Delaware lawmakers are advancing legislation that would significantly expand hospital financial assistance requirements while placing new restrictions on medical debt collection activity across the state.
Why it matters: Senate Bill 13 would require nonprofit hospitals and facility-based providers to provide free or discounted medically necessary care to more Delaware residents based on income thresholds tied to the federal poverty level. The proposal would also pause a wide range of collection activity while financial assistance applications are pending.
The big picture: The legislation follows scrutiny over hospital charity care practices in Delaware and renewed attention on medical debt burdens carried by residents across the state. According to reporting cited alongside the bill, lawmakers began examining the issue after the state helped erase roughly $50 million in unpaid medical debt for nearly 18,000 residents through a separate debt relief initiative.
Under the proposal:
- Patients earning up to 300% of the federal poverty level would qualify for full financial assistance for medically necessary hospital services.
- Patients between 300% and 350% of the federal poverty level would receive at least a 75% reduction in patient responsibility.
- Patients between 350% and 400% of the federal poverty level would qualify for at least a 50% reduction.
- Hospitals would also be required to maintain “medical hardship” policies for certain patients with incomes up to at least 500% of the federal poverty level.
The bill would prohibit hospitals and facility-based providers from referring accounts to collection agencies, selling debt, reporting unpaid charges to consumer reporting agencies, or initiating lawsuits or arbitration proceedings while a financial assistance application is pending.
The legislation would also require hospitals to prominently post financial assistance notices in patient registration and billing areas, provide oral notice at registration or admission, and screen certain uninsured or self-pay patients for eligibility. Notices and applications would need to be available in languages spoken by more than 5% of the hospital’s service area population.
Another notable provision would allow patients to apply for financial assistance even after accounts have been referred, assigned, or sold to another entity. If a patient is later determined eligible, the hospital would be required to notify the collecting entity that the debt is invalid.
The proposal would also establish new reporting and oversight requirements through Delaware’s Diamond State Hospital Cost Review Board, including annual reporting on financial assistance applications, approval and denial rates, eligibility determination times, and total assistance provided.
Enforcement authority under the bill would include potential civil penalties, licensure actions, and civil actions brought by the Delaware Attorney General on behalf of affected patients.
The legislation further states that noncompliance with the financial assistance requirements, or proof that a patient qualifies for assistance, could serve as a complete defense in a medical debt collection lawsuit.
Senate Bill 13 is currently awaiting a hearing in the Senate Health and Social Services Committee.
