Colorado Establishes Medical Debt Collection Requirements

On May 4, the Colorado governor signed SB 23-093 to cap the interest rate on medical debt at three percent per year. The Act outlines numerous provisions, including that entities collecting on a medical debt must provide a consumer with a written copy of a payment plan within seven days for medical debt that is payable in four or more installments. 

The Act also outlines requirements for accelerating or declaring a payment plan longer operative, and lays out prohibited actions (such as collecting on a debt or reporting a debt to a consumer reporting agency within a certain timeframe) relating to medical debt that an entity knows, or reasonably should know, is under review or being appealed. An entity that files a legal action to collect a medical debt must provide to a consumer (upon written request) an itemized statement concerning the debt and must allow a consumer to dispute the debt’s validity after receiving the statement. 

Entities are prohibited from engaging in collection activities until the itemized statement is delivered. The Act outlines self-pay requirements and estimates, and further provides that it is a deceptive trade practice to violate outlined provisions relating to billing practices, surprise billing, and balance billing laws. The Act takes effect immediately and applies to contracts entered into after the effective date.