MarylandSB 09812025 Regular SessionSenateWALLET

Hospitals - Financial Assistance and Collection of Debts - Policies

Sponsored By: Stephen S. Hershey (Republican)

Signed by Governor

Health Care Facilities and RegulationDebt Collection -see also- Attachments and GarnishmentsHospitals -see also- Clinics; State HospitalsLow-IncomeMedical AssistanceMedical TreatmentsNoticesReportsStandards and Best PracticesTime

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Analyzed Economic Effects

9 provisions identified: 8 benefits, 1 costs, 0 mixed.

Lower hospital bills for eligible patients

Beginning October 1, 2025, hospitals must provide free medically necessary care at family incomes up to 200% of the federal poverty level. For eligible patients, minimum cuts in regulated hospital out-of-pocket costs are 75% at 201%–250% of poverty and 60% above 250%–300%. For patients qualifying through financial hardship, minimum cuts are 50% above 300%–350%, 45% above 350%–400%, 40% above 400%–450%, and 35% above 450%–500%. The Commission can set higher income limits; hardship-based reduced rates last 12 months for patients and immediate household members. Qualifying care includes diagnosis, prevention, treatment, rehabilitation, and symptom relief that meets accepted medical standards—not care mainly for convenience. Copays, coinsurance, and deductibles count toward medical debt for assistance decisions, even when another provider bills them. Covered hospital services include inpatient, emergency, outpatient, and certain regulated outpatient services, but exclude outpatient kidney dialysis and limited-service outpatient care other than emergency care.

Fewer hospital lawsuits and clearer warnings

Hospitals cannot sue over outstanding hospital debt of $500 or less. They must wait until after 240 days from the first bill to send the required pre-lawsuit notice. That notice must arrive by certified and first-class mail at least 45 days before filing suit. It must use simple language, at least 10-point type, and include the debt amount, contacts, counseling information, an assistance application, payment-plan information, and the required information sheet. Notices must use the patient's stated preferred language or, if none is stated, qualifying local languages meeting the 5% population threshold. Lawsuits require sworn statements and records showing compliance with notice, assistance, and waiting-period rules. Covered hospital debt contracts and notes no longer receive the 12-year lawsuit deadline; the general three-year deadline applies unless another law provides otherwise.

Hospital debt cannot threaten patients' homes

Hospitals cannot place liens on patients' primary homes or force their sale or foreclosure to collect hospital debt. They cannot seek arrest warrants or court orders to seize patients, or garnish wages of patients eligible for assistance. Estate claims are barred when hospitals knew the patient qualified for free care or the estate's after-tax value is less than half the debt. Hospitals must determine assistance eligibility before filing a collection action. Spouses and other people are not liable for an adult patient's hospital debt unless they voluntarily sign a separate agreement. Hospitals cannot seek that agreement in an emergency room or emergency situation, or require it as a condition of any care.

Hospitals cannot sell patients' debt

Hospitals cannot sell patient debt and must actively oversee collection contracts. Hired collectors must follow hospital policies, address possible assistance eligibility, and forward patient complaints. Hospitals and collectors are each legally responsible for covered collection requirements. Hospital boards must approve financial-help and collection policies at least every two years and approve any changes. The Maryland Health Services Cost Review Commission must check compliance and publish hospital policies and annual reports free online. Annual reports must include assistance applications, approvals, denials, care costs, and collection data, with required demographic and ZIP code breakdowns. The law also requires a statewide report and reporting to legislative committees, with annual December 1 and February 1 reporting timeframes.

Stronger credit protections for hospital patients

Hospitals cannot report negative credit information during the first 240 days after providing the initial bill. They cannot report debt for patients who were uninsured or eligible for free or reduced-cost care when treated. Qualifying insurance appeals and assistance reconsiderations block negative reporting, lawsuits, and delegated collection during the protected review periods. Assistance reconsideration protections also cover decisions completed within the preceding 60 days; previously reported negative information must be deleted during protected periods. When patients fulfill their payment obligation, hospitals must notify any agency that received negative information within 60 days.

More time to seek hospital help

Patients have 240 days after receiving their first hospital bill to apply for help and report changed finances. Hospitals must record acknowledgment of the assistance notice before discharge, use a simplified state application, and avoid burdensome paperwork. They must decide completed applications within 14 days and pause billing and collection while deciding eligibility. Hospitals may consider only monetary assets above $100,000, exclude retirement assets, and cannot require citizenship or immigration status or discriminate based on protected traits. Hospitals must help uninsured patients apply for public coverage; households receiving SNAP, WIC, energy assistance, or designated social services qualify for presumed free care when patients are ineligible for state health programs. Patients can request reconsideration of assistance denials, complain about hospital or collector conduct, and agree with hospitals to change payment plans. Hospitals must provide plain-language assistance information before discharge, with bills, on request, and in collection communications, plus trained staff to help patients. Notices must use the patient's preferred language or qualifying local languages spoken by limited-English-proficient groups making up at least 5% of the population.

Refunds for patients qualifying for free care

Hospitals must refund amounts collected above $25 when patients qualify for free care within 240 days after the first bill. The refund is due within 30 days after the eligibility decision. For patients in means-tested government health plans requiring out-of-pocket payments, the plan's terms govern refunds. Hospitals must also vacate judgments and correct adverse information when the law's free-care correction requirements apply.

Smaller hospital payments and fewer charges

Hospitals must offer written installment plans before discharge and share plan information with bills, on request, and in written collection messages. Income-based monthly payments cannot exceed 5% of adjusted gross monthly household income, counting everyone on the same tax return. Plan guidelines address financial hardship and plan length based on income, and prohibit prepayment penalties or fees. Patients count as current after at least 11 scheduled payments in 12 months; after missing one, they must contact the facility and plan to catch up within one year. Facilities can waive additional missed payments to keep patients out of collections or court. Assistance-eligible patients cannot face interest before a court judgment or fees and other amounts above approved hospital charges; interest for other patients cannot begin before day 240. Before suing or assigning collection work, hospitals must make good-faith efforts to follow their compliant payment-plan policies.

Stricter free-care rules for meal-program families

A child's school meal enrollment alone does not establish presumed eligibility for free hospital care. The child must be enrolled in free or reduced-cost meals and qualify based on household income. The patient must also be ineligible for Maryland Medical Assistance and the Maryland Children's Health Program.

Sponsors & Cosponsors

Sponsor

Stephen S. Hershey
Republican • Senate

Cosponsors

Alonzo T. Washington
Democratic • Senate
Pamela Beidle
Democratic • Senate
Carl Jackson
Democratic • Senate
Dawn Gile
Democratic • Senate
Antonio Hayes
Democratic • Senate
Benjamin F. Kramer
Democratic • Senate
Clarence K. Lam
Democratic • Senate
Johnny Mautz
Republican • Senate
Justin Ready
Republican • Senate

Roll Call Votes

All Roll Calls

Yes: 168 • No: 11

House vote • 3/31/2025

Third Reading Passed

Yes: 121 • No: 11 • Other: 3

Senate vote • 3/12/2025