ALBANY- The number of hospital debt lawsuits and debtors have plunged following changes to state laws around medical debt collection, according to a new report by an advocacy organization.
The eight policy changes – passed as standalone laws or provisions in the state budget between 2020 and 2024 – aimed to reduce medical debt across the state, said the Community Service Society of New York, the group that authored the report and has been campaigning for the changes. Over the same period, the number of medical debt lawsuits filed by hospitals against former patients fell by 99.9 percent, from nearly 14,000 to 100 annually.
That amounts to about $36 million saved, the report says. The proportion of New Yorkers with medical debt in collections also declined from 7.6% to 1.7%, which the report says removed between $241 million and $337 million in debt from consumer credit reports.
One of the changes to medical collection policies was a ban against hospitals from garnishing wages and taking liens out on the homes of patients with back medical debt – a practice that has been particularly prevalent among Capital Region hospitals. The group found in 2021 via reports submitted by the hospitals to the Department of Health from 2017 to 2018.
Those hospitals include St. Peter’s Health Partners in Albany, which topped the list of more than 50 hospitals throughout the state; Albany Medical Center in Albany; Nathan Littauer Hospital in Gloversville; and Ellis Hospital in Schenectady. St. Peter’s Health Partners said at the time of the 2021 report that it had ended the practice.
“The ‘Campaign to End Medical Debt’ demonstrates how effective messaging, collaboration, and grassroots organizing can bring impactful change,” Assemblywoman Amy Paulin, who chairs the Assembly health committee, wrote in a statement. “The Community Service Society’s report shows these reforms have already benefited New York patients, which is more important now than ever, as many New Yorkers are set to lose coverage as a result of federal health cuts. I commend the campaign’s efforts and look forward to working with partners to build on this progress.”
Lawmakers also cut the statute of limitations for medical debt from six years to three and the consumer judgment interest rate from nine percent to three percent. In 2023, they banned hospitals from reporting medical debt to credit bureaus – a move that a swath of blue and purple states have pursued in recent years – and began requiring a uniform hospital financial assistance form. In 2024, they outlawed hospital lawsuits against most patients over medical debt.
Community Service Society’s Vice President and Managing Director Elisabeth Benjamin, who co-authored the report, said that when the group reached out to certain hospitals about the debt lawsuits filed against their patients, many were “shocked” by some practices in their collection departments. Some ended the practice and withdrew their existing cases against patients, and others – including St. Peter’s Health Partners – “reformed” their financial assistance policies, according to the report.
“I think a lot of times the hospital leadership doesn’t know what’s going on from the billing perspective, and the billing folks have a lot of pressure to engage in revenue maximization,” Benjamin said. “A collection attorney or collection firm comes along and makes big promises, but often there’s not the guardrails that need to be there to protect patients.”
She also said that while the policy changes were led by Democrats helming the state Legislature’s health committees, they received bipartisan support with Republican lawmakers voting for some of the bills.
State Sen. Gustavo Rivera, another lawmaker who has pushed for the legislation ending aggressive medical debt collection, said he was proud to have partnered with the Community Service Society on the campaign.
“Their research shows that the policies we’ve won have reduced medical debt and lawsuits significantly,” Rivera said. “We will continue pushing for policies that protect New Yorkers from financial ruin just because they need medical care until we have eliminated the absurdity of medical debt entirely.”
