Healthcare providers in New York are no longer permitted to report patient debt to credit agencies. The new law, known as the Fair Medical Debt Reporting Act, took effect December 13, 2023, and applies broadly to hospitals, health care professionals, and ambulance services. The prohibition covers all medical debt, regardless of amount, in any way “related to the receipt of health care services, product or devices…”

The ban also precludes credit reporting by any entities that purchase or collect medical debt. The penalties for a violation include voiding the improperly reported debt, making it uncollectable.

The New York law follows on the heels of Colorado’s amendment to its Colorado Consumer Reporting Act effective August 7, 2023, which excludes nearly all medical debt from credit reporting. It is the latest action by a state aimed at enhancing protections for individuals from the adverse effects of medical debt, but the impact on consumers – and healthcare providers – remains to be seen. Colorado has specified that it will report on the impact of its law by or before January 1, 2028.

The new laws in both states carve out exceptions to allow credit reporting for debts that are charged to credit cards, other than cards issued exclusively for payment of health care goods and services.

The impact of medical debt on consumers is also a key issue at the heart of the Consumer Financial Protection Bureau’s review of the Fair Credit Reporting Act. The proposed modifications to the Act, addressed in the Outline of Proposals and Alternative Under Consideration, include prohibitions on medical debt reporting and use and are currently under review. If adopted, the changes have the potential to significantly impact both consumers and healthcare providers.