Medical debt collection rules for practices

An unpaid balance is a patient relationship problem before it is a revenue problem. The words a practice puts on a statement, in a billing text or on its payment page decide whether a patient calls to set up a plan or stops answering. Those words also sit under several sets of rules at once: federal debt collection law, credit reporting law, the telephone rules for calls and texts, HIPAA, state medical debt laws and, for nonprofit hospitals, the tax rules on financial assistance.

This guide covers the messages: what an office can say about a balance, what changes when an account goes to a collection agency, where credit reporting of medical debt stands, and how to send billing texts and calls. Cost estimates before care are covered in our good faith estimate guide, hospital financial assistance policies in our financial assistance policy guide, payment plans and lenders in our patient financing guide, and reminder texts in our appointment reminder texts guide. Patients sometimes hire bill help services; see patient advocate marketing for the savings claim and fee rules those businesses face.

This is general information, not legal or billing advice. Sources cited were checked on October 30, 2026: the Fair Debt Collection Practices Act (15 U.S.C. 1692a and 1692j), Regulation F (12 CFR part 1006), the Fair Credit Reporting Act (15 U.S.C. 1681s-2) and Regulation V (12 CFR part 1022), the CFPB final rule page on medical information and its January 14, 2025 Federal Register notice, Colorado HB23-1126, New York S.4907-A of 2023, California SB 1061 of 2024, 26 CFR 1.501(r)-6, the TCPA (47 U.S.C. 227 and 47 CFR 64.1200), 45 CFR 164.501 and 164.502, and 15 U.S.C. 45. Rules differ by state and by payer contract. Ask a health care attorney before you change your collection process.

Is your practice a debt collector?

For federal purposes, the answer turns on who is collecting and under whose name. 15 U.S.C. 1692a(6) defines a debt collector as a person whose business has the principal purpose of collecting debts, or who regularly collects debts owed to another. The same definition excludes any officer or employee of a creditor who collects debts for that creditor in the creditor’s name. Regulation F repeats this definition at 12 CFR 1006.2(i).

In plain terms, your own billing staff sending statements in your practice’s name are generally not a debt collector under the federal Act. A collection agency working your accounts is. Two traps sit between those positions:

Using another name. Under 15 U.S.C. 1692a(6), a creditor who collects its own debts under any name other than its own, which would suggest a third person is collecting, counts as a debt collector. A separate “recovery department” name on letters can pull the practice into the Act.
Borrowed letterhead. 15 U.S.C. 1692j and 12 CFR 1006.30(e) bar designing or furnishing forms meant to make a consumer believe someone other than the creditor is collecting when that is not so. A practice should not buy letters that look like agency letters while the agency does nothing.
State law can reach further. Some state collection laws cover creditors collecting their own debts. Check your state’s statute before relying on the federal exclusion.

What changes when an agency takes the account

Once a third-party collector works an account, Regulation F governs how it contacts the patient. The practice does not send these notices itself, but it chooses the agency, supplies the data and answers to the patient for what happens. Points worth knowing before you sign a contract:

Validation notice. 12 CFR 1006.34(a) requires a debt collector to give the consumer specific validation information, either in the initial communication or within five days of it.
Collector disclosure. Under 12 CFR 1006.18(e), the collector must state in its initial communication that it is attempting to collect a debt and that information obtained will be used for that purpose, and must say in later communications that the message is from a debt collector.
Call limits. 12 CFR 1006.14(b)(2) presumes a collector complies with the harassment rule if it calls a person about a particular debt no more than seven times within seven consecutive days, and not within seven days after a telephone conversation about that debt.
No reporting before contact. 12 CFR 1006.30(a) bars a debt collector from furnishing information about a debt to a consumer reporting agency before it has spoken with the consumer about the debt or sent a letter or electronic message and waited a reasonable time for a notice of undeliverability.

Ask the agency in writing how it meets each of these, how it handles disputes and what it does when a patient says the balance should have gone to insurance. The answers belong in your file, not in your memory.

Credit reporting of medical debt: where the federal rule stands

In January 2025 the Consumer Financial Protection Bureau issued a rule under Regulation V that would have limited creditors from using medical debt information and limited consumer reporting agencies from including it in reports sent to creditors. According to the CFPB’s own rule page, the effective date of March 17, 2025 was stayed, and on July 11, 2025 the U.S. District Court for the Eastern District of Texas vacated the rule in Cornerstone Credit Union League v. CFPB, at the joint request of the Bureau and the plaintiffs. The CFPB page states that the materials on that rule are for reference only.

One detail can confuse staff who look it up: as of October 28, 2026, the eCFR text of 12 CFR 1022.38 still showed the rule’s language with its 2025 citation. Rely on the court order and the CFPB statement, not on the presence of text in the online code, and recheck before you write anything about credit reports.

Separate from any rule, the three nationwide consumer reporting agencies made voluntary changes. The CFPB described them in its January 14, 2025 Federal Register notice (90 FR 3276): from July 1, 2022, unpaid medical collections would not appear on a report for up to one year (up from 180 days) and paid medical collections would no longer appear; in April 2023, the agencies announced that medical collections with initial balances below 500 dollars had been removed. These are company policies, not law, and they can change. Check each agency’s current policy before you mention them.

What still applies is the Fair Credit Reporting Act itself. Under 15 U.S.C. 1681s-2(a)(1)(A), a person may not furnish information about a consumer to a consumer reporting agency if the person knows or has reasonable cause to believe it is inaccurate. If your practice or its agency reports balances, the accuracy of what goes out is your problem too: a balance that should have been billed to insurance, or that is under a payment plan, is a reporting risk.

Use: “If you have questions about this balance or think it is wrong, call our billing office before [date].”
Avoid: “Pay now to protect your credit score.” The federal rule is vacated, state laws differ, and the statement may be false for your patients.

State medical debt laws: three examples

States have moved on their own. Three examples with their primary sources:

Colorado. HB23-1126, approved by the governor in June 2023 and effective August 7, 2023 according to the General Assembly’s bill page, bars consumer reporting agencies from making reports with adverse information they know or should know concerns medical debt. It also bars debt collectors and collection agencies from falsely representing that medical debt will be included in a consumer report or factored into a credit score, apart from an exception for very large credit transactions, and requires a statement about these limits in the collector’s initial written communication.
New York. The Fair Medical Debt Reporting Act, S.4907-A, signed December 13, 2023 as chapter 727, added Public Health Law sections 4925 to 4927. Under section 4926, a licensed hospital, a health care professional licensed under title eight of the Education Law, or a certified ambulance service may not furnish any portion of a medical debt to a consumer reporting agency, and must put a clause in each contract with a collection entity that bars that entity from reporting it. Section 4927 makes any portion so furnished void.
California. SB 1061, chapter 520 of 2024, approved by the governor on September 24, 2024, added Civil Code section 1785.27. It says a person shall not furnish information regarding a medical debt to a consumer credit reporting agency, and a medical debt is void and unenforceable if a person knowingly violates that rule. A contract creating a medical debt entered into on or after July 1, 2025 must include a set notice term about this ban, or the contract is void and unenforceable.

Other states have their own laws on medical debt, interest, payment plans and collection timing. Check your state’s statutes and attorney general guidance, and the law of each state where your patients live if you bill across state lines. Your billing page should not promise anything state law does not back.

Nonprofit hospitals: the 501(r) collection rules

A tax-exempt hospital facility has an extra layer. Under 26 CFR 1.501(r)-6, extraordinary collection actions include selling a person’s debt to another party (with listed exceptions) and reporting adverse information to consumer credit reporting agencies or credit bureaus. Before starting these actions, with one listed exception, the facility has to notify the person about its financial assistance policy and wait at least 120 days from the first post-discharge billing statement. The full notice and application rules are in our financial assistance policy guide. If you market for a hospital-owned clinic, ask whether its statements fall under the hospital’s policy.

Billing texts and automated calls

Reminder texts and billing texts are not treated the same under the telephone rules. 47 CFR 64.1200(a)(9)(iv) exempts certain calls and texts from health care providers to a patient’s wireless number from the consent requirement, but only for listed purposes such as appointment reminders, lab results and prescription notifications, and only if the message has no accounting, billing, debt-collection or other financial content. A balance text does not fit that exemption.

That leaves the general rule in 47 U.S.C. 227 and 47 CFR 64.1200(a)(1): a call using an automatic telephone dialing system or an artificial or prerecorded voice to a wireless number needs the called party’s prior express consent unless it is for emergency purposes or otherwise exempt. Practical points:

Get and record consent for billing messages at intake, separate from appointment reminders, with the number the patient gave you.
Honor opt-outs. 47 CFR 64.1200(a)(10) lets a person revoke consent by any reasonable method, and treats replies such as “stop”, “quit”, “end”, “revoke”, “opt out”, “cancel” or “unsubscribe” as a reasonable means per se.
Keep billing texts short and neutral, with the practice name and a way to reach a person.
The FCC published an amendment to 64.1200 on October 26, 2026 (91 FR 67219). Check the current text and its effective date with counsel before you change your texting setup.

HIPAA and the content of billing messages

Collection is part of payment under HIPAA: 45 CFR 164.501 defines payment to include billing, claims management and collection activities. Payment uses and disclosures are allowed, but the minimum necessary standard in 45 CFR 164.502(b) applies to them. A covered entity must make reasonable efforts to limit protected health information to the minimum necessary for the purpose.

For billing messages, that points to a short list of facts: the patient’s name, the practice name, the date of service, the amount and how to pay or ask questions. Diagnoses, procedure names and treatment details do not need to be in a text, a voicemail or a collection letter.

Use: “[Practice name]: you have a balance from your visit on [date]. Pay or set up a plan at [link] or call our billing office.”
Avoid: naming the service, the specialty in a way that reveals the condition, or test results in a billing text or voicemail.
Use: a payment portal that shows details only after login.
Avoid: sending a full itemized statement to a shared family email unless the patient asked for that address.

Your billing page and payment messages

The patient-facing billing page is marketing content too. It tells a worried patient what to do next. A clear page lists:

How to pay, and the payment methods you accept.
Whether you offer payment plans, with terms written exactly as your policy states. If a lender is involved, follow the disclosure points in our patient financing guide.
Whether you offer financial assistance or prompt-pay discounts, and how to apply.
How to dispute a balance or ask for an itemized statement, with a named route (phone, portal message or mail).
For self-pay patients, how the bill relates to the good faith estimate and what to do if it is far above it. See our good faith estimate guide.
When an account may go to a collection agency, stated plainly and only if your policy and state law allow it.

Leave out fear selling. Countdown timers, red warning banners, threats of legal action that you do not intend to take, or claims about credit scores are pressure tactics, and the FTC Act at 15 U.S.C. 45 bars unfair or deceptive acts or practices in commerce. The same applies to the agency’s letters: ask to review the templates it will send in your name.

Where practices go wrong

Running an in-house “collections” brand that looks like a separate company.
Sending billing texts under the appointment reminder consent and exemption.
Putting procedure names in balance texts and voicemails.
Copying a statement template from another state that promises or threatens credit reporting.
Sending balances to an agency while an insurance claim or appeal is still open.
Not telling the front desk what to say when a patient calls about a collection letter.

An example statement message

The following is an invented illustration, not a real practice, and is not a template approved for any state.

[Practice name] billing: Hello [first name], our records show a balance of [amount] from your visit on [date]. You can pay or set up a payment plan at [portal link]. If you think this balance is wrong or should go to your insurance, reply or call our billing office at [number] and we will review it. Reply STOP to end billing texts.

It names the sender, sticks to date and amount, offers a plan and a dispute route, and gives an opt-out. Whether you may send it as an automated text depends on the consent you hold.

Checklist

Bill in the practice’s own name and keep agency branding off in-house letters.
Get separate, recorded consent for billing texts and automated calls.
Strip diagnoses and procedure names from texts, voicemails and collection letters.
Write down which state laws apply to your patients and whether they limit reporting or collection.
If you are in New York, check that collection contracts bar credit reporting as section 4926 requires.
If you are in California, check that patient financial agreements signed on or after July 1, 2025 carry the notice term in Civil Code section 1785.27(c).
If you are a nonprofit hospital, map each collection step to your 501(r) policy.
Review the agency’s letter templates and call practices against Regulation F before signing.
Remove credit score threats from statements, texts and your billing page.
Give the front desk a short script for collection calls, with the route for disputes.

How we help

We build websites, local search, Google Ads and lead generation and AI front desk tools for independent practices and health businesses. For billing, that means a billing and payment page written in plain words, payment and dispute routes patients can find, text and call consent captured at intake, and front desk scripts that answer balance questions without revealing health details. Our tools are built with HIPAA in mind. We confirm in writing what a BAA covers before any patient information flows through a tool, and if it is not covered, we do not route patient information through it. We are not a healthcare provider and we do not give legal or billing advice. For the wider rules, see our healthcare marketing rules hub.

Does the federal debt collection law apply to my practice’s own billing staff?

Generally not when your own employees collect in your practice’s name. 15 U.S.C. 1692a(6) excludes a creditor’s officers and employees collecting in the creditor’s name, but includes a creditor that uses another name suggesting a third party is collecting. State law can be broader, so check your state.

Is medical debt banned from credit reports?

Not by federal rule. The CFPB rule from January 2025 was vacated by a federal court on July 11, 2025, according to the CFPB’s rule page. California, Colorado and New York, among other states, have their own limits. Check your state’s law before saying anything about credit reports.

Can I text patients about unpaid balances?

The health care exemption in 47 CFR 64.1200(a)(9)(iv) excludes billing and debt collection content, so automated billing texts and calls to wireless numbers need the patient’s prior express consent under the general rule. Record that consent and honor opt-outs as 64.1200(a)(10) requires.

What health information can go in a billing text?

As little as possible. Collection is a payment activity under 45 CFR 164.501, and the minimum necessary standard in 45 CFR 164.502(b) applies. Name, practice, date of service, amount and how to pay or ask questions cover the purpose. Leave out diagnoses and procedure names.

Can a New York practice send balances to an agency that reports to credit bureaus?

New York Public Health Law section 4926, added in 2023, says a licensed hospital, licensed health care professional or certified ambulance service may not furnish medical debt to a consumer reporting agency and must bar its collection entities from reporting it by contract. Ask a New York attorney how this applies to your accounts.

When can a nonprofit hospital report a bill to a credit bureau?

Under 26 CFR 1.501(r)-6, reporting adverse information is an extraordinary collection action. The facility must first notify the person about its financial assistance policy and wait at least 120 days from the first post-discharge billing statement, among other steps. See our financial assistance policy guide.

Medical debt and patient billing messages: the rules for practices