ST. PAUL, Minn. — Minnesota has implemented a groundbreaking law compelling hospitals to assess patients’ eligibility for financial assistance before resorting to debt collections, aiming to combat the escalating issue of medical debt.
State Senator Liz Boldon (DFL-Rochester) spearheaded the initiative, which came into effect in November 2023. The legislation dictates that hospitals must not initiate payment plans or escalate cases to collections until they’ve ascertained whether patients qualify for government insurance or hospital assistance. To maintain nonprofit status tax breaks, health systems are obligated to offer “charity care” programs to economically disadvantaged patients struggling with medical expenses.
Boldon emphasized the motivation behind the law, stating, “What we saw happening across the state was, some patients need care, and they go to the hospital for care. They end up with a large bill, and in some cases were being taken to court, taken to collections for not being able to pay their bills when in fact they would have qualified for the hospital’s own charity care program. They just didn’t know about it.”
The new law does not alter the eligibility criteria for charity care programs. However, hospitals are now required to screen patients for income qualifications within 30 days. If eligible, patients “must be assisted with applying for charity care and referred to the appropriate department for follow-up.” During the application process, hospitals are barred from taking action against patients.
This screening legislation was part of a broader health spending bill passed last spring. While it did not receive as much attention as other issues during the legislative session, it prompted discussions among lawmakers and stakeholders in a committee hearing in March 2023. The Minnesota Hospital Association voiced support for certain aspects but expressed concerns about potential conflicts with existing agreements between hospitals and the Attorney General’s office.
Attorney General Keith Ellison strongly endorsed the bill, aligning with investigations by his office into billing and medical debt issues at Allina Health and Mayo Clinic in recent years.
While Minnesota boasts one of the lowest percentages of residents with medical debt in the country, Sen. Boldon noted that over 750,000 residents were in the medical debt collection system as recently as 2018.
The law’s impact is not entirely unprecedented, resembling legislation passed in Illinois, Colorado, Oregon, and Washington state, according to Nick McLaughlin, CEO of Breez Health, a Michigan-based company collaborating with hospitals on charity care programs.
McLaughlin, who spent 12 years in the hospital bill collections industry, believes the law’s proactive screening will significantly alleviate the burden of medical debt for Minnesotans. He highlighted the common challenge of patients qualifying for financial assistance but being unaware of existing programs, a major contributor to medical debt in the country.
Minnesota’s move reflects a growing trend toward more proactive measures in addressing medical debt issues nationwide.