I 
115TH CONGRESS 
1ST SESSION H. R. 3920 
To establish a Medicare demonstration program on the use of third-party 
interest-free payment arrangements to reduce Medicare hospital part 
A bad debt claims. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 3, 2017 
Mrs. WALORSKI introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on Energy 
and Commerce, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned 
A BILL 
To establish a Medicare demonstration program on the use 
of third-party interest-free payment arrangements to re-
duce Medicare hospital part A bad debt claims. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. MEDICARE DEMONSTRATION PROGRAM ON 
THE USE OF THIRD-PARTY INTEREST-FREE 
PAYMENT 
ARRANGEMENTS 
TO 
REDUCE 
MEDICARE HOSPITAL PART A BAD DEBT 
CLAIMS. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall establish a 3-year demonstration program 
(in this section referred to as the ‘‘demonstration pro-
gram’’) in 5 States to determine the impact on patient 
engagement and satisfaction, health outcomes, and claims 
for Medicare hospital part A bad debt (as defined in sub-
section (d)(2)) of hospitals’ implementing third-party in-
terest-free payment arrangements (as defined in sub-
section (b)). 
(b) THIRD-PARTY INTEREST-FREE PAYMENT AR-
RANGEMENT DEFINED.—In this section, the term ‘‘third- 
party interest-free payment arrangement’’ means, with re-
spect to a hospital and individuals who are receiving inpa-
tient hospital services for which payment may be made 
under part A of title XVIII of the Social Security Act, 
an arrangement between the hospital, a third-party, and 
such individuals under which— 
(1) the hospital offers to all such individuals 
the option of making payment of Medicare part A 
cost-sharing under such an arrangement for such 
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services rather than through the routine billing proc-
ess for such cost-sharing; 
(2) in the case of any such individual who 
agrees to such offer, the hospital assigns to the third 
party the rights of collection for such Medicare part 
A cost-sharing from such individual and efforts for 
such collection by the third party pursuant to this 
section shall be treated as reasonable collection ef-
forts by the hospital for purposes of section 
413.89(e) of title 42 of the Code of Federal Regula-
tions (or any successor regulation); 
(3) in the case of any such individual who does 
not agree to such offer, the hospital payment of 
Medicare part A cost-sharing for such services shall 
continue to be made through the routine billing 
process for such cost-sharing (including with respect 
to claims for Medicare hospital part A bad debt); 
and 
(4) the third party— 
(A) participates in a level of financial en-
gagement and education with all such individ-
uals who agree to such offer to ensure such in-
dividuals are able to afford such cost-sharing 
payments; 
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(B) in collecting the amounts so owed, per-
mits all such individuals who agree to such 
offer to make payment over time through a 
payment plan that does not charge interest with 
respect to the balance of the amount so owed; 
and 
(C) pays the hospital the amount so col-
lected under the arrangement less a fee that 
does not exceed 15 percent of the amount so 
collected. 
(c) PAYMENT INCENTIVE.—The demonstration pro-
gram shall provide that a hospital that participates in such 
a third-party interest free payment arrangement under the 
program and demonstrates improved patient engagement 
and satisfaction, improved health outcomes, and a reduc-
tion in the number of claims for Medicare hospital part 
A bad debt that are reported to the Secretary is paid an 
amount equal to 10 percent of the original amount owed 
in Medicare part A cost-sharing that is collected under the 
arrangement. Such amount shall be paid from funds ap-
propriated (under subsection (f)(1) of section 1115A of 
the Social Security Act (42 U.S.C. 1315a)) for activities 
to carry out such section. 
(d) REPORT TO CONGRESS.—After the completion of 
the demonstration program, the Secretary shall submit a 
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report on the demonstration program to the Committee 
on Ways and Means of the House of Representatives and 
the Committee on Finance of the Senate. The report shall 
include an analysis of whether the demonstration program 
reduced the number and amount of Medicare hospital part 
A bad debt claims and if there were improved health out-
comes for Medicare beneficiaries who did not forgo med-
ical care due to their inability to pay for Medicare part 
A cost-sharing. 
(e) OTHER DEFINITIONS.—In this section: 
(1) MEDICARE
PART
A
COST-SHARING.—The 
term ‘‘Medicare part A cost-sharing’’ means, with 
respect to a hospital, amounts owed to the hospital 
that are derived from deductibles and coinsurance 
imposed under part A of title XVIII of the Social 
Security Act (42 U.S.C. 1395c et seq.). 
(2) MEDICARE HOSPITAL PART A BAD DEBT.— 
The term ‘‘Medicare hospital part A bad debt’’ 
means bad debt of a hospital that is attributable to 
the inability of the hospital to collect Medicare part 
A cost-sharing, taking into account collections made 
under third-party interest-free payment arrange-
ments made under the demonstration program. 
Æ 
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