Massachusetts is moving to keep medical debt off consumer credit reports, and it is using provider licensing as the enforcement hammer.
Gov. Maura Healey yesterday announced proposed regulations that would bar licensed health care providers, and the debt collectors working on their behalf, from reporting medical debt to consumer credit agencies. The rules, developed by the state Department of Public Health, tie compliance directly to licensure. Providers that report medical debt could lose their license to practice.
“Right now we’re tying this to licensure, so both facility licensure and professional licensure,” Public Health Commissioner Robbie Goldstein said. He called the potential loss of a license “a pretty significant penalty for someone who’s trying to provide health care.”
That licensure hook is the part collection professionals should watch. It routes around the legal vulnerability that sank the CFPB’s national medical-debt rule, which a federal judge vacated last year. Matt Selig, executive director of Health Law Advocates, argued that grounding the ban in the state’s authority to grant and revoke licenses puts it on firmer footing than a stand-alone credit-reporting rule. More than a dozen states have adopted similar measures since the federal rule fell.
For the ARM industry, the operational reach extends beyond hospitals. Agencies collecting on behalf of Massachusetts providers would be swept into the prohibition, adding a state-specific furnishing restriction on top of existing FCRA obligations and the credit bureaus’ voluntary removal of medical debt under a certain threshold.
Healey framed the move as regulatory action in the absence of legislation, echoing her earlier decision to scrap prior authorization requirements by rule. She pitched medical debt as a poor predictor of creditworthiness. “Medical debt isn’t a sign of poor financial health,” she said. “Medical debt happens because bad stuff happens.”
The scale is meaningful. The biennial Massachusetts Health Insurance Survey found 13.5% of residents carried family medical debt, most of it incurred while insured, and roughly 41% of those had been contacted by a collection agency, according to the Center for Health Information and Analysis.
All 23 of the department’s licensing boards have voted to advance the proposal. DPH is accepting written public comments and will hold public hearings July 27 and 28 before finalizing the rules.
The regulatory push arrives alongside private relief. More than 140,000 residents are set to receive over $170 million in debt cancellation through a partnership among the Atrius Health Equity Foundation, Undue Medical Debt and the Massachusetts Health and Hospital Association, with notification letters expected around July 7.
