Section 120.570  Medical Debt Relief Pilot Program

a)         Definitions. For the purpose of this Section:

1)         "Eligible resident" means an individual who is a resident of the State of Illinois; and:

A)        has a household income at or below 400% of the federal poverty guidelines; or

B)        has medical debt equal to 5% or more of the individual's household income.

2)         "Department" means the Department of Healthcare and Family Services.

3)         "Medical debt" means an obligation to pay money arising from the receipt of health care services. This includes medical debt owed to hospitals and other health care providers and entities.

4)         "Medical debt relief" means the discharge of a patient's medical debt, including debt that is not in collections.

5)         "Nonprofit Medical Debt Relief Coordinator" means a nonprofit organization that is:

A)        experienced in locating, acquiring, and relieving medical debt for individuals; and

B)        able to discharge medical debt of an eligible resident in a manner that does not result in a taxable event for the resident.

6)         "Pilot Program" means the Medical Debt Relief Pilot Program. [305 ILCS 85/10]

b)         No later than January 1, 2025, the Department shall establish a Medical Debt Relief Pilot Program to discharge the medical debt of eligible residents with monies set aside in the Medical Debt Relief Pilot Program Fund.  [305 ILCS 85/15(c)]

1)         The Medical Debt Relief Pilot Program Fund is a special fund created in the State treasury.

2)         All monies in the Medical Debt Relief Pilot Program Fund shall be:

A)        appropriated to the Department; and

B)        expended exclusively for the Pilot Program to provide grant funding to a nonprofit medical debt relief coordinator to be used to discharge the medical debt of eligible residents as defined in the Medical Debt Relief Act.

c)         Based on a budget approved by the Department, the grant funding may also be used for any administrative services provided by the nonprofit medical debt relief coordinator to discharge the medical debt of eligible residents.  [30 ILCS 105/6z-140]

d)         Under the Pilot Program, the Department shall provide grant funding to:

1)         a Nonprofit Medical Debt Relief Coordinator to use the grant funds, and any other private and public funds available, to negotiate and settle, to the extent possible, the medical debt of eligible residents owed to hospitals and other health care providers and entities.

2)         The hospitals and other health care providers and entities may be located outside of the State of Illinois, so long as the negotiation and settlement of medical debt is on behalf of an eligible resident.  [305 ILCS 105/85-15(b)]

e)         The Department shall administer the Pilot Program consistent with the requirements of the Grant Accountability and Transparency Act to determine which Nonprofit Medical Debt Relief Coordinator to use, unless the Department and the State's Grant Accountability and Transparency Unit determine that only a single Nonprofit Medical Debt Relief Coordinator has the capacity and willingness to carry out the duties specified in this Pilot Program.

f)         The Department shall publish on its website any agreement, including amendments and attachments, entered into with a debt relief coordinator within five business days after the agreement or amendment was entered into by the Department.  [305 ILCS 85/15(c)]

g)         The Nonprofit Medical Debt Relief Coordinator shall:

1)         Identify eligible residents who qualify for the Pilot Program.

2)         Review the medical debt accounts of each commercial debt collection agency or health care provider willing to sell medical debt accounts of eligible residents.

3)         Conduct an outreach program with hospitals, hospital systems, and other providers and entities about the benefits of the Medical Debt Relief Pilot Program. Such outreach shall first be initiated with safety-net hospitals.

4)         Negotiate and acquire medical debt of eligible residents from health care providers and medical debt collection agencies.

5)         Within 60 days of the acquisition of an eligible resident's medical debt, notify all eligible residents whose medical debt has been discharged under the Pilot Program, in a manner approved by the Department, that they no longer have specified medical debt owed to the relevant health care provider or commercial debt collection agency.

6)         Not attempt to seek payment from an eligible resident for medical debt purchased by the Nonprofit Medical Debt Relief Coordinator.

7)         To the extent possible, give priority to residents with medical debt at hospitals and providers who serve a high percentage or number of Medicaid customers and providers located in disproportionately impacted area zip codes.  [305 ILCS 85/15(d)]

h)         The Department shall provide an annual report to the Governor and General Assembly that includes, but is not limited to:

1)         The amount of medical debt purchased and discharged under the Pilot Program.

2)         The number of eligible residents who received medical debt relief under the Pilot Program.

3)         The demographic characteristics of the eligible residents, including, but not limited to, race, ethnicity, income level, zip code, and insurance status, in accordance with HIPAA and any other federal or State privacy laws.

4)         The number and characteristics of health care providers from whom medical debt was purchased and discharged, including, but not limited to, geography and payor mix.  [305 ILCS 85/15(e)]

i)          The Department shall repeal this Section on July 1, 2029.

(Source:  Added at 49 Ill. Reg. 4009, effective March 20, 2025)