The medical debt regulation landscape is poised to change drastically over the next few years. Laws in Texas, New York, and New Jersey are key case studies of this shift, imposing stricter rules on billing transparency, debt collection practices, and patient financial assistance. Providers may or may not be ready for the shift, but those that embrace it will find a real opportunity to improve the financial experience of their patients, build lasting relationships and protect their bottom line.
Recent data shows just how urgently these reforms are needed. According to the Kaiser Family Foundation, nearly 1 in 10 adults in the U.S.—about 23 million people—owe more than $250 in medical debt, with low-income households and individuals with disabilities disproportionately affected. In 2022, the Consumer Financial Protection Bureau (CFPB) found that medical debt was the most common collection item on credit reports (58%), which is what prompted the suggestion of a rule to remove medical debt from credit reports. Although now reversed federally, further changes of this nature are no doubt coming on the state level. Scrutiny on the long-term consequences of medical debt for patients has prompted lawmakers to rethink how it is handled, and to take action that better aligns with patient needs and financial realities.
Providers are now navigating requirements to provide itemized bills with clear language (e.g., TX), offer more extensive financial assistance and charity care options (e.g., NY), and adhere to new timelines and limitations on debt collection activities (e.g., NJ and NY). Notably, practices like reporting medical debt to credit bureaus and pursuing wage garnishments are being curtailed or outright banned in some cases.
These state-level initiatives are not alone. Eighteen total states, and eleven since 2021, have enacted consumer protections against medical debt. This signals broader shifts in healthcare finance, with more states following suit, and potential implications for federal regulations and industry standards. The National Consumer Law Center (NCLC) has even proposed a model for state medical debt protection laws, offering a potential roadmap for broader alignment across jurisdictions. Moving forward, providers that prioritize patient-centered billing are likely to be better positioned to adapt to the evolving landscape.
Traditional RCM No Longer Cuts It
Legacy revenue cycle management (RCM) systems were built for an era when paper statements, call center queues, and one-size-fits-all payment options were the norm. Modern providers are being asked to do things a bit differently.
Traditional models typically lack tools to support proactive, compassionate financial engagement. For example, when patients can’t easily access their bills or set up self-service payment plans, they’re more likely to fall behind, causing providers to see revenue delays. Providers using disconnected systems also miss opportunities to explain available support or clarify confusing charges.
As compliance requirements become more complex, sticking with outdated processes introduces real risk. Fortunately, things like compliance penalties, delayed payments, patient frustration, and reputational challenges can be minimized with the right approach.
The Cost of Waiting
Delaying updates to revenue cycle management can carry costs beyond missed payments. While new regulations and patient expectations create a certain amount of pressure, they also offer a roadmap for building stronger, more resilient financial operations.
According to the Healthcare Financial Management Association (HFMA), patient payments now represent a significant portion of revenue—about 30%, up from 10% just a few years ago—yet collection rates have declined by 8.3% in recent months, according to the Kodiak Benchmarking report. This gap points to the growing impact of outdated billing methods and missed opportunities to connect with patients early and effectively. Patients are paying attention. Nearly two thirds say they would consider switching providers for more digital convenience.
Standing still isn’t neutral. Taking action now to streamline billing, improve communication, and offer patient-centered payment solutions creates a competitive advantage and supports long-term financial health.
Proactive, Patient-Centered RCM is the Solution
Patients want clarity, flexibility, and convenience. Providers want reliable revenue and peace of mind around compliance. A more proactive, patient-centered revenue cycle delivers both.
Engaging patients before confusion or collections enter the picture can reduce delays, improve satisfaction, and strengthen trust. It also helps providers identify and assist those who qualify for financial help before accounts become overdue.
Here are a few strategies leading organizations are adopting now:
- Communicate early and often.
Use a mix of text messages, emails, portal alerts, and phone calls to keep patients informed about what they owe, when, and why. Omnichannel communication ensures no one falls through the cracks. - Make bills clear and easy to understand.
Avoid jargon and confusing line items. Timely, itemized, plain-language bills reduce frustration and questions. They also increase the chances of timely payment. - Make financial support accessible.
Too many patients never apply for financial assistance simply because they don’t know it’s available. Proactively share information about charity care, sliding-scale options, and payment plans before the bill is due. - Leverage technology to stay ahead.
From eligibility screening and real-time compliance tracking to self-service payment portals and mobile pay options, digital tools reduce manual efforts and make it easier for patients to pay in ways that fit their lives.
Ultimately, building a more responsive, transparent billing experience creates a seamless patient experience that is also likely to keep up with new regulations.
About Ana Ponder
Ana Ponder is the Director of RCM Solutions at Millennia. She has been in healthcare RCM for 20 years working with providers to optimize RCM processes, comply with regulations, and improve patient A/R recovery. For the last 12 years at Millennia, she’s helped healthcare providers reach their financial goals with patient payments while maintaining an excellent patient experience through their partnership with Millennia. Ana is passionate about guiding providers through regulations, improving processes, keeping patient satisfaction high, and still achieving better results.
