D.C. Medical Debt Reform Bill Advances With Expanded Consumer Protections and Collection Limits
The Washington, D.C. City Council is moving forward with sweeping legislation that would significantly reshape how medical debt is handled across the District. The Medical Debt Mitigation Amendment Act of 2025 (Bill 26-0438) has advanced out of the Committee on Health following a series of revisions aimed at narrowing its scope and addressing fiscal concerns.
The bill, first introduced in 2025, remains a high-priority measure and proposes broad restrictions on medical debt collection, reporting, and financing practices. An April 14 committee report outlines updated provisions that clarify compliance obligations for health care providers and debt collectors while expanding consumer protections.
Key Provisions Target Reporting, Interest, and Lending Practices
The revised legislation refines which entities fall under its requirements, focusing primarily on hospitals, psychiatric facilities, and hospital-owned outpatient clinics. Smaller independent providers would face fewer administrative obligations but would still be subject to core restrictions on collection activity.
The bill maintains an income-based framework tied to the federal poverty level. Patients earning up to 200% of the federal poverty level would qualify for free care, while those earning between 201% and 500% would be eligible for discounted care. This expands the upper threshold from earlier drafts, which capped eligibility at 400%.
Interest on medical debt would also face strict limits. Providers and collectors would be prohibited from charging interest to patients receiving financial assistance, while all other accounts would be capped at a maximum annual rate of 3%.
A central feature of the legislation is a full prohibition on reporting medical debt to consumer credit reporting agencies. If enacted, this would eliminate the role of medical debt in credit scoring for District residents.
Additional provisions restrict the use of medical lending products. Health care providers and their employees would be barred from promoting or facilitating financing options such as high-interest medical credit cards. The bill also prohibits requiring credit card authorizations before delivering necessary care.
Collection Restrictions and Enforcement Authority Expand
Wage garnishment and property liens would be prohibited for patients earning below 500% of the federal poverty level. The bill also establishes mandatory waiting periods, requiring providers to wait at least 180 days after issuing a bill before initiating collection efforts and to provide a 90-day advance notice before any action begins.
Legal action would be restricted as well. Providers and debt collectors would be prohibited from filing lawsuits against patients who are presumed eligible for financial assistance.
Beyond collection practices, the bill requires large health care facilities to screen patients for financial assistance and offer structured payment plans. These plans would cap monthly payments at 3% of household income and limit repayment terms to 36 months.
The measure also introduces new reporting and enforcement mechanisms. Health care facilities would be required to submit annual data on financial assistance programs, and the District’s Department of Health would be tasked with oversight. The Office of the Attorney General would receive enforcement authority, including the ability to pursue penalties for noncompliance.
Fiscal Concerns and Implementation Timeline
Despite its progress, the legislation faces budgetary challenges. The Office of the Chief Financial Officer concluded that current funding levels are insufficient to support implementation through fiscal years 2026 to 2029.
To address these concerns, the bill includes a delayed applicability date of April 1, 2027. This timeline is intended to give regulators time to build out oversight infrastructure, including staffing and data systems.
Why It Matters
The proposal represents one of the most comprehensive local efforts to regulate medical debt collection practices in the United States. For creditors, servicers, and collection agencies operating in the District, the bill would introduce significant compliance requirements and limit traditional recovery strategies.
Restrictions on credit reporting, interest accrual, and legal enforcement could materially affect portfolio valuation and recovery timelines. At the same time, the legislation reflects a broader policy trend toward limiting the financial consequences of medical debt for consumers.
With the bill now eligible for consideration by the full City Council, stakeholders across the receivables and health care sectors will be closely monitoring its next steps and potential revisions.
