A new report by the Commonwealth Fund has highlighted significant gaps in state medical debt protections, raising potential compliance risks for hospitals. The study, published in August, found that while states have expanded consumer protections in the past five years, no state currently addresses all the gaps involving eligibility, access, and enforcement of medical debt protections.
States’ Role in Medical Debt Protections
Medical debt affects an estimated 30% of U.S. adults, according to the report. Although federal law requires nonprofit hospitals to maintain financial assistance policies, it does not set specific eligibility or benefit requirements. States, however, have stepped in to varying degrees.
Currently, 21 jurisdictions have established minimum hospital financial-assistance standards. However, the coverage and scope of these standards vary significantly. Five of these jurisdictions limit assistance to uninsured patients, excluding those with high out-of-pocket costs. Only 12 states set income thresholds that ensure assistance reaches patients earning less than a living wage.
Gaps in Protections and Procedures
Protections often exclude bills from hospital-affiliated outpatient facilities or clinicians who bill separately. Most states do not cover ambulance services, physician offices, or medical debt transferred to credit cards and financing products. Moreover, procedural gaps exist in patient screening, collection practices, and appeal processes.
Only eight states require hospitals to screen patients for financial assistance or public coverage before sending bills to collections. Nine jurisdictions provide patients with a process for appealing denials. The report suggests improvements such as presumptive eligibility screening, simplified documentation, and pauses on collection activity during insurance or assistance decision processes.
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The study also noted that 19 states collect no hospital data relevant to financial assistance, billing, or debt-related lawsuits. Only 14 states collect basic information, indicating a potential lack of oversight and exposure of hospital-level differences in approvals and collection practices.
Additionally, automated billing and collection tools are a regulatory blind spot. Hospitals increasingly use AI and predictive analytics, but states generally do not require disclosure or validation of these systems. This lack of oversight could lead to potential risks in hospitals’ revenue-cycle technology.
To handle these complexities, health systems operating in multiple states may need to manage different eligibility, notice, collection, and reporting standards across their markets. Hospitals may also need to strengthen their eligibility screening, provide clearer notices, document appeal procedures, and ensure collection agencies comply with the same requirements.
HIMSS is hosting the AI Executive Leadership Summit in San Diego on Oct. 21, 2026, and the AI in Healthcare Forum from Oct. 22-23, where these issues may be further discussed.