Lawmakers in in South Dakota have taken opposing actions on two medical debt bills, advancing one that prohibits reporting medical debt to credit agencies while rejecting another that sought to limit when hospitals could send bills to collections.
The details:
- The House Health and Human Services Committee approved House Bill 1058, which prohibits the reporting of medical debt to consumer credit agencies. The bill passed 9-4 and now moves to the full House for consideration.
- A second measure, House Bill 1210, which would have restricted hospitals from sending unpaid medical bills to collection agencies under certain conditions, was defeated in a 10-3 vote.
HB 1058: Blocking medical debt from credit reports
- Prohibits medical creditors and debt collectors from reporting medical debts to consumer credit agencies.
- Violating the law would be classified as a Class 2 misdemeanor.
- Supporters, including Rep. Brian Mulder, a Republican, argue that medical debt is often incurred unexpectedly and should not impact a person’s credit score.
- “When you have a low credit score and this compounding debt, it just makes it harder in every other aspect—housing, transportation, and employment,” Mulder said.
- Several health advocacy groups, including organizations supporting elderly, disabled, and tribal communities, backed the bill. A representative of the Rosebud Sioux Tribe testified that tribal members often struggle with collections when federal reimbursements for care at non-Indian Health Service providers are delayed.
- Opposition came from banks and business groups. Karl Adam, president of the South Dakota Bankers Association, said excluding medical debt from credit reports prevents lenders from having a full financial picture of borrowers.
HB 1210: Restrictions on sending medical debt to collections
- Would have prohibited hospitals from sending unpaid medical bills to collection agencies under certain conditions, including:
- If the patient was awaiting an insurance appeal.
- If the hospital had not yet evaluated the patient for financial assistance eligibility.
- If the hospital failed to provide an itemized statement before sending the debt to collections.
- If the patient was actively negotiating or making payments under an agreed-upon plan.
- The bill allowed patients to sue hospitals for damages and legal fees if violations occurred.
- South Dakota’s hospital industry opposed the measure, arguing that it was vague, unnecessary, and could be costly. They noted that hospitals already provide financial assistance and negotiate payment plans before resorting to collections.
- Rep. Taylor Rehfeldt, a Republican, expressed concerns about small hospitals, saying, “Eight South Dakota hospitals might close,” if financial pressure from unpaid medical debt worsens.
