Collection Practices FAQs

The Fair Patient Billing Act standardizes billing and collection practices for all Illinois hospitals. Here are answers to frequently asked questions about collection practices.

When can a hospital initiate a collection action against an  uninsured patient?
Before pursuing collection action against a patient without health insurance, hospitals must satisfy the following conditions:

  • The hospital provided the patient an opportunity to assess the accuracy of the bill and apply for financial assistance or negotiate a reasonable payment plan;
  • The hospital offered the patient a reasonable payment plan if the patient indicated inability to pay the bill’s full amount in one payment. The hospital may require the patient to verify his or her inability to pay the full amount in one payment;
  • The hospital gave the patient at least 60 days after discharge or receiving outpatient care to submit an application for financial assistance. The hospital will need to evaluate to what extent it provides financial assistance and whether the circumstances of the uninsured patient suggest potential eligibility of charity care);
  • A patient who has agreed to a reasonable payment plan has failed to make payments as agreed; and
  • A patient who has applied for government-sponsored healthcare informs the hospital that the application has been denied.

When may a hospital initiate a collection action against an insured patient?
Hospitals may not refer a bill to collection against an insured patient for 30 days following the date of an initial bill without first offering the patient the opportunity to request a reasonable payment plan for the amount the patient owes. If the payment plan is requested but the hospital and patient fail to agree on the plan within 30 days of the request, then the hospital may proceed with collection action.

How does the law define a “reasonable payment plan?”
A “reasonable payment plan” is one offered by the hospital that takes into account the patient’s available income and assets, the amount owed, and any prior payments. Under this definition hospitals have the flexibility to apply whatever payment terms and conditions that are reasonable or appropriate.

What must hospitals do under the law to authorize a collection action against any patient?
A hospital or its agent(s) may not initiate legal action for non-payment of a hospital bill without written approval of an authorized hospital employee who reasonably believes that the conditions for pursuing such action outlined above are met.

Are my collection agencies and law firms bound by the requirements of this law?
Yes, because hospitals must incorporate these new collection provisions into their contracts with their collection agencies and firms.  Failure to do so may subject the hospital to fines.

Can hospitals outsource their billing and collection practices?
Yes. Nothing in the law prohibits a hospital from using an outside agency to manage the process of implementing the hospital’s financial assistance and reasonable payment plan practices and policies so long as the outside agency complies with the terms of the law.

Does the Act ever prohibit the use of a collection action against an uninsured patient?
Yes. If an uninsured patient has clearly demonstrated the inability to meet his/her financial obligations to the hospital and has cooperated reasonably and in good faith with the hospital in showing such inability, the law prohibits a hospital from initiating a collection action against that patient.

Get answers to Out-of-Network Providers FAQs and Patient Responsibilities and Enforcement FAQs.