Committee hears testimony on bill to curb medical debt collections and delay actions during insurance appeals

Rep. Ed Staffman, sponsor of House Bill 273, told the House Health and Human Services Committee on Feb. 3 that the bill — styled the Montana Medical Debt Protection Act — is intended to protect Montanans from ‘‘extraordinary collection actions’’ such as foreclosures, forced garnishments and credit reporting while giving patients more time to pursue insurance appeals. The hearing, held in the committee room, drew health advocates, tribal representatives and legal-aid attorneys to testify in favor and a trade group to oppose.

The bill would prohibit specified collection measures for medically necessary care, require creditors to provide notice before certain actions, and — as amended during drafting — shorten a waiting period from 180 days to 120 days. It would also require that, if property is seized to satisfy a medical debt, a person be left with at least $3,000 in exempt funds. Staffman said those provisions were modeled on neighboring states’ laws and included an exception when a patient has signed an Advanced Beneficiary Notice (ABN) at a hospital.

"This act . . . will protect people from the extreme debt collection practices, like losing their homes or having their wages taken," Staffman said as he laid out the bill’s key sections, including definitions and prohibited practices.

Proponents described repeated, concrete harms. Rep. Cetus Crowe (House District 15) recounted emergency care that left him with a $90,000 hospital bill and subsequent denials from Blue Cross Blue Shield and Indian Health Service (IHS). "I found myself sitting at the table with a $90,000 medical bill," Crowe said, and later described still owing roughly $20,000 after negotiations. He told the committee that IHS’s purchased-and-referred-care process can take weeks, by which time bills are already in collection.

Advocates from disease and legal-aid organizations said the bill addresses common industry failures. "Medical debt has become a very pervasive problem," Adam Zarrin, director of state government affairs for the Leukemia & Lymphoma Society, told the committee. He said the bill would "stop wage garnishments, liens on homes, and credit reporting of medical debt" in many cases and provide time for insurance appeals without preventing a provider from ultimately collecting legally owed amounts.

Beth Hayes, consumer staff attorney at Montana Legal Services Association, emphasized surprise billing and complex provider networks that can leave patients unaware a separate provider performed services and never billed insurance. "It just gives more time for patients to be in the know so that they can figure out what happened," Hayes said, arguing that additional time reduces the need for extraordinary collection measures.

Disability Rights Montana’s executive director, David Carlson, framed the scope of the problem for people with disabilities and cited national health-care spending as a driver of higher out-of-pocket burdens. Mark Cook, a veteran from Stevensville, and tribal witnesses also described how medical bills can deplete savings and destabilize families.

The lone opponent in the room, Adrianna Hines of the Consumer Data Industry Association, told the committee the association "respectfully urges the committee to oppose this legislation as we believe it is preempted by federal law" and handed the committee a letter explaining that view. Hines summarized federal changes to medical-debt reporting she said the association relies on, including that paid medical collections were excluded from credit scores as of July 1, 2022, reporting windows were lengthened to one year, and small debts under $500 are excluded from reporting as of 2023.

Committee members pressed both sides on legal and practical effects. Members asked whether the bill’s prohibition on reporting to consumer reporting agencies is preempted; proponents cited court decisions in other states rejecting preemption challenges and argued states can set protections above federal minimums. Lawmakers also asked witnesses how often IHS referred patients out and failed to cover bills; tribal witnesses said they had anecdotal and personal examples but no statewide statistics.

Rep. Staffman closed by urging a do-pass recommendation and said the bill had been refined in consultation with hospitals (noting the ABN carve-out) and modeled in part on neighboring states such as North Dakota. "We were looking for a reasonable amount that somebody would need to keep to live," he said of the $3,000 exemption, adding that the measure is intended to allow hospitals and providers to still collect payment while protecting consumers.

The committee took no vote at the hearing’s end; Chair Marshall closed the hearing and indicated executive action was planned on a later date.

The bill’s proponents asked the committee to advance the measure; opponents asked the committee to consider federal preemption and credit-industry changes. If the committee moves the bill forward, it will next be scheduled for executive action and additional floor consideration according to legislative procedures noted by the chair.