In an effort to push hospitals toward compliance with federal hospital price transparency laws, Gov. Jared Polis signed HB 22-1285, "Prohibit Collection Hospital Not Disclosing Prices," into law on June 8, 2022. Specifically, HB 22-1285 prohibits hospitals from initiating or pursuing collection actions against patients or their guarantors for debts incurred for services provided to the patient at a time when the hospital was not in material compliance with federal price transparency laws. The new state statute applies when a hospital, in its debt collection efforts, (1) refers a debt to a debt collector, a collection agency or other third party retained by the hospital; (2) sues a patient; (3) enforces an arbitration or mediation clause; or (4) causes a report to be made to a consumer reporting agency. The statute will be effective for hospitals other than licensed Critical Access Hospitals on Aug. 10, 2022, but will not apply to licensed Critical Access Hospitals until Feb. 15, 2023.
HB 22-1285 also creates a private right of action for a patient to bring a lawsuit against a hospital if the hospital initiates or pursues a collection action against the patient and the patient believes the hospital was not in material compliance with the price transparency laws on the date the patient received the services from the hospital. A hospital found by a judge or jury to be materially out of compliance with federal price transparency laws must refund any amount of the debt that has been paid. The patient will also be entitled to collect a penalty equal to the amount of the total debt, recover any attorneys' fees and costs incurred by the patient relating to a debt collection action and have information impacting the patient's credit report removed.
One of the key questions in resolving lawsuits by patients will be to define what is meant by "material" compliance. While the statute does not define "material" compliance, it refers to the compliance standards issued by the federal Centers for Medicare and Medicaid Services ("CMS") for the price transparency law codified at Section 2718(e) of the Public Health Service Act, and the implementing rules available at 45 C.F.R. Part 180, which became effective on Jan. 1, 2021. Among other things, the federal law requires hospitals to provide accessible pricing information online about the items and services they provide through: (1) a comprehensive machine-readable file containing a list of the hospital's standard charges for all items and services and (2) a consumer-friendly display of at least 300 "shoppable services" that a health care consumer can schedule in advance. In addition to these federal standards, Colorado hospitals are also subject to the "Transparency In Direct Pay Health Care Prices" law, which requires hospitals in the state to make public self-pay prices for their most common procedures. See C.R.S. Section 25-40-101 et seq.
Colorado's passage of HB 22-1285 comes on the heels of CMS on June 7, 2022, imposing its first set of civil monetary penalties for non-compliance with price transparency laws on two Georgia hospitals; imposing fines of $883,180 and $214,320, respectively, after the hospitals failed to comply following a string of warning letters and communications from CMS.
With the passage of Colorado's new statute and CMS's recent enforcement actions, failing to take steps to comply with price transparency laws will not only have regulatory consequences at the federal level but also puts Colorado hospitals at risk of litigation initiated by patients at the state level. Those in the industry should therefore pay close attention to the guidance materials issued by CMS to mitigate the risk of allegations of noncompliance come August.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.