Beginning on Wednesday, hospitals in Colorado will be prohibited from pursuing debt collections against patients if the hospitals aren’t in compliance with federal price transparency laws.

The new state law, created by House Bill 1285, bans noncompliant hospitals from using debt collectors, filing negative credit reports against patients and obtaining state court judgements for outstanding debts. The hospitals can still bill patients, but if they pursue collection actions, they must refund any debt paid by the patient, in addition to all legal fees. 

“This is a great step in improving the health care system to ensure affordable, high-quality care for all Coloradans and saving people money,” said Gov. Jared Polis. “People deserve to know what all their medical bills will look like and finally we will have better price transparency which is needed for the market to work better in health care and empower patients to take control of their own health care needs.” 

Federal law requires hospitals to post procedure prices on a public website to increase transparency and allow patients to compare costs between hospitals. Under Colorado’s new law, patients who believe a hospital was not in compliance with federal law can sue to have their debt forgiven and other fees covered.

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This comes as, more than a year after it went into effect, only 6% of Colorado hospitals were in full compliance with the federal price transparency law, according to a February report by PatientRightsAdvocate.org. That is below the national average of 14.3% compliance.

“Our law puts patients over profits and puts us one step closer to a health care system that is open and honest about medical costs,” said House Majority Leader Daneya Esgar, D-Pueblo, who sponsored HB-1285. “Under our law, Coloradans will save money on health care because they’ll know the costs upfront and hospitals will be required to follow the rules when it comes to their billing.”

For small, critical access hospitals with less than 25 beds, Colorado’s new law will not go into effect until February 2023. The law also specifies that patients can only complain about price transparency for procedures relevant to their own care. 

The bipartisan-sponsored bill passed the legislature overwhelmingly earlier this year, receiving only one “no” vote in the House and unanimous approval in the Senate.

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