May 3, 2024 | Blogs, Non-Gated

New York Expands Patient Financial Protections in Healthcare

As of October 20, 2024, New York hospitals must significantly change their financial assistance (FA) programs and practices. Enacted as part of the State’s health and mental hygiene budget legislation for the fiscal year 2024 through 2025, these reforms aim to expand FA eligibility, enhance patient protections regarding medical debt collection, and introduce new regulations related to consent forms and patient use of credit cards and medical financial products.

Redefining “Underinsured” to Expand FA Eligibility

A key aspect of the reforms is the identification of “underinsured” individuals – those whose out-of-pocket medical expenses in the past 12 months exceed 10% of their gross income. This expanded definition will allow more New Yorkers to access FA programs, regardless of their insurance status. The legislation also prohibits the use of immigration status as a criterion for FA eligibility. This reinforces the principle of equal access to healthcare services for all New Yorkers, a cornerstone of our healthcare system.

Furthermore, the reforms require hospitals that do not participate in the distribution of the State Indigent Care Pool (the “Pool”) to use a State-approved uniform FA form and comply with certain other FA and collection procedures. This standardization ensures consistency in the application of FA programs across the state.

Revised Financial Thresholds for Charge Adjustments

The reforms mandate complete charge waivers for individuals falling below 200% of the federal poverty level (FPL). Gradually graduated collection limits will apply for patients within income brackets up to 400% of the FPL.

By tying charge adjustments to income levels, these thresholds aim to alleviate the burden of medical expenses on economically vulnerable populations. This commitment to financial protection underlines the healthcare system’s unwavering responsibility to all patients, providing a secure foundation for financial officers to navigate these changes.

Limiting Installment Plan Payments and Interest Rates

Limiting installment plan payments of outstanding balances to no more than 5% of the patient’s gross monthly income and interest rates to no more than 2%. This new requirement aims to make it more affordable for patients to pay off any remaining medical debt through installment plans by capping the monthly payment amount and interest rate. This is part of the broader effort to enhance patient protection and financial accessibility in the healthcare system.

Strengthening Patient Rights in Debt Collection

The reforms impose stricter oversight on hospital debt collection practices. Key provisions include:

  • Granting patients the right to apply for FA at any stage of the collection process
  • Prohibiting denial of admission or treatment due to unpaid medical bills
  • Restricting the sale of medical debt and initiation of legal actions against low-income patients

These measures emphasize a shift toward a more compassionate, patient-centric healthcare ecosystem in New York.

New Restrictions On Credit Cards and Financial Products

The legislation mandates separate consent forms for treatment and payment, ensuring patients understand their financial obligations. Simultaneously, amendments to the General Business law prohibit healthcare providers from completing medical financial product applications or preemptive credit card authorizations before emergency or medically necessary services.

By elucidating the risks associated with credit card payments for medical services, patients are empowered to make informed financial decisions that are in their best interests.

Preparing for the October 2024 Compliance Deadline

With the compliance deadline approaching, New York hospitals must review and update their FA and debt collection protocols to align with the new legislative mandates. By embracing these reforms proactively, healthcare institutions can chart a course toward equitable healthcare access and financial security for all stakeholders.

The reforms in New York represent a significant step forward in ensuring that patients, regardless of their economic status, can access the healthcare services they need without fear of financial hardship. As other states consider similar measures, these reforms serve as a model for enhancing patient protections and promoting financial accessibility in the healthcare system.

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