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President Donald Trump has a new defense for a doctor who sued hundreds of his own patients: The law made him do it.
At a rally in Park City, Kansas, on Oct. 19, Trump defended Kansas Sen. Roger Marshall, who sued more than 700 patients over unpaid medical bills during his years as an OB-GYN, as first reported by The New York Times. (1)
“You have to, by law, go after those people,” Trump said. He added that if Marshall hadn’t, “he would have been breaking a very strong criminal law, and he would be subject to criminal arrest and liability.” (1)
I’ve been a CPA since 1981. Here’s my verdict: Trump is half right.
Federal rules really do push doctors who bill Medicare to try to collect from patients. (2)
But those same rules let a doctor occasionally forgive a patient’s share of the bill when that patient can’t pay, and neither the fraud alert nor the statute says a doctor has to sue anyone. (2)(3)
Lawrence Gostin, who directs a health law institute at Georgetown Law School, put it this way, according to CNN: Marshall was “entitled to sue for unpaid bills but not required to do so.” (1)
Here’s what the law actually says, and how to use it if you’re the one staring at a medical bill you can’t pay.
What Trump gets right: doctors can’t just let everyone off the hook
Trump’s claim isn’t pulled from thin air. The federal government’s health care watchdog, the Office of Inspector General at the Department of Health and Human Services, has warned doctors about this for decades.
In a fraud alert first issued in 1991, the inspector general said doctors paid under Medicare Part B who routinely waive their Medicare patients’ copays and deductibles are breaking the law. (2)
Why would forgiving a bill be illegal? Two reasons.
First, it can be a kickback. Waiving bills to win patients is like paying them to come to you, with Medicare picking up the rest of the tab. (2)
Second, it can mean overbilling. The alert gives an example: If a supplier says its charge for a piece of equipment is $100 but routinely waives the patient’s copay, the actual charge is $80. Medicare then pays $80 instead of $64, or $16 more than it should. (2)
The penalties are real. The alert says doctors who routinely waive copays can be criminally prosecuted and kicked out of Medicare. (2) It also says that, outside of hardship cases, a good-faith effort to collect copays and deductibles must be made. (2)
So yes: A doctor who takes Medicare and never bothers to bill anyone is asking for trouble.
What Trump gets wrong: “try to collect” doesn’t mean “sue”
Here’s where the claim falls apart.
The same fraud alert has a big exception. A doctor may forgive what a particular patient owes because of that patient’s financial hardship, as long as it isn’t done routinely. (2)
The federal law itself goes further.
It says forgiving a copay or deductible doesn’t count as an illegal inducement to patients if the doctor doesn’t advertise it, doesn’t do it routinely, and either finds in good faith that the patient is in financial need, or fails to collect after making reasonable collection efforts. (3)
That last part matters. The law talks about “reasonable collection efforts.” It doesn’t say a lawsuit has to follow.
My read: A doctor who sends bills, makes calls, offers a payment plan and then writes off what’s left, without doing it routinely or advertising it, fits that description.
Put another way, there’s a big difference between sending a bill and sending a process server. For doctors who bill Medicare, federal rules expect the first. The second is a business choice.
And here’s a point most people miss: These rules are about patients in government programs. The fraud alert covers Medicare patients, and the federal law also covers people on Medicaid. (2)(3)
If you’re uninsured, the rules point the other way. Back in 2004, the inspector general’s office said federal anti-kickback law doesn’t stop hospitals from giving discounts to uninsured patients who can’t afford their bills. (6)
Quick aside — most internet financial advice comes from people who weren’t alive during the last recession. I’ve been writing about money for more than 35 years. Want rock-solid advice? Sign up for the free Money Talks Newsletter. Takes 10 seconds. No fluff. No spam.
Owe a doctor or hospital? 5 moves to make
I once served on the advisory board of a local Consumer Credit Counseling Service. If you’re facing a medical bill you can’t pay, here’s my advice: you probably have more leverage than you think.
1. Ask for a hardship discount. The rules behind Trump’s claim cut both ways.
For Medicare patients, doctors are allowed to forgive the patient’s share of the bill when that particular patient has a real financial hardship. (2) Ask the billing office directly, and be ready to show proof of your income.
2. If it’s a nonprofit hospital, ask for its financial assistance policy. Under IRS rules, tax-exempt hospitals must make reasonable efforts to find out whether you qualify for financial help before taking what the IRS calls “extraordinary collection actions.” (4)
That includes telling you about the policy and generally waiting at least 120 days after the first bill after you leave the hospital. (4)
3. Think twice before putting it on a credit card. The credit-report protections for medical collections don’t cover credit card collections, even if you used the card to pay a medical bill. (5)
If you’ve already put big medical bills on high-rate cards, consider swapping that debt for something cheaper. A personal loan rolls those balances into one fixed monthly payment, often at a lower rate, with a set payoff date instead of a revolving cycle.
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4. Check your credit reports.
According to a 2023 Consumer Financial Protection Bureau post, the three big credit bureaus removed paid medical collections from credit reports and, as of April 2023, stopped reporting medical collections under $500. (5)
If you see one, the Consumer Financial Protection Bureau says you can dispute it with the credit bureau. (5)
5. Get help if the bills have snowballed. A big hospital stay can leave you owing far more than you can pay from savings.
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They can help with most unsecured debt — credit cards, personal loans, medical bills, even some student loan debt. There’s no upfront fee and no obligation to get started.
The bottom line
Trump is right that a doctor who takes Medicare can’t simply stop billing patients. He’s wrong that the law forces a doctor to sue them, and, in my read, wrong that a doctor risks arrest just for choosing not to sue.
The rules behind Trump’s claim actually contain your best argument. If you’re on Medicare and truly can’t pay, your doctor is allowed to forgive your share of the bill.
So don’t wait for a court date. Pick up the phone, explain your situation and ask. The worst they can say is no, and that’s a lot better than a summons.
Sources: 1. CNN; 2. HHS Office of Inspector General; 3. Cornell Law School Legal Information Institute (42 U.S.C. 1320a-7a); 4. IRS; 5. Consumer Financial Protection Bureau; 6. HHS Office of Inspector General (2004)
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