chooses to apply for
15 public or private insurance, however, a patient's refusal to be screened shall
16 not be grounds for denying financial assistance.
17 (3) Offer to screen the patient for other public programs which may assist with
18 health care costs, however, a patient's refusal to be screened shall not be
19 grounds for denying financial assistance.
20 (4) If available, use information in the possession of the large health care facility
21 to determine that the patient is qualified for free or discounted care as set forth
22 in subsection (b) of this section.
23 (5) If the patient submits an application for financial assistance, determine the
24 patient's eligibility for the financial assistance plan within 14 days after the
25 patient applies for financial assistance, suspending any billing or collections
26 actions while eligibility is being determined.
27 (b) The following patients shall qualify for financial assistance under the MDMP, which
28 applies to any charges for health care services that are not covered by insurance and would
29 otherwise be billed to the patient:
30 (1) Patients with household income of zero percent (0%) to two hundred percent
31 (200%) of the federal poverty level shall receive free care.
32 (2) Patients with household income of more than two hundred percent (200%) up
33 to four hundred percent (400%) of the federal poverty level shall be charged
34 no more than an amount calculated in the following manner:
35 a. Recalculate the patient's bill using the Medicare reimbursement rate
36 applicable on the dates of service.
37 b. The patient shall be charged no more than fifty percent (50%) of the
38 first one thousand dollars ($1,000) charged under this recalculated bill.
39 c. The patient shall be charged no more than ten percent (10%) of any
40 remaining amount over one thousand dollars ($1,000) and up to five
41 thousand dollars ($5,000).
42 d. The patient shall be charged no more than five percent (5%) of any
43 remaining amount over five thousand dollars ($5,000) and up to ten
44 thousand dollars ($10,000).
45 e. Any amount above ten thousand dollars ($10,000) shall be provided to
46 the patient as free care.
47 (3) Patients with household income of more than four hundred percent (400%) up
48 to six hundred percent (600%) of the federal poverty level shall receive the
49 same discounts as patients with household income of more than two hundred
50 percent (200%) up to four hundred percent (400%) of the federal poverty level
51 if the patient or the patient's household has incurred medical expenses from
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1 the current large health care facility's bill and all other medical bills for
2 medically necessary health care services received during the previous 12
3 months which in total exceed ten percent (10%) of the household's income.
4 (4) In addition to other financial assistance provided under this Article, no patient
5 with household income at or below four hundred percent (400%) of the federal
6 poverty level shall be required to pay more than two thousand three hundred
7 dollars ($2,300) in cumulative medical bills to large health care facilities per
8 year. Upon patient request and documentation, any health care services that
9 have been delivered by one o