House Healthcare panel advances S.27 to fund purchase and abolition of medical debt; committee adds debtor notification requirements

The House Healthcare Committee on April 3 advanced draft 1.2 of S.27, an act to fund the purchase and abolition of certain medical debt and to exclude abolished medical debt from consumer credit reports. The committee voted in favor of the draft in a roll-call after a straw‑poll, with 11 members recorded as voting yes.

Committee members said the bill would appropriate $1 million to the state treasurer to contract with a nonprofit to acquire eligible medical debts from health care providers at fair market value and abolish those debts without cost or tax consequence to the debtor. "This is S.27 and [it] relate[s] to medical debt relief and excluding medical debt from credit reports," said Jen Carby, Legislative Counsel, as she explained the strike‑all amendment that reflected the committee's changes.

The amendment added an explicit notice requirement to individuals whose debts are abolished. The notice must include: the amount of medical debt abolished; the name(s) of the provider(s) from whom the nonprofit purchased the debt; an estimated percentage of the federal poverty level corresponding to the individual's household income; and information that financial assistance policies are available at all Vermont hospitals in accordance with 18 V.S.A. §9482, including a 100% discount for households at or below 250% of the federal poverty level and a minimum 40% discount for households between 250% and 400% of the federal poverty level.

"Notify each individual whose medical debt was abolished pursuant to this section, the amount of the individual's medical debt that was abolished and the name of the health care provider or providers from whom the entity purchased the individual's debt," Carby read aloud when describing the new notice language. Doctor Amy Moore, participating on the committee, said she wanted to avoid wording that might mislead a recipient or produce an unclear notice: "If people are having trouble understanding what the intent is, then I'm concerned the wordsmith(er) will go down the wrong track," she said. Moore confirmed Jen Carby would refine the notice language for clarity.

The committee also addressed consumer credit report protections. The amendment clarifies that an organization may access a consumer's credit report without the consumer's consent only when the organization is a tax‑exempt entity determining eligibility for abolition of medical debt; the amendment further specifies that the exemption does not apply to large health care facilities as defined in the patient assistance and medical debt chapter (hospitals, affiliated outpatient clinics and ambulatory surgical centers). Jen Carby explained that because Vermont hospitals are nonprofits, the carve‑out prevents hospitals themselves from using the exemption to pull credit reports without consent; the exemption is focused on organizations determining eligibility for the abolition program.

Committee members asked practical questions about how the treasurer or contracted nonprofit would obtain provider records and eligibility information; Carby noted witnesses had described coordination with hospitals and other providers. The committee asked legislative counsel to produce a clean copy of the draft and a short memo on the two highlighted changes.

On procedure, the committee conducted a straw poll and then a roll‑call on moving draft 1.2 out of committee. The clerk recorded 11 yes votes and the motion passed. Representative Paige agreed to serve as reporter for the bill and the committee asked for an ASAP clean copy reflecting the two highlighted amendments.

Next steps include final editing of the strike‑all amendment language and circulation of clean drafts to committee members prior to reporting the bill to the full body.