U.S. Senator Al Franken (D-Minn.) said that he would introduce a bill Wednesday with tough new rules for medical debt collection agencies and healthcare providers.

Franken told Minnesota Public Radio of his plans Tuesday. As of posting, a formal announcement has not been made and details were not available.

[UPDATE: Sen. Franken has formally announced the legislation, which is actually two bills: one proposes direct changes to the FDCPA to carve out special rules for medical debt, and the other addresses protecting patients’ electronic information. It is still too early for the bills to be available in the Congressional online legislative portal, but Franken provided a summary of the FDCPA amendment bill, called the End Debt Collector Abuse Act.]

The new proposal would almost certainly be informed by a hearing Franken conducted last month on alleged debt collection abuses by Accretive Health on behalf of its client, hospital operator Fairview.

The Minnesota Public Radio article also hinted that Franken’s bill would go beyond the Treasury Department’s recent rule change proposal for nonprofit hospitals’ debt collection practices. It is unlikely that Franken would limit his bill’s scope to just charitable healthcare providers. He also hinted that he would require companies to encrypt all laptops that contain patient medical information.

Treasury’s new rules proposal has already been met with pushback from the medical ARM community. The measure that would force nonprofit hospitals to wait up to 240 days before beginning certain collection activity while waiting to confirm if a patient is eligible for financial assistance is viewed as especially onerous.

“The new Treasury rules will be an added revenue cycle burden for all nonprofit hospitals to comply with,” said Tom Gavinski, vice president of I.C. System. “These hospitals will incur additional costs in attempting to determine financial assistance for patients and incur additional costs waiting for the patient to complete their financial assistance application.  Holding self pay patient accounts as accounts receivable for eight months without any collection activity will reduce the overall collectability of those accounts, reducing the net value of that receivable.”

Gavinski also noted that hospitals are already being squeezed with reduced reimbursement and tighter margins.  “These proposed rules will create additional financial constraints on not for profit hospitals that will challenge them financially,” he said.

In addition to the codified waiting period, the Treasury proposal bans debt collection activity in emergency rooms, or “in other hospital venues where collection activities could interfere with treatment,” a direct reference to the Accretive scandal being addressed by Franken.

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