Demand Letters for Medical Bills and Surprise Billing: How to Challenge Hospital, ER, and Out-of-Network Charges
If you’ve ever opened a medical bill that made your heart stop, you’re not alone. Americans face over $220 billion in medical debt, and much of it stems from surprise bills, coding errors, and collection practices that range from aggressive to outright illegal. The good news is that federal and state laws have evolved significantly in recent years to protect patients, and a well-crafted demand letter can often reduce or eliminate bills that seem insurmountable.
This guide explains when medical bills cross the line from “expensive but legitimate” to “challengeable under federal or state law,” and provides the strategic framework for writing demand letters that get results. Whether you’re facing an out-of-network emergency room bill, a surprise charge from an anesthesiologist you never met, or aggressive collection on a bill you believe should have been covered by charity care, this article will walk you through the legal landscape and practical tactics for fighting back.
Understanding When Medical Bills Are Actually Illegal
Not every high medical bill is unfair, and not every unfair bill is illegal. The distinction matters because your leverage in a demand letter depends on being able to point to specific violations of federal or state law, not just general unfairness.
Medical bills can be challenged on several legal grounds. The most common scenarios involve surprise billing violations under the No Surprises Act or state law, failure to properly apply financial assistance or charity care programs, billing errors and upcoding, and illegal collection practices that violate consumer protection laws. Each category provides different leverage points and requires different evidence.
The strongest demand letters identify multiple potential violations. For example, a surprise bill from an out-of-network emergency room doctor might violate the No Surprises Act while also failing to account for the patient’s eligibility for the hospital’s financial assistance program. A bill sent to collections might involve both improper balance billing and a violation of the hospital’s obligation to screen for charity care before taking collection action.
The No Surprises Act: Federal Protection Against Balance Billing
The No Surprises Act, which took effect January 1, 2022, represents the most significant federal intervention into medical billing in decades. The law was designed to remove patients from billing disputes between providers and insurance plans, ensuring that patients pay only what they would have paid if they had received in-network care in situations where they had no meaningful opportunity to choose a network provider.
The Act applies primarily to people with group or individual health insurance coverage. It does not directly protect patients with Medicare, Medicaid, or those who are uninsured, though uninsured patients receive different protections under the Act that we’ll discuss later. Understanding whether you fall within the NSA’s protection is the first step in determining whether you have grounds to challenge a surprise bill.
Emergency Services Protection
The core protection covers emergency services at out-of-network facilities. If you need emergency care and go to the nearest emergency room, you cannot be balance billed by the facility or any provider who treats you there, even if the entire facility and all its doctors are out of your insurance network. Your cost-sharing, meaning your deductible, copayment, and coinsurance, must be calculated as if you received in-network care.
This protection applies regardless of whether you could have reasonably known the facility was out of network. The federal government recognized that patients experiencing medical emergencies cannot be expected to research network status or drive past a nearby hospital to find an in-network alternative. The protection extends to all services provided during the emergency visit, including labs, imaging, and specialist consultations that occur as part of emergency stabilization.
What counts as emergency services is defined broadly under federal law. It includes services provided after an individual experiences symptoms of sufficient severity that a prudent layperson who possesses an average knowledge of health and medicine could reasonably expect that absence of immediate medical attention would result in placing the health of the individual in serious jeopardy, serious impairment to bodily functions, or serious dysfunction of any bodily organ or part. This standard is deliberately patient-focused and protects individuals who reasonably believed they were experiencing an emergency, even if the final diagnosis reveals a less serious condition.
In-Network Facility, Out-of-Network Provider
The second major protection addresses a scenario that became increasingly common in the years before the NSA: a patient schedules a procedure at an in-network hospital, only to later discover that the anesthesiologist, radiologist, pathologist, or assistant surgeon was out of network and is now balance billing thousands of dollars. Under the No Surprises Act, when you receive care at an in-network facility, you generally cannot be balance billed by out-of-network providers for ancillary services unless you received adequate advance notice and gave informed consent to the higher charges.
The notice and consent requirements are strict. Providers must give written notice at least 72 hours before the scheduled service for non-urgent care, explaining that they are out of network, providing a good faith estimate of charges, and obtaining the patient’s voluntary consent to waive balance billing protections. The notice must be in plain language and cannot be buried in general consent forms. For many types of ancillary services like anesthesiology, radiology, and pathology, providers cannot obtain valid consent at all because patients have no meaningful ability to choose these providers.
This protection is particularly valuable for surgical procedures. If you verified that the hospital and surgeon were in your network before scheduling surgery, but later received a bill from the anesthesiologist who you never met or selected, that bill likely violates the NSA. Your demand letter should state clearly that you selected an in-network facility, received no advance notice or consent form regarding out-of-network providers, and therefore owe only in-network cost-sharing under federal law.
Air Ambulance Services
Air ambulance bills represent some of the most shocking surprise medical charges, often exceeding $50,000 for a single transport. The No Surprises Act extends similar balance billing protections to air ambulance services, though notably it does not cover ground ambulances. If you are transported by helicopter or airplane to receive emergency care, the air ambulance company cannot balance bill you beyond your in-network cost-sharing, regardless of whether the air ambulance provider participates in your insurance network.
The protection applies to both emergency transports and non-emergency interfacility transfers when air transport is medically necessary. However, the NSA does not prevent air ambulance companies from billing you for services if you are uninsured. The uninsured face different protections, primarily the requirement that providers give good faith estimates of charges.
Good Faith Estimates and Uninsured Patient Protections
For uninsured and self-pay patients, the No Surprises Act requires providers and facilities to give a Good Faith Estimate of expected charges before providing scheduled services. The estimate must be provided at least three business days before the scheduled service if the appointment was made at least ten business days in advance, or within three business days of scheduling if the appointment was made fewer than ten days before the service date.
The Good Faith Estimate must include expected charges from the provider or facility furnishing the items or services, and also from any other providers anticipated to provide services in conjunction with the scheduled item or service. If the final bill is substantially higher than the Good Faith Estimate, generally meaning more than $400 above the estimate, the patient can initiate a federal patient-provider dispute resolution process within 120 days of receiving the bill.
This dispute process is separate from the insurance-based protections and provides uninsured patients with a formal mechanism to challenge bills that significantly exceed what they were told to expect. The dispute resolution entity will determine whether the charge was appropriate based on various factors including the good faith estimate, the complexity of the service actually furnished, and any differences between the scheduled service and what was ultimately provided.
State Surprise Billing Laws Add Additional Protection
While the No Surprises Act provides a federal floor of protection, many states enacted their own surprise billing laws before 2022 and continue to maintain them. These state laws often provide broader protections and apply to scenarios not fully covered by federal law, particularly for fully insured health plans regulated by state insurance departments.
California’s Comprehensive Approach
California established itself as a leader in surprise billing protection with the passage of Assembly Bill 72 in 2016, years before federal intervention. AB 72 and related statutes protect California consumers from surprise medical bills when they receive non-emergency services at an in-network facility but are treated by an out-of-network professional without their consent. Under California law, the consumer owes only their in-network cost-sharing, and the provider and health plan must resolve payment disputes through an independent dispute resolution process administered by the California Department of Managed Health Care or the Department of Insurance.
California law applies to HMO, PPO, and other health plan contracts regulated by the state, which includes most fully insured plans. The protection covers emergency services as well as non-emergency situations where a patient reasonably believed they were receiving in-network care at an in-network facility. The California Department of Insurance maintains a dedicated “No Surprise Bills” resource page where consumers can learn about their rights and file complaints when providers or plans fail to comply with state protections.
More recently, California enhanced its protections through additional legislation including AB 1020, which strengthened hospital charity care requirements and collection restrictions. These laws work in tandem with federal protections, and in many cases California law provides the stronger safeguard. When drafting demand letters for California patients, citing both federal NSA protections and California AB 72 creates multiple pressure points for providers to comply.
Other State Protections
Other states maintain their own surprise billing frameworks with varying levels of protection. States like New York, Florida, Texas, and Illinois all have statutes limiting balance billing in specific circumstances. Some states focus primarily on emergency services, while others extend protection to scheduled procedures at in-network facilities. A few states have established all-payer databases and rate-setting mechanisms that effectively cap what out-of-network providers can charge.
For patients outside California, researching state-specific protections through your state insurance department’s website is essential before writing a demand letter. Even if your state’s law is less comprehensive than California’s, having a specific statute to cite strengthens your position significantly compared to making generalized fairness arguments. State insurance regulators generally maintain complaint processes and can intervene when providers or plans violate state balance billing prohibitions.
Hospital Charity Care and Financial Assistance: The 501(r) Framework
For uninsured and underinsured patients, hospital financial assistance programs represent another major source of leverage. Federal tax law requires most hospitals to maintain and follow financial assistance policies, and violations of these requirements can provide grounds for powerful demand letters.
IRS Section 501(r) Requirements for Tax-Exempt Hospitals
Most hospitals in the United States operate as tax-exempt charitable organizations under Section 501(c)(3) of the Internal Revenue Code. In exchange for exemption from federal income tax, these hospitals must comply with Section 501(r), which imposes four major categories of requirements related to billing and collections for emergency and medically necessary care.
First, hospitals must conduct a community health needs assessment every three years and adopt an implementation strategy to address identified needs. Second, they must adopt a written financial assistance policy that describes eligibility criteria, the application process, and the basis for calculating amounts charged to patients. Third, they must limit the amounts charged for emergency or other medically necessary care provided to individuals eligible for financial assistance to not more than the amounts generally billed to patients who have insurance. Fourth, hospitals must make reasonable efforts to determine whether an individual is eligible for financial assistance before engaging in extraordinary collection actions.
The third and fourth requirements are where most demand letter leverage exists. The limitation on amounts charged, often called the AGB or amounts generally billed requirement, means that patients who qualify for financial assistance cannot be charged the hospital’s gross chargemaster rates. Instead, they must be charged amounts that do not exceed what the hospital would have received from insured patients for the same services, typically calculated as a percentage of gross charges based on Medicare reimbursement rates and private insurance rates.
The extraordinary collection actions requirement is even more powerful. Hospitals cannot sell debt to third parties, report adverse information to credit bureaus, file lawsuits, place liens on property, or garnish wages against any patient without first making reasonable efforts to determine whether the patient qualifies for financial assistance. Reasonable efforts include providing the patient with a plain language summary of the financial assistance policy, offering a financial assistance application, and giving at least 120 days from the first post-discharge billing statement before initiating extraordinary collection actions.
California’s Enhanced Fair Pricing and Fair Billing Rules
California law builds on the federal 501(r) framework with additional protections through the Hospital Fair Pricing Act and Hospital Fair Billing Program. These laws, administered by the California Department of Health Care Access and Information, require hospitals to offer discounts and charity care to patients at higher income thresholds than many hospitals would voluntarily adopt, and impose stricter limits on collection practices.
Under California law, hospitals must provide full charity care to patients with family incomes up to 400% of the federal poverty level who are uninsured or underinsured. Partial discounts must be provided to patients with incomes between 400% and 600% of the federal poverty level. Hospitals must make applications easily available, including on their websites and at admission and discharge, and must process applications within a reasonable timeframe. Recent amendments through AB 1020 and AB 2297 strengthened these requirements by establishing clearer timelines, requiring enhanced notice before collections, and limiting the interest and fees hospitals can charge.
HCAI maintains a complaint process specifically for hospital fair billing violations. Patients who believe they were improperly denied financial assistance, charged excessive amounts, or subjected to aggressive collection without proper screening can file complaints through the HCAI website. Hospitals face potential penalties for violations, creating strong incentive to resolve complaints before they reach formal investigation.
When writing demand letters on behalf of uninsured or underinsured patients in California, citing both the federal 501(r) requirements and California’s Fair Pricing and Fair Billing Program establishes a dual legal foundation. The letter should calculate the patient’s likely eligibility based on income and family size, point out any procedural failures in how the hospital handled the account, and demand that the hospital properly screen for financial assistance and adjust charges before proceeding with any further collection activity.
Medical Debt Collection and Credit Reporting Under Federal Scrutiny
Even when underlying medical bills have some validity, the methods hospitals and collectors use to pursue payment frequently cross legal lines. Consumer protection laws provide significant constraints on medical debt collection, and recent regulatory focus from the Consumer Financial Protection Bureau has heightened enforcement risk for collectors who use unfair or deceptive practices.
FDCPA and Regulation F Apply to Medical Debt
The Fair Debt Collection Practices Act prohibits debt collectors from using false, deceptive, or unfair means to collect debts. Regulation F, issued by the CFPB, provides detailed implementing rules including specific prohibitions on misrepresenting the amount or legal status of a debt, threatening actions the collector cannot legally take, and using communication methods or frequencies that harass consumers. These protections fully apply to medical debt collectors, and violations can form the basis for both demand letters and subsequent litigation.
In November 2024, the CFPB issued an advisory opinion specifically focused on deceptive and unfair collection of medical debt. The opinion reminds collectors that they cannot misrepresent whether a medical debt is owed, which includes continuing collection on amounts that may be protected under the No Surprises Act or that should have been covered by financial assistance. Collectors must respect consumer disputes and cannot simply ignore explanations that the debt may be invalid under federal or state law.
The CFPB’s focus on medical debt collection creates an important strategic opportunity. Demand letters to medical debt collectors can reference the CFPB’s advisory opinion and emphasize that continued collection on a disputed debt, particularly one with potential NSA or 501(r) violations, may constitute an FDCPA violation. Even if the collector is a third-party agency or debt buyer with no direct knowledge of the underlying billing issues, they inherit liability for collecting on invalid debts and must conduct reasonable investigation of disputes.
Credit Reporting Changes and Limitations
The treatment of medical debt on credit reports has undergone significant changes, though the regulatory landscape remains somewhat uncertain. The three major credit bureaus voluntarily implemented policies in 2022 to remove paid medical collection accounts from credit reports entirely, remove unpaid medical collection accounts under $500, and extend the waiting period before unpaid medical collections appear on reports from six months to one year.
The CFPB went further in 2024 by finalizing a rule that would remove medical debt from most credit reports and prohibit lenders from using medical information in credit underwriting decisions. The rule would have eliminated approximately $49 billion in medical debt from consumer credit reports. However, in mid-2025 a federal court reversed and suspended key portions of the rule following legal challenges, leaving its future uncertain depending on the current administration’s priorities.
Regardless of the broader regulatory uncertainty, tax-exempt hospitals remain bound by Section 501(r)’s restriction on extraordinary collection actions before completing financial assistance screening. Reporting medical debt to credit bureaus is classified as an extraordinary collection action, meaning that if a hospital reports debt to credit bureaus without first making reasonable efforts to determine financial assistance eligibility, the hospital has violated federal tax law. This creates a specific basis for demanding removal of credit reporting in situations where the hospital failed to follow proper procedures.
Strategic Approaches for Different Demand Letter Scenarios
The most effective demand letters match strategy to the specific legal violations and factual circumstances. Four common scenarios require different emphasis and evidence.
Challenging Surprise Bills Under NSA or State Law
When facing a bill that appears to violate the No Surprises Act or state surprise billing protections, the demand letter should be directed to both the provider who issued the bill and, if applicable, to the health insurance plan. The provider needs to understand they have sent a prohibited balance bill, while the plan needs to process the claim correctly and prevent any deficiency from reaching the patient.
The letter should establish the factual predicate for NSA protection by clearly describing whether this was an emergency service, a scheduled service at an in-network facility where an out-of-network provider rendered care without proper notice and consent, or an air ambulance transport. Attach the bill or Explanation of Benefits showing the amounts charged and the cost-sharing calculated. If you verified network status before care, include evidence such as the facility’s website printout, call logs to the insurance company’s nurse line, or pre-authorization documents.
State clearly that the bill violates the No Surprises Act’s prohibition on balance billing and cite the relevant provision. For emergency care, cite the emergency services provision. For ancillary services at in-network facilities, cite the provision requiring adequate notice and consent. If state law also applies, cite the specific state statute and include a reference to the state regulator’s public guidance on surprise billing protections.
Demand specific corrective action with a deadline. Request that the provider recalculate patient responsibility at in-network cost-sharing levels, issue a corrected bill, withdraw the account from any collection activity, and provide written confirmation of these corrections within 30 days. For the insurance plan, demand that they reprocess the claim applying in-network cost-sharing and issue a corrected Explanation of Benefits showing the proper patient responsibility. Explain that if the matter is not resolved within the specified timeframe, you will file formal complaints with the federal No Surprises Help Desk and relevant state regulators.
Demanding Financial Assistance and Charity Care
For uninsured or underinsured patients who likely qualify for financial assistance, the demand letter takes a different approach focused on the hospital’s obligations under Section 501(r) and applicable state law. The letter should be addressed to the hospital’s billing department with copies to the compliance office and patient financial services.
Begin by establishing the patient’s financial circumstances including household income and family size, and demonstrate eligibility under the hospital’s posted financial assistance policy. Most hospitals post their FAPs online, and you should download and reference the specific eligibility thresholds the hospital has established. Calculate the patient’s income as a percentage of federal poverty level and show clearly that they fall within the eligibility range for full or partial assistance.
Detail any failures in the hospital’s process. If the hospital never provided information about financial assistance, note that Section 501(r)(4) requires prominent posting and plain language summaries. If the hospital sent the account to collections or threatened legal action without screening for financial assistance, note that Section 501(r)(6) prohibits extraordinary collection actions before making reasonable efforts to determine eligibility. In California, add that the Fair Pricing Act and Fair Billing Program impose additional requirements that appear to have been violated.
Demand that the hospital immediately suspend all collection activity, provide a financial assistance application if one has not already been submitted, complete a determination of eligibility within a reasonable timeframe per the hospital’s policy, and adjust the charges to amounts generally billed if the patient qualifies. Also request that the hospital reverse any extraordinary collection actions already taken, including withdrawing accounts from collections, correcting any credit reporting, and dismissing any pending legal actions.
The tone should be firm but not hostile. Hospitals generally want to comply with 501(r) because violations can jeopardize their tax-exempt status, making them more likely to respond positively to well-supported financial assistance demands. However, the letter should make clear that if the hospital does not properly evaluate the application and adjust charges, you are prepared to file complaints with the IRS Form 13909 and, in California, with HCAI’s Hospital Fair Billing Program.
Disputing Billing Errors and Coding Issues
Many medical bills contain straightforward errors such as duplicate charges, services never received, or inappropriate procedure codes that result in higher billing. These situations call for a different type of demand letter focused on line-item dispute and correction rather than broad legal violations.
The letter should include a detailed breakdown of the disputed charges with specific reference to line items, dates, and procedure codes. If possible, obtain an itemized bill that shows all charges with corresponding Current Procedural Terminology codes. Compare the itemized bill to the medical records or discharge summary to identify discrepancies. Common issues include duplicate billing for the same service on the same date, charges for supplies or medications that were not documented in medical records, and upcoding such as billing an emergency visit at Level 5 when records reflect a simple condition requiring minimal intervention.
Present the evidence clearly and request investigation. Attach relevant portions of medical records with disputed charges highlighted. For coding disputes, you can reference Medicare’s evaluation and management guidelines or other coding resources to show why a particular level of service appears inappropriate, though avoid getting lost in technical coding details unless you have expertise in this area.
Demand that the provider or facility investigate the disputed charges, provide documentation supporting each disputed line item, and issue a corrected bill within a specified timeframe. Note that until the dispute is resolved, any collection activity on the disputed amounts may violate the Fair Debt Collection Practices Act and state unfair and deceptive trade practices laws, as collectors cannot misrepresent the amount of a debt when that amount is in good faith dispute.
For health plan errors such as incorrectly applied deductibles or coinsurance, the demand letter goes to the insurance company and requests a claim review. Many plans have internal appeal processes that must be exhausted before external review becomes available. Follow the plan’s stated appeal process while reserving the right to pursue external review with state regulators if the internal appeal is unsuccessful.
Pushing Back Against Collectors and Credit Reporting
When medical debt has been sent to third-party collectors or sold to debt buyers, the demand letter must address both the validity of the underlying debt and the collector’s obligations under federal consumer protection law. These letters go to the collection agency or debt buyer with a copy to the original provider.
Start by disputing the debt under the Fair Debt Collection Practices Act. State that you dispute the validity of the debt and request that the collector provide verification including the original creditor’s name, the date of service, an itemized statement of charges, and documentation showing that the collector has the legal right to collect. Collectors must pause collection activity while investigating disputes and cannot resume until providing adequate verification.
Explain the basis for disputing the debt, which might include NSA violations, potential financial assistance eligibility, billing errors, or failure of the original creditor to follow proper procedures before sending the account to collections. If the original provider was a tax-exempt hospital that may have violated Section 501(r)(6) by engaging in extraordinary collection actions without screening for financial assistance, state this explicitly and note that collection on a debt that should have been written off as charity care may constitute attempted collection of a debt not owed.
If the debt has been reported to credit bureaus, demand that the collector immediately correct or delete the reporting pending resolution of your dispute. Reference the CFPB’s advisory opinion on medical debt collection and note that reporting disputed medical debt when the dispute is based on substantial legal grounds may constitute a deceptive practice under the FDCPA and state consumer protection laws.
Set a firm deadline for response and verification, typically 30 days. State that if the collector cannot adequately verify the debt and its legal right to collect, the debt should be withdrawn and any credit reporting removed. Make clear that if collection activity continues without proper verification, you will file complaints with the Consumer Financial Protection Bureau and your state attorney general, and may pursue private litigation under the FDCPA which provides for statutory damages and attorney’s fees for violations.
Evidence Gathering and Documentation
Effective demand letters depend on thorough documentation. Before writing any demand letter challenging medical bills, gather comprehensive records across several categories.
For insurance coverage and benefits, collect your insurance card showing the plan name and member ID, Summary Plan Description or plan booklet showing coverage terms and network provisions, and any pre-authorization or pre-certification documents related to the service. If you called your insurance company to verify network status before receiving care, document the date and time of the call, name of the representative, and what they told you about network participation.
For the medical encounter itself, obtain complete medical records including admission and discharge summaries, operative reports if surgery was performed, emergency department records, and any consent forms or notices signed during registration or admission. Note the date and time of service, the facility name and location, and the names and specialties of all providers who treated you. If this was an emergency, document the symptoms that led you to seek care and why you chose the facility you did.
Billing and payment records are essential. Collect all bills and invoices from the facility and any individual providers, Explanation of Benefits documents from your insurance company, and records of any payments you have already made. If charges have been sent to collections, obtain the collection letters and any correspondence with the collection agency. Download your credit reports from all three bureaus if medical debt has been reported.
For financial assistance claims, gather documentation of household income including recent pay stubs or tax returns, information about household size, and bank statements showing assets if the financial assistance policy includes asset tests. Download the hospital’s current financial assistance policy and application from their website, and keep copies of any applications you submit along with proof of submission.
Finally, preserve all correspondence. Keep copies of every letter, email, or patient portal message exchanged with providers, billing offices, insurance companies, and collectors. Document phone calls with date, time, person spoken to, and summary of conversation. This documentation will be critical if you need to escalate to formal complaints or litigation.
Escalation Paths When Demand Letters Don’t Resolve the Issue
Despite a well-crafted demand letter, some providers, plans, and collectors will not respond appropriately or will continue to dispute your position. Understanding escalation paths before you write the initial letter helps you make credible statements about next steps.
For No Surprises Act violations, the federal government maintains a dedicated Help Desk at 1-800-985-3059 and an online complaint portal through the CMS No Surprises website. The Help Desk can answer questions about whether specific situations are covered by the NSA and can assist in filing formal complaints. Federal regulators take these complaints seriously and can intervene directly with providers and plans that fail to comply with balance billing prohibitions.
State insurance departments handle complaints about health plans and, in some states, provider billing practices. In California, the Department of Insurance handles complaints about PPO plans while the Department of Managed Health Care handles HMO complaints. Both agencies maintain online complaint forms and will investigate allegations of surprise billing, improper claim denials, and other violations of state insurance law. State regulators have authority to impose penalties and require corrective action, making them powerful allies when providers or plans refuse to comply with state surprise billing laws.
For hospital financial assistance and charity care issues in California, HCAI’s Hospital Fair Billing Program provides a dedicated complaint process. The complaint form asks for specific information about the hospital, the bill amount, your income and eligibility for assistance, and how the hospital has failed to meet its obligations. HCAI investigates complaints and can require hospitals to correct improper billing and collection practices. For violations of federal Section 501(r) requirements, complaints can be filed with the IRS using Form 13909, Tax-Exempt Organization Complaint. While IRS enforcement is not rapid, hospitals are aware that 501(r) violations can jeopardize their tax-exempt status and may respond to credible threats of IRS complaints.
The Consumer Financial Protection Bureau accepts complaints about debt collectors and credit reporting agencies through their online complaint portal. These complaints are forwarded to the company for response, and the CFPB tracks patterns of complaints to identify systemic problems. Medical debt collection is currently a CFPB priority area, and the agency has brought enforcement actions against collectors who use unfair or deceptive practices. State attorneys general also investigate medical billing and collection practices under state consumer protection laws, particularly when they identify systemic patterns affecting many consumers.
For disputes that remain unresolved through administrative complaints, litigation options include small claims court for relatively modest amounts, typically up to $10,000 in California and similar amounts in other states. Small claims court does not require an attorney and can be an efficient way to challenge improper bills. For larger amounts or cases involving clear legal violations, consultation with a consumer protection attorney may be worthwhile. Many consumer protection statutes including the FDCPA provide for attorney’s fees and statutory damages, making it economically feasible for attorneys to take cases on a contingency basis.
Frequently Asked Questions
How do I know if my emergency room bill is protected under the No Surprises Act versus just being expensive?
The distinction comes down to two factors: whether you have health insurance coverage subject to the NSA, and whether the services qualify as emergency care under the law’s definition. If you have group or individual health insurance and you sought emergency services, the NSA applies regardless of whether the facility or providers are in your network. You should not be balance billed beyond your in-network cost-sharing amount.
The key is understanding what constitutes emergency services. Under the NSA, emergency services are defined using the prudent layperson standard, which means medical screening, examination, and stabilization services required to determine if an emergency medical condition exists, and if so, to stabilize the patient. The important part is that this determination is based on the presenting symptoms, not the final diagnosis. If you went to the emergency room because you experienced chest pain, severe headache, difficulty breathing, or other symptoms that a reasonable person would consider serious enough to need immediate care, the services you received should be treated as emergency care even if it turned out to be something less serious.
Some situations are clearer than others. If you arrived by ambulance, lost consciousness, experienced significant bleeding, or had symptoms suggesting heart attack or stroke, there is no question you needed emergency care. But even less dramatic situations can qualify. Severe pain, high fever with confusion, or injuries from an accident all support that emergency services were necessary. What matters is whether you reasonably believed you needed immediate care, not whether the ER doctor later determined your condition was not life-threatening.
If your insurance company or the provider argues that your visit was not for an emergency, push back by describing your symptoms and why you believed immediate care was necessary. The law is designed to protect patients who make reasonable decisions to seek emergency care, not to second-guess those decisions based on hindsight about the final diagnosis.
What should I do if I am uninsured and received a massive bill for emergency care?
Being uninsured does not mean you lack options, though your rights differ from insured patients. The No Surprises Act’s balance billing protections do not apply to uninsured patients because there is no insurance cost-sharing to calculate. However, uninsured patients have other significant protections, particularly regarding financial assistance and charity care.
If you received care at a tax-exempt hospital, which includes most major hospital systems, the hospital is required under Section 501(r) to have a financial assistance policy that provides free or discounted care to patients based on income. You should immediately request a financial assistance application from the hospital’s billing department. Many hospitals provide full charity care to uninsured patients with incomes up to 400% of the federal poverty level, which for 2024 means approximately $60,000 for a family of four or $30,000 for a single individual, though hospitals set their own thresholds.
The critical point is to apply for financial assistance as quickly as possible and before paying anything on the bill. Once you pay, it becomes much harder to get refunds. The hospital cannot send your account to collections, file a lawsuit, or report the debt to credit bureaus while your financial assistance application is pending, and they must wait at least 120 days from the first billing statement before taking any of these extraordinary collection actions even if you have not applied, provided they gave you proper notice about financial assistance.
For uninsured patients in California, additional protections under the Hospital Fair Pricing Act may apply, requiring hospitals to provide discounts and charity care at specific income thresholds and limiting what hospitals can charge even to patients who do not qualify for full charity care. If the hospital refuses to provide financial assistance despite your apparent eligibility, file a complaint with HCAI’s Hospital Fair Billing Program while also sending a demand letter citing Section 501(r) and state law.
Can hospitals in other states send me to collections for medical debt while I am disputing the bill?
The answer depends on whether the hospital is a tax-exempt charitable organization and what procedural requirements they must follow before collections. Most hospitals operate as 501(c)(3) organizations and must comply with Section 501(r), which restricts extraordinary collection actions before making reasonable efforts to determine whether the patient qualifies for financial assistance.
The reasonable efforts standard includes providing notice of the financial assistance policy, making applications available, and giving patients at least 120 days from the first post-discharge billing statement to respond before initiating collections, lawsuits, credit reporting, or other aggressive collection activity. If you submitted a financial assistance application or your circumstances clearly suggest eligibility, the hospital should complete that evaluation before sending the account to collections.
Beyond the 501(r) requirements, some states have additional laws that restrict collection on disputed medical bills. In California, for example, hospitals must provide enhanced notice before collection activity and must complete financial assistance screening. Other states have varying levels of protection, and you should research your state’s specific requirements through the state hospital association or department of health websites.
As a practical matter, sending an account to collections while the patient has an active financial assistance application pending or while a good faith dispute is being investigated reflects poor compliance practices. Your demand letter should emphasize that premature collection activity violates Section 501(r) if applicable, may violate state law, and that you are prepared to file complaints with the IRS and state regulators if the hospital proceeds improperly. Make clear that you are not refusing to pay a legitimate bill but rather requesting that the hospital follow proper procedures to determine the correct amount owed before any collection activity.
What happens if an out-of-state hospital that treated me sends my bill to collections and I live in California?
Dealing with out-of-state hospitals adds complexity because you need to understand which state’s laws apply to both the underlying billing dispute and to collection practices. The No Surprises Act is federal law and applies regardless of which state the hospital is in, so if your situation involves emergency services, out-of-network care at an in-network facility, or air ambulance transport and you have health insurance, the NSA protections follow you across state lines.
For charity care and financial assistance, Section 501(r) is also federal law that applies to all tax-exempt hospitals nationwide, so a non-profit hospital in any state must follow the same basic financial assistance and collection restriction requirements. However, the specific terms of the hospital’s financial assistance policy will be based on that state’s requirements and the hospital’s own policies, which may be less generous than California’s Fair Pricing Act requirements.
If the out-of-state hospital has sent your account to collections, you still have rights under the Fair Debt Collection Practices Act regardless of where the hospital or collector is located. The FDCPA is federal law that protects all consumers from unfair and deceptive collection practices. Your demand letter to the collector should dispute the debt and demand verification, explaining the basis for dispute whether that is an NSA violation, potential financial assistance eligibility, or billing errors.
For credit reporting, federal law also applies uniformly. If the hospital violated Section 501(r) by reporting your debt to credit bureaus without completing financial assistance screening, you can demand removal of the credit reporting based on the procedural violation. For small dollar amounts, it may not be worth the complexity of pursuing an out-of-state hospital through their local courts, but administrative complaints to the IRS, CFPB, and federal No Surprises Help Desk remain available regardless of the hospital’s location. Focus your efforts on the most efficient enforcement paths, which typically means working through federal regulators rather than navigating out-of-state court systems.