This bill, known as the Patient Debt Relief Act, establishes new standards for hospitals participating in the Medicare program regarding financial assistance and medical debt collection, effective January 1, 2028. Hospitals will be required to implement and publicly disclose charity care or financial assistance policies, including clear eligibility requirements and a process for screening patients for aid. They must determine eligibility within 30 days before payment is due, allow appeals, and refrain from collection efforts until a determination is made.

The legislation imposes strict medical debt collection limitations, prohibiting hospitals from placing liens on homes, foreclosing on property, or garnishing wages. Hospitals are also restricted from selling or assigning medical debt to debt collectors unless specific conditions are met, such as the debt being over a year old and the patient failing a repayment program. Crucially, for individuals with household incomes at or below 250% of the poverty line, hospitals cannot impose interest or sell their medical debt to third-party collectors.

To ensure compliance, the bill authorizes civil monetary penalties up to $1,000,000 for non-compliant hospitals and mandates annual audits. An online portal will also be established for individuals to report noncompliance. Additionally, the bill creates a medical debt relief grant program, authorizing $100,000,000 for fiscal year 2027, to fund eligible nonprofit organizations.

These nonprofits will acquire and discharge medical debt for eligible individuals, defined as those with medical debt equivalent to 5% or more of their modified adjusted gross income, or a household income not exceeding 400% of the poverty line. This program aims to directly alleviate the burden of medical debt for vulnerable populations.