Sen. Bush’s bill would limit hospital debt collection and require notice before closures; authors, advocates urge fixes

Sen. Bush introduced Senate Bill 225 to curb aggressive medical-debt collection tied to hospital compliance and to require advance notice for major service-line reductions and closures.

The bill would prevent a hospital, debt collector or third party from pursuing medical debt when the hospital is out of compliance with a set of reporting and transparency requirements; it directs the Department of Health to determine hospital compliance and authorizes the attorney general to suspend a hospital’s ability to collect medical debt while noncompliance persists. It also creates civil penalties, restitution and notice requirements, including 120 days’ advance notice before long-term service-line reductions or closure, with waivers allowed for emergencies.

Rachel Sportward, chief of policy for health and family services in the governor’s office, asked the committee to support the measure. “Approximately 1 in 6 Hoosiers has medical debt in collections,” Sportward said, and she characterized SB 225 as a targeted approach that focuses on structural protections and transparency rather than creating new debt-relief programs.

Luke McNamee of the Indiana Hospital Association said IHA broadly supports the bill’s goals but urged technical changes. He recommended stretching the time that defines “medical debt” from 60 days to 120 days to avoid labeling active payment plans as delinquent debt and said the bill should not convert a hospital’s choice about nonprofit benchmarks (a reference to code section 16-21-18) into a de facto price cap. He also urged shortening the proposed 120-day closure notice to something closer to federal norms (30–60 days), citing operational and board-planning constraints.

Committee members pressed witnesses about practical complications: what happens when hospitals have already assigned or transferred debt to third-party collectors, whether suspension of a hospital’s collection authority would affect assigned debts, and how far back a hospital could retroactively pursue collections after regaining compliance. Sportward acknowledged the sale/assignment problem and said the administration was willing to work on solutions to protect patients and families in those situations. Luke McNamee said the bill’s language and some definitions need clarification so active payment plans are not mistakenly treated as collections-worthy debt.

Davey Neal of the attorney general’s consumer protection division proposed a friendly clarifying amendment that would route AG enforcement through the Deceptive Consumer Sales Act to clarify investigative procedures and allow cost recovery for investigations.

Witnesses representing employers and employers’ groups testified in support of the bill’s transparency and notice provisions, saying advance warning of service-line reductions helps employers and communities plan for disruptions to care.

Sen. Bush closed by saying he would work with hospital representatives and the attorney general’s office to craft amendments and that the committee would hold the bill for further work.

The committee did not vote on SB 225; sponsors said amendments will be drafted and the measure returned for further consideration.