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Senate Health & Welfare reviews medical-debt bill; lenders raise concerns about broad definition
Summary
The Senate Health & Welfare Committee took testimony on S.27, a bill to allow a nonprofit to forgive certain medical debt and to set notice/reporting requirements. Supporters said it could relieve Vermonters while hospital and banking representatives urged narrowing the bill’s definition of “medical debt” and raised implementation questions.
The Vermont Senate Health & Welfare Committee heard extended testimony Feb. 18 on S.27, legislation that would allow a nonprofit to forgive medical debt and create reporting and notice procedures aimed at giving relief to Vermonters with unpaid hospital and provider bills.
Supporters, including the Office of the Health Care Advocate and hospital representatives, told the committee the proposal could provide meaningful relief to people saddled by hospital bills and urged the committee to consider related state actions to draw down federal funds. Critics including the Vermont Bankers Association warned the bill’s current wording could sweep in consumer debt not directly owed to medical providers.
Mike Fisher, the state’s health care advocate, described ACT 119 of 2022 — the patient financial assistance and medical debt protections law that took effect July 1, 2022 — as groundwork that standardized hospitals’ financial assistance eligibility and discount levels. “Act 119 … prohibited the sale of medical debt by large health care facilities and set minimum standards for financial assistance programs,” Fisher said, noting hospitals must now offer a range of discounts tied to federal poverty levels.
Chris Delia, president of the Vermont Bankers Association, said he supports the bill’s first section — money that the treasurer would administer to reduce outstanding provider-consumer debts — but raised concerns about the bill’s later sections that define which obligations qualify. “If a consumer uses a credit card or a home-equity loan to pay a medical expense, that credit or loan could be swept up into this,” Delia said, arguing that lenders could not reliably distinguish medical from nonmedical uses of general-purpose credit and that reporting requirements could create unintended credit-reporting consequences.
A representative of the Vermont Association of Hospitals and Health Systems told the committee hospitals back the concept and urged full funding for measures that would reduce uncompensated care. The witness said the state’s Disproportionate Share Hospital (DSH) match is underfunded: “There’s a special fund … our limit is $44,000,000. We only fund up to $22,000,000 for that, so we are leaving federal dollars on the table,” the witness said, summarizing hospital finance concerns and the size of uncompensated care documented in regulated hospital reports.
Office of the Health Care Advocate witnesses recommended several technical changes to S.27 to improve outreach and reduce unintended consequences. Their suggestions included requiring notice to individuals whose debt is forgiven about existing hospital financial assistance programs and clarifying that large health care facilities should not pull consumer credit reports to determine eligibility for financial assistance. They also asked the committee to consider whether the program should include non-hospital medical debts that enter collection and whether the treasurer’s nonprofit partner should be structured to identify debts originated by ambulance services, dental offices or independent provider practices.
The committee did not take formal votes on S.27 at the hearing. Members said they will use the testimony and follow-up hallway discussions with the treasurer’s office and stakeholders to refine language ahead of a scheduled markup.
Evidence in the hearing showed broad agreement on the bill’s intent but varied views on implementation details: hospital and consumer-advocate witnesses urged steps that would increase access to financial assistance and screen patients earlier, while bankers and lenders asked the committee to narrow statutory definitions to avoid capturing general secured or unsecured consumer credit tied to nonmedical purchases.
Committee leadership closed testimony by asking advocates and agencies to supply written language and data for the mark-up session, and to identify whether funding increases (for example to the DSH match or Medicaid rates) would be needed to preserve hospital capacity while expanding consumer protections.
Votes at the hearing: none recorded. The committee scheduled further work and a markup when members will incorporate the technical clarifications and any statutory language changes suggested by stakeholders.
