A California bill that took effect Jan. 1 expanded existing regulations on consumer credit reports and reporting agencies by prohibiting certain uses of consumer medical debt. Specifically, SB 1061:
- Prohibits individuals, such as health care providers, from providing information about medical debt to a consumer credit reporting agency.
- Prohibits individuals from using medical debt listed on a credit report as a negative factor when making a credit decision.
- Prohibits consumer credit reporting agencies from making a consumer credit report that contains information about medical debt.
- Requires health insurers to notify the insured and the health care provider of any payments for services sent directly to the insured rather than the provider.
CDA’s practice analyst emphasizes that the bill does not prohibit a health care provider or other individual from working with collection agencies and sending medical debts to collections agencies. CDA’s member resource Collections Agency FAQ covers this distinction and more.
Medical debt contracts must include specific language
A second part of the bill requires specific language to be included in any contract that creates a medical debt beginning on or after July 1, 2025. That language, per the text of the bill, is:
“A holder of this medical debt contract is prohibited by Section 1785.27 of the Civil Code from furnishing any information related to this debt to a consumer credit reporting agency. In addition to any other penalties allowed by law, if a person knowingly violates that section by furnishing information regarding this debt to a consumer credit reporting agency, the debt shall be void and unenforceable.”
Member-dentists who use CDA’s financial agreement and consent form and credit card authorization form should download the updated versions, which include the required language.
California dentists who use their own resources for such contracts should ensure they add the required language to their forms. A contract for medical debt initiated on or after July 1 that does not include the above language is void and unenforceable according to the law.
CDA offers sample patient financial policy, other resources
In a brief video CDA shared with members last fall, Practice Management Analyst Matthew Nelson discusses steps dental offices can take to help prevent the risk and collection of patients’ overdue balances along with the resultant costs. CDA members can also sign in to access a benefit breakdown form, a sample patient financial policy and other patient and billing forms.
“Understandably, dentists may be concerned that having the required verbiage in a medical debt contract will suggest to patients that there is no consequence for not paying their bill other than, perhaps, being dismissed from the practice,” Nelson says. “Collecting up front, updating and using your patient financial policy and using third party financing like Care Credit remain your best ways to reduce risk.”