As part of the 2024 New York State Budget Act, significant changes were made to the mandatory hospital financial assistance program requirements and several new laws were enacted, aimed at easing the impact of health care costs and medical debt on patients.  Hospitals and other healthcare providers must revise policies and procedures or create new policies and procedures to comply with these new requirements no later than October 20, 2024.

Hospital Financial Assistance Policies.  With respect to hospital financial assistance and debt collection practices, the following are the material changes that will go into effect this fall:

• Financial assistance must be offered not only to low-income uninsured individuals, but also to individuals who are “underinsured” (meaning individuals whose out-of-pocket medical costs over the preceding year were greater than 10% of such individual’s gross annualized income).
• An individual’s immigration status cannot be used as an eligibility criterion. Any requirements for program participants to apply for government provided insurance must be waived for those individuals whose immigration status precludes them from being granted such coverage.
• Income eligibility for financial assistance will increase from 300% of the federal poverty level (FPL) and below to 400% of the FPL and below.
• For those with income levels at or below 200% of the FPL, all charges must be waived and no nominal payment may be collected.
• For those with income levels between 200% and 300% of the FPL, charges must be reduced (on a sliding scale) up to a maximum of 10% of the Medicaid rate for the services in question. For the underinsured, the maximum payment may be no more than 10% of what would otherwise be the patient’s co-pay or cost-sharing responsibility.
• For those with income levels between 300% and 400% of the FPL, charges must be reduced (on a sliding scale) up to a maximum of 20% of the Medicaid rate for the services in questions. For the underinsured, the maximum payment may be no more than 20% of what would otherwise be the patient’s co-pay or cost-sharing responsibility.
• Although infrequently used, the exception allowing hospitals to consider any significant assets owned by low-income patients is eliminated.
• Hospitals with 24-hour emergency departments are required to provide all patients (including ED patients) with written summaries of its financial assistance program during the intake and registration process. In addition, all hospitals, regardless of emergency department status, must provide the written summaries again upon a patient’s discharge.
• Any installment payment plans offered must not require monthly payments that exceed 5% of the patient’s gross monthly income and the rate of interest imposed on outstanding balances must not exceed 2%.
• Patients must be allowed to apply for financial assistance at any time during the collection process. While  current New York law allows hospitals to preclude patients from applying for financial aid if they do not apply within  90 days of their date of discharge or date of service or fail to return a completed application within 20 days of it being provided to them, existing federal regulations for 501(c)(3) hospitals already extended those timeframes (i.e. 120-day “notification period” and a 240-day “application period,” plus a 30 day notice period, prior to initiating any “extraordinary collection actions”).  So, the amendment to the New York law has the effect of extending what the IRS otherwise requires of tax-exempt hospitals.
• Patients may not be denied admission or treatment for clinical services that are reasonably anticipated to be medically necessary simply because they have unpaid medical debt owed to the hospital.
• Debt collection policies must affirmatively prohibit forced sale or foreclosure of a patient’s primary residence in order to collect on outstanding medical bills.
• Debt collection policies must affirmatively prohibit the sale of accumulated medical debt to a third-party unless the third-party explicitly purchases such medical debt in order to relieve the patient of the debt.
• Debt collection policies must affirmatively prohibit commencement of legal action to recover unpaid medical debts against patients with incomes at or below 400% of the FPL. Further, any legal action to recover unpaid medical debt must be accompanied by an affidavit from the hospital’s Chief Financial Officer, confirming that the patient-defendant does not have income at or below 400% of the FPL based on the hospital’s reasonable determination.
• Hospitals are required to produce a new report, stating the number of patients who applied for financial assistance and the number who were denied such assistance, along with each patient’s age, race, ethnicity, gender and insurance status.
• Hospitals and their debt collection agents may not commence a civil action against a patient for nonpayment of a medical debt for at least 180 days after issuing the first post-service bill to the patient and even then, only after the hospital has made reasonable efforts to determine whether the patient qualifies for financial assistance. In addition, hospitals must refrain from delegating collection action to a collection agent for these same timeframes (i.e. 180 days after issuing bill and reasonable efforts to determine financial aid eligibility). As previously stated, existing federal IRS regulations require tax-exempt hospitals to refrain from taking “extraordinary collection actions” until at least 120 days after issuing the first post-service bill and, even then, only after providing patients with at least 30 days’ advance notice of such actions. So, again, the New York State amendment extends the waiting period for collection actions as required by IRS regulations.

Separation of Consent to Treatment and Consent to Payment.  The Budget Act also included new rules on securing patient consent to treatment and consent to payment.  Beginning this fall, hospitals and other healthcare providers (including physician practices, captive medical practices, ambulatory surgery centers, etc.) must use completely separate patient consent forms for treatment and for payment.  In addition, a patient’s consent to payment cannot be requested or provided until after the provider (1) has provided the services to the patient, and (2) has discussed the treatment or service costs with the patient.  The new law also has a detailed description of what “consent” means for these purposes.

Credit Cards and Medical Financial Products.  Finally, the Budget Act also creates two new provisions in the General Business Law; Sections 349-g and 519-a.  New Section 349-g prohibits hospitals, “healthcare providers” (limited to those health care professionals license, registered or certified pursuant to Title 8 of New York State Education Law) and their employees or agents from completing any portion of an application for “medical financial products” for patients or from otherwise arranging for or establishing an application that is not completely filled out by the patient.  “Medical financial products” are defined as credit cards issued under an open-end or closed-end plan that is offered specifically for the payment of health care services, products or devices that are provided to a person.

New Section 519-a addresses the use of credit cards as payment for health care services.  The new provision prohibits hospitals and health care providers (same definition) from requiring credit card preauthorization or a credit card to be kept on file prior to providing emergency or medically necessary health care services.  Hospitals and healthcare providers are also required to notify patients about the risks attendant to paying for medical services with a credit card, including the fact that by doing so, the patient will forego state and federal protections that apply to medical debt.

Again, October 20, 2024, is the effective date for these new financial assistance program, payment consent and credit card requirements.  Hancock Estabrook will monitor any further implementation guidance that may be issued by the applicable regulatory authorities.