H.R. 7478 — Patient Debt Relief Act

This section requires hospitals to comply with financial assistance and medical debt collection requirements as a condition of participation in Medicare under Section 1866(a)(1) of the Social Security Act, effective January 1, 2028, authorizes civil monetary penalties of up to $1 million per instance of noncompliance (with 90-day notice and 45-day correction period), and establishes those requirements in new subsection (l). The financial assistance and charity care requirements include (1) establishing a publicly available charity care or financial assistance policy with minimum eligibility criteria and a screening process for patients; (2) determining eligibility for applicants within 30 days before payment is due, allowing appeals, and suspending collection efforts until determination; and (3) including policy details, debt collection notices, and income submission instructions on all bills. The medical debt collection limitations prohibit hospitals from (1) placing liens or foreclosing on a patient's home; (2) garnishing wages; or (3) selling or assigning debt to a third party unless more than one year past due, the patient has declined or failed four consecutive payments under an offered repayment plan (with payments not exceeding 4% of gross monthly income), and the third party agrees to the same limits. If a patient's household income was not more than 250% of the federal poverty line at the time of service (based on provided information), additional restrictions apply.

This section establishes a medical debt relief grant program to be administered by the Secretary of Health and Human Services not later than one year after enactment. Under the program, the Secretary may make grants to not more than one eligible nonprofit organization (i.e., a nonprofit with a mission of relieving medical debt, as determined by the Secretary) to identify eligible individuals and acquire and discharge their medical debt, with grantees required to notify affected individuals within 60 days of discharge and submit quarterly reports to the Secretary on related activities, numbers of individuals served, and debt amounts. Eligible individuals are those with medical debt equivalent to at least 5% of their modified adjusted gross income or household income not exceeding 400% of the federal poverty line (using terms defined in section 36B of the Internal Revenue Code); $100 million is authorized for FY2027, to remain available until expended.