Patient Debt Relief Act

Bill Number

H.R. 7478

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Health

Status

Introduced

Latest Action

2026-02-10: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Last Updated

2026-02-27T19:04:57Z

AI-Generated Summary

Purpose of the Legislation

The Patient Debt Relief Act (H.R. 7478) aims to protect patients from aggressive medical debt collection practices by Medicare-participating hospitals and to provide relief for medical debt through a new federal grant program. It seeks to standardize financial assistance policies, limit harmful debt collection tactics, and support nonprofits in forgiving eligible medical debts.

Key Provisions

The bill has two main components:

Amendments to the Social Security Act (Title XVIII, Section 1866)

• Compliance as a Medicare Condition: Starting January 1, 2028, hospitals must meet new financial assistance and debt collection standards to participate in Medicare (the federal health insurance program for people 65 and older, certain younger people with disabilities, and those with end-stage renal disease).
• Financial Assistance and Charity Care Requirements:
• Hospitals must create and publicize a charity care or financial assistance policy with clear eligibility criteria (e.g., based on income).
• They must screen patients for eligibility when providing services.
• Eligibility decisions must be made within 30 days before payment is due; patients can appeal denials, and hospitals cannot pursue payment until a decision is final.
• All bills must include eligibility details, notices about debt collection limits, and instructions for submitting income information.
• Medical Debt Collection Limitations:
• Hospitals cannot place liens (legal claims) on or foreclose on a patient's home, or garnish (withhold) wages to collect medical debt.
• Debt cannot be sold or assigned to a third-party debt collector (an entity that collects debts for others) unless:
• More than one year has passed since payment was due.
• The hospital offers a repayment plan with monthly payments capped at 4% of the patient's gross monthly income, and the patient misses four consecutive payments or declines to participate.
• The debt collector agrees to follow the same home lien and wage garnishment bans.
• For patients with household income at or below 250% of the federal poverty line (a measure of low income adjusted for family size) at the time of service:
• No interest can be charged on the debt.
• The debt cannot be sold or assigned at all.
• Enforcement and Monitoring:
• Non-compliant hospitals face civil monetary penalties up to $1 million per violation, imposed after a 90-day notice and failure to correct issues (procedures similar to those for Medicare fraud penalties).
• Starting January 1, 2029, the Secretary of Health and Human Services (HHS) must conduct annual audits of a random sample of hospitals.
• By January 1, 2028, HHS must create an online portal for patients to report violations, including by debt collectors.
• Definitions:
• "Medical debt" refers to unpaid bills for hospital services.
• "Debt collector" is defined under the Fair Debt Collection Practices Act (a federal law regulating debt collection tactics).

Amendments to the Public Health Service Act (Title III, New Section 399V-8)

• Medical Debt Relief Grant Program:
• Within one year of enactment, HHS must establish a program to award grants to up to one eligible nonprofit organization.
• Grants fund the nonprofit to identify eligible individuals and buy (acquire) and forgive (discharge) their medical debts.
• Eligibility:
• Individuals qualify if their medical debt equals 5% or more of their modified adjusted gross income (a tax measure of income) for the most recent year, or if their household income is at or below 400% of the federal poverty line.
• Nonprofits must have a mission focused on relieving medical debt, as determined by HHS.
• Requirements:
• Nonprofits must notify individuals within 60 days of forgiving their debt.
• They must submit quarterly reports to HHS on actions taken, number of people helped, debt amounts relieved, and other details.
• Funding:
• Authorizes $100 million for fiscal year 2027, available until spent.

Significant Changes to Existing Law

• Medicare Participation: Introduces mandatory, detailed financial assistance and debt collection rules as a condition for hospitals to receive Medicare payments, expanding on existing (but less enforced) charity care requirements under the Affordable Care Act. Previously, hospitals had flexibility in policies; now they face standardized timelines, notices, and bans on certain collections.
• Debt Collection Protections: Adds new federal limits on liens, foreclosures, wage garnishment, debt sales, and interest for low-income patients—protections not previously required for Medicare hospitals.
• Enforcement Mechanisms: Creates new audit and reporting tools, plus penalties tied to Medicare compliance, which were not specified before.
• Grant Program: Establishes a first-of-its-kind federal program for nonprofits to forgive medical debt, using criteria based on income and debt burden, with no prior equivalent in the Public Health Service Act.

Potential Impacts

• On Citizens: Low- and moderate-income patients could gain easier access to charity care, reduced debt burdens, and protections from home loss or wage withholding, potentially lowering financial stress and medical bankruptcies. The grant program may forgive debts for hundreds of thousands, based on similar nonprofit efforts.
• On Government Agencies: HHS and the Centers for Medicare & Medicaid Services (CMS) will need resources for audits, the online portal, grant administration, and penalty enforcement, increasing administrative workload but promoting program integrity.
• On Hospitals and Debt Collectors: Medicare hospitals (over 5,000 nationwide) face higher compliance costs for screening and policies but avoid penalties by helping patients; non-compliance risks fines and loss of Medicare funding (a major revenue source). Debt collectors lose ability to use aggressive tactics on hospital-assigned debts.
• International Relations: No direct impacts, as the bill focuses on domestic healthcare.

Main Stakeholders Affected

• Patients and Consumers: Especially those with low incomes or high medical debts, who benefit from assistance and protections.
• Hospitals: Medicare-participating facilities must adapt operations, potentially improving patient relations but adding bureaucracy.
• Nonprofit Organizations: Debt-relief groups can apply for grants to expand forgiveness efforts.
• Government Entities: HHS and CMS handle implementation, enforcement, and funding.
• Debt Collectors: Restricted in handling hospital debts, limiting their practices.

Notable Legal, Constitutional, or Political Implications

• Legal: Strengthens patient rights under Medicare by linking compliance to federal funding, potentially leading to more lawsuits if hospitals violate rules (e.g., via the online portal reports). Aligns with the Fair Debt Collection Practices Act but extends protections specifically to medical debt from hospitals.
• Constitutional: No major issues; the bill regulates private hospitals via spending conditions (Medicare participation), a common congressional tool upheld in cases like South Dakota v. Dole (1987), which allows incentives for policy compliance.
• Political: Addresses the growing medical debt crisis (affecting over 40 million Americans) as a public health and economic issue, potentially appealing to consumer advocates but facing opposition from hospitals over costs and from fiscal conservatives over the $100 million authorization. As a House-introduced bill referred to committees, it signals Democratic priorities on healthcare affordability.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Vasquez, Gabe [D-NM-2]

Cosponsors (18)

Rep. Stansbury, Melanie A. [D-NM-1], Rep. Ruiz, Raul [D-CA-25], Rep. Castor, Kathy [D-FL-14], Rep. Thanedar, Shri [D-MI-13], Rep. Clarke, Yvette D. [D-NY-9], Rep. Schrier, Kim [D-WA-8], Rep. Garcia, Robert [D-CA-42], Rep. Barragán, Nanette Diaz [D-CA-44], Rep. Landsman, Greg [D-OH-1], Rep. Frost, Maxwell [D-FL-10], Del. Norton, Eleanor Holmes [D-DC-At Large], Rep. Craig, Angie [D-MN-2], Rep. García, Jesús G. "Chuy" [D-IL-4], Rep. Simon, Lateefah [D-CA-12], Rep. Goldman, Daniel S. [D-NY-10], Rep. Horsford, Steven [D-NV-4], Rep. DelBene, Suzan K. [D-WA-1], Rep. Cohen, Steve [D-TN-9]

Recent Actions

• 2026-02-10: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2026-02-10: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2026-02-10: Introduced in House
• 2026-02-10: Introduced in House

Bill Versions

• Patient Debt Relief Act — issued 2026-02-10 — PDF (12 pages)