On October 18, 2024, the New York State Department of Health issued long-awaited guidance on the implementation of two new consumer protection laws regarding payments for health care services.
Recent legislation has heightened consumer protection for patients with medical debt. Changes include prohibitions on health care providers from placing liens on an individual’s primary residence or garnishing wages to collect medical debt as well prohibitions on reporting medical debt to consumer reporting agencies and removing unpaid medical debt from credit reports. These protections, however, only apply to debt incurred with open-ended or closed-ended financial products specifically for the payment of health care services, such as CareCredit®. If a patient elects to pay with a traditional credit card, these heightened medical debt protections do not apply.
The new DOH guidance addresses three areas of the new consumer protection laws applicable to health care facilities and providers.1 First, under Section 349-G of the General Business Law, hospitals and health care providers are prohibited from completing any application for medical financial products for a patient or otherwise arranging or establishing an application that is not “completely filled out” by the patient. The new guidance clarifies: “[p]roviders may answer patient’s questions and provide assistance if requested, so long as the application is completed wholly by the patient.”
Second, Section 519-a of the General Business Law prohibits a hospital or health care provider from requiring preauthorization or having a credit card on file prior to providing emergency or medically necessary services to a patient. According to the new guidance, “[h]ealth care providers may ask patients to voluntarily choose to have a credit card on file but may not require patients to do so.”
Last, the guidance implements the requirement under Section 519-a of the General Business Law that patients be notified of the risks of paying for health care services with a traditional credit card. Here the guidance is very specific:
Each time a credit card is used to pay for services, patients must be notified of the risks of paying for medical services with a credit card, including:
- Medical bills paid by credit card are no longer considered medical debt.
- By paying with a credit card, patients are foregoing federal and state protections around medical debt.
- Protections that patients must acknowledge foregoing include:
- Prohibitions against wage garnishment and property liens
- Prohibitions against reporting medical debt to credit bureaus
- Limitations on interest rates
- Patients must affirmatively acknowledge foregoing these protections by paying with a credit card.
The requirement to obtain the patient’s affirmative acknowledgment of these risks each time a payment is made presents a number of operational issues. Payments by phone will be complicated because of the need to obtain (and memorialize) the patient’s acknowledgment. Providers might want to utilize a recorded line (i.e., using technology that allows the patient to input a credit card number without the representative having access to it) and have the employee read the disclosure over the phone and obtain a verbal consent at the time the payment is made. Payments made electronically should include an acknowledgment of the disclosure language before the payment is processed. Payments in person may be the easiest right now; providers can simply hand the patient a written disclosure, have the patient sign a paper copy, and scan it into the system. Patients can also read the disclosures on the payment screen, indicate their agreement, and then sign to authorize the payment.
There are still many questions surrounding the implementation of this new law, and the provider community is hoping for further guidance and clarification.
As a final note, the New York State Fiscal Year 2024 budget also enacted a new Section 18-C of the Public Health Law, which requires separate patient consent for payment, which can’t be combined with a consent for treatment and “shall not be given prior to the patient receiving such services and discussing treatment costs.” Although this provision was scheduled to go into effect on October 20, 2024, the Department of Health received many questions from stakeholders and subsequently paused its implementation until further guidance is released.
If you have any questions regarding the content of this alert, please contact Fran Ciardullo, special counsel, at fciardullo@barclaydamon.com, or another member of Barclay Damon’s Health & Human Services Providers Team.
1The guidance also addresses a recent amendment to Section 2807-k of the Public Health Law, which limits what hospitals can charge eligible patients for emergency and medically necessary services.