If you operate a medical practice or manage revenue for a health system in Maryland, you already know that our state is an island. We play by different rules than the rest of the country. With the Health Services Cost Review Commission (HSCRC) setting rates and “Global Budgets” capping revenue, the game has always been complex.
But as we approach the transition from the Total Cost of Care (TCOC) model to the new AHEAD Model (States Advancing All-Payer Health Equity Approaches and Development), the difficulty setting just spiked.
Simultaneously, the Maryland General Assembly has erected what we call a “legislative firewall” around patients. Between HB 1020 (The Fair Medical Debt Reporting Act) and HB 428 (The Lien Prohibition), the traditional levers of debt collection—credit reporting and property liens—have been legally dismantled.
If you are still using a “standard” collection agency that treats a Baltimore patient the same way they treat a debtor in Texas, you aren’t just losing money; you are exposing your institution to “void” contracts and regulatory audits.
At our agency, we have completely re-engineered our Maryland operations. We don’t just “collect debt”; we act as a Regulatory Compliance Shield and a UCC (Uncompensated Care) Maximizer. Here is why the old playbook is dead and how our new strategy protects your bottom line.
Nexa provides 100% reputation-safe, equipped with all 50-state collections license, offering free credit reporting, free litigation, free bankruptcy scrubs, and zero onboarding fees. Secure – SOC 2 Type II & HIPAA compliant. Over 2,000 online reviews rate us 4.85 out of 5.
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The Credit Reporting Dead End
For decades, the threat of a hit to a credit score was the primary motivator for consumers to settle small medical balances. That tool is effectively broken, and relying on it in 2025 is a liability, not an asset.
The government has not given a clear path on the future of medical credit reporting. Between conflicting federal proposals, court rulings vacating CFPB decisions (like the recent Texas ruling), and aggressive state-level bans, the regulatory guidance is murky at best. Because of this ambiguity and the high risk of litigation, most responsible collection agencies—ours included—are moving away from credit reporting as a primary tool.
1. The National Restrictions (The “Safe Harbor” Is Gone)
Even before we look at Maryland-specific laws, the national infrastructure for reporting debt has tightened. The three major credit reporting agencies (Equifax, Experian, and TransUnion) have imposed strict voluntary restrictions that render reporting useless for most small-balance accounts:
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The $500 Threshold: Medical debts under $500 are no longer reported. Since a vast majority of patient copays and deductibles fall under this amount, you cannot report them.
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The Waiting Period: Unpaid medical debt cannot be reported until it is at least one year old. This one-year lag destroys the “urgency” that reporting used to create.
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Paid Debt Removal: If a debt is reported and then paid, it must be removed from the report entirely. It no longer stays as a “paid collection,” meaning the long-term consequence for the debtor is minimal.
2. The Maryland Ban (HB 1020)
While national rules are restrictive, Maryland has gone further. Effective October 1, 2025, HB 1020 prohibits the reporting of medical debt to consumer reporting agencies. But here is the trap: The law mandates that your contract with a collection agency must explicitly prohibit credit reporting.
If your current agency contract has old “boilerplate” language about reporting debt, that contract is now deemed “void and unenforceable” by state statute. This means you legally cannot collect anything under that agreement. We audit every client contract to ensure it contains the mandatory “non-reporting” clauses, keeping you on the right side of the Attorney General.
The Legislative Trap: Why “Standard” Collections are Dangerous
Beyond credit reporting, Maryland law punishes non-compliance with severe penalties.
The End of the Home Lien (HB 428)
Historically, if a high-asset patient refused to pay a large balance, you could sue and place a lien on their home. HB 428 has banned this practice for owner-occupied primary residences. You can spend thousands on legal fees to get a judgment, but you cannot secure it against their most valuable asset. This makes “blind litigation” a massive waste of money.
The 240-Day “Safety Zone” (HB 268)
You are now required to give patients 240 days (about 8 months) to apply for financial assistance before we can take any adverse action. Most generalist agencies don’t have the software to track this specific Maryland moratorium. We do. We use this window not to harass, but to facilitate.
The Economic Squeeze: Why You Can’t Afford to Lose 40%
The Maryland economy is currently facing headwinds that directly impact patient “ability to pay.” We are seeing significant federal downsizing in the DMV region—approximately 17,000 federal jobs lost in a recent six-month window. When these jobs disappear, commercial insurance disappears with them, pushing more patients into self-pay or Medicaid.
At the same time, hospital operating margins are razor-thin. Major systems like Johns Hopkins and MedStar have reported margins hovering around 1% or even negative in recent periods. In this environment, paying a collection agency a 30-50% commission on every dollar collected is unsustainable.
You need a model that keeps the cash in your pocket.
The Solution: The “Step 2” Compliance & Recovery Funnel
We have abandoned the “one-size-fits-all” model in favor of a two-step funnel designed specifically for Maryland’s regulatory environment. We are fully HIPAA Compliant, ensuring that all patient data transfer, storage, and communication meet the strictest federal privacy standards.
Step 2: The Fixed-Fee “Financial Navigation” Service
Instead of waiting until an account is 120 days past due and classified as bad debt, we engage earlier. For a flat fee of roughly $15 per account, we perform a sophisticated outreach campaign consisting of five contacts (letters, emails, and calls).
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You Keep 100%: If we resolve a $5,000 surgery balance during this phase, you pay us ~$15. You keep the entire $5,000. There is no commission.
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The “5% Rule” Administration: Maryland law (HB 565) mandates that you offer payment plans capped at 5% of the patient’s gross monthly income. This is an administrative nightmare for your internal staff to calculate and track. We handle this for you. We verify the income, set up the compliant plan, and manage the billing.
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UCC Optimization: Under the HSCRC rules, you can be reimbursed for Uncompensated Care, but only if you prove you made a “reasonable collection effort.” Our Step 2 service provides the meticulous documentation required to claim these bad debts against the state pool, effectively getting you paid by the system when the patient cannot pay.
Step 3: Contingency Collections (The Safety Net)
For accounts that do not resolve in Step 2, we transition them to Step 3: Contingency Collections.
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Fee Structure: We charge a standard 40% contingency fee. No collection, no fee.
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Garnishability Analysis: Because Maryland has a high wage garnishment floor (roughly $450/week is protected from seizure based on 30x the $15 minimum wage), suing low-income patients is mathematically futile. We use data analytics to screen debtors. We only recommend legal action when we verify the patient has garnishable wages or non-primary real estate assets.
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The “Cross-Border” Advantage: The DMV is transient. A patient treated in Bethesda today might move to Northern Virginia or DC tomorrow. Many local agencies get stuck at the border. We are licensed and bonded to collect in all 50 states and Puerto Rico. If your patient moves to Fairfax or Philadelphia, we follow them.
Why Reputation is Critical Under the AHEAD Model
As Maryland transitions to the AHEAD model, health equity is no longer just a buzzword; it is a metric tied to your revenue. Aggressive, non-compliant collections that target vulnerable populations can hurt your hospital’s standing and equity scores.
We are proud of our high rating on Google Reviews because we treat patients as people navigating a complex system, not just debtors. We act as diplomats for your brand. By helping patients apply for financial assistance or setting up the state-mandated income-based payment plans, we solve the problem without burning the bridge.
The Bottom Line
The Maryland market has changed. The days of leverage are gone. The days of compliance and smart financial navigation are here.
If you are still operating under a legacy contract that demands credit reporting or relies on aggressive litigation, you are walking through a minefield. You need a partner who understands HB 1020, who can administer the 5% payment cap, and who knows how to maximize your HSCRC Uncompensated Care recovery.
Don’t let regulatory changes erode your revenue. Contact us today to audit your strategy and switch to a compliant, cost-effective Fixed Fee model.
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