Background

As a reminder, effective October 20, 2024, New York prohibits hospitals and healthcare providers from requiring credit card preauthorization or requiring a patient to have a credit card on file prior to providing emergency or medically necessary medical services. Health providers are also required to notify all patients about the risks of paying for medical services with a credit card, particularly that by using a credit card to pay for medical services, the patient is forfeiting state and federal protections relating to medical debt.

New legislation in Connecticut establishes that healthcare providers and health systems in the state may not require patients to provide or keep on file any form of electronic payment information, such as bank account information, credit card numbers, or debit card numbers, as a prerequisite for an office visit or receiving healthcare services. Violating Public Act 25-97, Section 4 is considered an unfair trade practice under the Connecticut Unfair Trade Practices Act (CUTPA). Penalties include temporary restraining orders, an injunction, or a civil penalty of not more than $25,000 per violation.

Under Section 19a-508c, Connecticut defines a health system as:

• A parent corporation of one or more hospitals and any entity affiliated with such parent corporation through ownership, governance, membership, or other means.
• A hospital and any entity affiliated with such hospital through ownership, governance, membership, or other means.

Meanwhile, “health care provider” is defined as “an individual, entity, corporation, person or organization, whether for-profit or nonprofit, that furnishes, bills or is paid for health care service delivery in the normal course of business, including, but not limited to, a health system, a hospital, a hospital-based facility, a freestanding emergency department and an urgent care center.”

This prohibition does not affect a patient’s obligation to pay for healthcare services or prevent providers from requesting; collecting; or storing bank accounts, credit cards, debit cards, or other payment-related information if the patient agrees to provide such information.

How each state differs

While both Connecticut and New York prohibit healthcare providers and systems from requiring patients to provide electronic payment information before receiving services, the two laws differ significantly in scope and enforcement.

A key distinction between the two is that New York’s law applies exclusively to credit card transactions, whereas Connecticut’s law encompasses all forms of electronic payment. Consequently, providers in New York may collect debit card or automated clearing house transfer details while providers in Connecticut are prohibited from doing so. New York’s law is designed to prevent individuals from inadvertently forfeiting statutory protections by using a credit card, since, under other laws, a debt ceases to qualify as “medical debt” once owed to a third-party creditor rather than the original provider. In contrast, Connecticut’s law reflects a broader concern with the use of electronic payment more broadly. Moreover, Connecticut enforces its prohibition through CUTPA, with significant civil penalties, while New York requires the US Department of Health and Human Services (HHS) to develop patient disclosure guidelines and assigns enforcement to the attorney general (though HHS has yet to issue such guidelines).

Next steps for healthcare providers

Providers and health systems should assess their current consent and billing processes to assess how payment information is collected from patients prior to receipt of care to ensure compliance with the new laws. It should be made clear to patients that any such collection is subject to their agreement in advance.

Please contact the authors or your regular McDermott Will & Schulte lawyer with any questions related to these new requirements.