AMENDED IN ASSEMBLY APRIL 9, 2026

AMENDED IN ASSEMBLY MARCH 16, 2026

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

97

Introduced by Assembly Member Aguiar-Curry

(Coauthor: Assembly Member Caloza)

February 18, 2026

An act to add Section 15464 to the Government Code, and to amend Section Sections 127425 and 128740 of the Health and Safety Code, relating to medical debt, and making an appropriation therefor. debt.

Vote: majority   Appropriation: no   Fiscal committee: yes   Local program: no

LEGISLATIVE COUNSEL’S DIGEST

Existing law, the California Health Facilities Financing Authority Act, establishes the California Health Facilities Financing Authority, which has authority to, among other things, make secured or unsecured loans to, or purchase secured or unsecured loans of, any participating health institution in accordance with an agreement between the authority and the participating health institution to refinance indebtedness incurred by that participating health institution, as specified, in connection with projects undertaken, for health facilities acquired, or for working capital. Existing law also authorizes the authority to award grants to eligible clinics and health facilities, as specified. Existing law establishes the California Health Facilities Financing Authority Fund, a continuously appropriated fund, to carry out the purposes of the act.

This bill, the Medical Debt Relief Act of 2026, would establish the medical debt relief program, which would be administered by the authority. The The bill would require the authority to enter into an interagency agreement with the Department of Health Care Access and Information to implement the program. The bill would require the authority and department to convene a stakeholder advisory group, as specified, no later than July 1, 2027, to advise on the development, implementation, and administration of the program. The bill would require the stakeholder advisory group, on or before January 1, 2028, to develop recommendations for the authority and department, including, among others, criteria for the ranking and priority of eligible recipients to receive discharge of their medical debt.

This bill would authorize the authority authority, in consultation with the department, to, among other things, contract with a medical debt relief coordinator, as defined, for purposes of acquiring medical debt of eligible recipients either directly from a providing health institution or from a debt buyer, as specified. The bill would require the authority to, among other things, maintain books and records of all the medical debt acquired and canceled. The bill would authorize the authority to adopt, amend, or repeal regulations to establish criteria for the operation and administration of the program, and would require the authority to take into account specified factors in developing its ranking and priority criteria. The bill would require the authority to maintain a public internet website for information about the program.

This bill would create the California Medical Debt Relief Program Account within the California Health Facilities Financing Authority Fund and would appropriate $2,500,000 from the General Fund to the California Medical Debt Relief Program Account for the purposes of the Medical Debt Relief Act of 2026. make all moneys in the account available, upon appropriation by the Legislature, to the authority for carrying out the purposes of the Medical Debt Relief Act of 2026. The bill would require the authority authority, in consultation with the department, to provide a report to the Legislature and Governor by January 1 of each year, starting January 1, 2028.

The people of the State of California do enact as follows:

SECTION 1.

Section 15464 is added to the Government Code, immediately following Section 15463, to read:

15464.

(a) This section shall be known, and may be cited, as the Medical Debt Relief Act of 2026.

(b) The Legislature finds and declares all of the following:

(1) The rising costs of health care have had a severe economic impact on Californians.

(2) Numerous Californians have found themselves unable to pay for the costs of health care.

(3) The burden of unaffordable medical debt on these Californians has impacted their ability to participate equally in California’s economy.

(4) Relieving Californians of burdensome medical debt will enhance their ability to participate in California’s economy and lead to more economically beneficial and prosperous lives.

(5) It is necessary and appropriate to create a mechanism for needy Californians to escape the burden of medical debt they have no hope of repaying.

(c) As used in this section, the following definitions apply, unless the context clearly indicates or requires another or different meaning or intent:

(1) “Authority” means the California Health Facilities Financing Authority.

(3) “Eligible health care costs” means health care costs for medical care incurred by an eligible recipient at a health facility by a providing health institution.

(4) “Eligible recipient” means a patient who meets all of the following qualifications:

(A) The person is a resident of California.

(B) The person has incurred medical debt following receipt of care from a providing health institution.

(C) The person is unable to repay the debt.

(D) The person’s federal adjusted gross income is 400 percent or less than the federal poverty line, or their debt is more than 5 percent of their adjusted gross income as measured by the prior tax return or the estimated return in the current year.

(5) “Medical debt” means an eligible recipient’s obligation to pay money arising from the receipt of eligible health care costs.

(6) “Medical debt relief coordinator” means a person, company, partnership, or other entity under contract with the authority to facilitate the discharge of medical debt of an eligible recipient.

(7) “Medical debt relief program” or “program” means the program administered by the authority to cause discharge of an eligible recipient’s medical debt.

(8) “Providing health institution” means any of includes, but is not limited to, all of the following entities that operates operate a health facility: facility or provide health care:

(E) A limited liability company whose sole member is a nonprofit corporation or association authorized by the laws of this state to provide or operate a health facility.

(F) A nonprofit corporation that controls or manages, is controlled or managed by, is under common control or management with, or is affiliated with any of the foregoing.

(d) The medical debt relief program is hereby established. The authority shall administer the program. The authority may do or cause to be done any of the following:

(1) Contract with a medical debt relief coordinator for purposes of acquiring medical debt of eligible recipients, either directly from a providing health institution or from a debt buyer as provided in Section 127425 of the Health and Safety Code. Upon the acquisition, the medical debt relief coordinator shall convey the acquired indebtedness to the authority. The authority shall do all of the following:

(B) If the authority cancels the debt, the authority shall record that the debt is no longer an obligation of the eligible recipient or any other person or entity.

(C) Maintain books and records of all the acquired and canceled medical debt.

(D) Provide written notice to the eligible recipient that the medical debt acquired by the authority has been canceled and is no longer an obligation of the eligible recipient.

(3) Adopt, amend, or repeal rules and regulations pursuant to this chapter as emergency regulations. The adoption, amendment, or repeal of these regulations is conclusively presumed to be necessary for the immediate preservation of the public peace, health, safety, or general welfare within the meaning of Section 11346.1.

(j) The California Medical Debt Relief Program Account is hereby created in the California Health Facilities Financing Authority Fund. All moneys in the account are hereby appropriated shall be available, upon appropriation by the Legislature, to the authority for carrying out the purposes of this section.

(k) (1) The authority authority, in consultation with the department, shall prepare and provide a report to the Legislature and the Governor by January 1 of each year, starting January 1, 2028, on the operations and outcomes of the medical debt relief program, including, but not limited to, all of the following:

(A) Any contracts entered into with a medical debt relief coordinator.

(B) The cost of medical debt purchased.

(C) The amount of medical debt canceled.

(D) The benefits to eligible recipients whose medical debt has been purchased.

(E) The balance of the California Medical Debt Relief Program Account.

(2) The report submitted pursuant to this subdivision shall be submitted in compliance with Section 9795.

(l) For purposes of this section, any prohibitions or restrictions on the sale of debt set forth in Section 127425 of the Health and Safety Code shall not apply to the sale of medical debt to a medical debt relief coordinator.

(m) The discharge of an eligible recipient’s medical debt as provided herein shall not result in taxable income to the eligible recipient for purposes of state income taxation.

(n) In administering this section, the authority shall not be subject to the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

SEC. 2.

Section 127425 of the Health and Safety Code is amended to read:

127425.

(a) A hospital shall not sell patient debt to a debt buyer, as defined in Section 1788.50 of the Civil Code, unless all of the following apply:

(1) The hospital has found the patient ineligible for financial assistance or the patient has not responded to any attempts to bill or offer financial assistance for 180 days.

(2) The hospital includes contractual language in the sales agreement in which the debt buyer agrees to return, and the hospital agrees to accept, any account in which the balance has been determined to be incorrect due to the availability of a third-party payer, including a health plan or government health coverage program, or the patient is eligible for charity care or financial assistance.

(3) The debt buyer agrees to not resell or otherwise transfer the patient debt, except to the originating hospital or a tax-exempt organization described in Section 127444, or if the debt buyer is sold or merged with another entity.

(4) The debt buyer agrees not to charge interest or fees on the patient debt.

(5) The debt buyer is licensed as a debt collector by the Department of Financial Protection and Innovation.

(b) A hospital shall have a written policy about when and under whose authority patient debt is advanced for collection, whether the collection activity is conducted by the hospital, an affiliate or subsidiary of the hospital, or by an external collection agency, or debt buyer.

(c) A hospital shall establish a written policy defining standards and practices for the collection of debt, and shall obtain a written agreement from any agency that collects hospital receivables that it will adhere to the hospital’s standards and scope of practices. This agreement shall require the affiliate, subsidiary, debt buyer, or external collection agency of the hospital that collects the debt to comply with the hospital’s definition and application of a reasonable payment plan, as defined in subdivision (i) of Section 127400. The policy shall not conflict with other applicable laws and shall not be construed to create a joint venture between the hospital and the external entity, or otherwise to allow hospital governance of an external entity that collects hospital receivables. In determining the amount of a debt a hospital may seek to recover from patients who are eligible under the hospital’s charity care policy or discount payment policy, the hospital may consider only income as limited by Section 127405.

(d) At time of billing, a hospital shall provide a written summary consistent with Section 127410, which includes the same information concerning services and charges provided to all other patients who receive care at the hospital.

(e) Before assigning a bill to collections, or selling patient debt to a debt buyer, a hospital shall send a patient a notice with all of the following information:

(1) The date or dates of service of the bill that is being assigned to collections or sold.

(2) The name of the entity the bill is being assigned or sold to.

(3) A statement informing the patient how to obtain an itemized hospital bill from the hospital.

(4) The name and plan type of the health coverage for the patient on record with the hospital at the time of services or a statement that the hospital does not have that information.

(5) An application for the hospital’s charity care and financial assistance.

(6) The date or dates the patient was originally sent a notice about applying for financial assistance, the date or dates the patient was sent a financial assistance application, and, if applicable, the date a decision on the application was made.

(f) A hospital, any assignee of the hospital, or other owner of the patient debt, including a collection agency or debt buyer, shall not do either of the following:

(1) Report adverse information to a consumer credit reporting agency.

(2) Commence civil action against the patient for nonpayment before 180 days after initial billing.

(g) If a patient is attempting to qualify for eligibility under the hospital’s charity care or discount payment policy and is attempting in good faith to settle an outstanding bill with the hospital by negotiating a reasonable payment plan or by making regular partial payments of a reasonable amount, the hospital shall not send the unpaid bill to any collection agency, debt buyer, or other assignee, unless that entity has agreed to comply with this article.

(h) (1) The hospital or other assignee that is an affiliate or subsidiary of the hospital shall not, in dealing with patients eligible under the hospital’s charity care or discount payment policies, use wage garnishments or liens on any real property as a means of collecting unpaid hospital bills.

(2) A collection agency, debt buyer, or other assignee that is not a subsidiary or affiliate of the hospital shall not, in dealing with any patient under the hospital’s charity care or discount payment policies, use as a means of collecting unpaid hospital bills, any of the following:

(A) A wage garnishment, except by order of the court upon noticed motion, supported by a declaration filed by the movant identifying the basis for which it believes that the patient has the ability to make payments on the judgment under the wage garnishment, which the court shall consider in light of the size of the judgment and additional information provided by the patient before or at the hearing concerning the patient’s ability to pay, including information about probable future medical expenses based on the current condition of the patient and other obligations of the patient.

(B) Notice or conduct a sale of any real property owned, in part or completely, by the patient.

(C) Liens on any real property.

(3) This requirement does not preclude a hospital, collection agency, debt buyer, or other assignee from pursuing reimbursement and any enforcement remedy or remedies from third-party liability settlements, tortfeasors, or other legally responsible parties.

(i) Extended payment plans offered by a hospital to assist patients eligible under the hospital’s charity care policy, discount payment policy, or any other policy adopted by the hospital for assisting low-income patients with no insurance or high medical costs in settling outstanding past due hospital bills, shall be interest free. The hospital extended payment plan may be declared no longer operative after the patient’s failure to make all consecutive payments due during a 90-day period. Before declaring the hospital extended payment plan no longer operative, the hospital, collection agency, debt buyer, or assignee shall make a reasonable attempt to contact the patient by telephone and, to give notice in writing, that the extended payment plan may become inoperative, and of the opportunity to renegotiate the extended payment plan. Before the hospital extended payment plan being declared inoperative, the hospital, collection agency, debt buyer, or assignee shall attempt to renegotiate the terms of the defaulted extended payment plan, if requested by the patient. The hospital, collection agency, debt buyer, or assignee shall not commence a civil action against the patient or responsible party for nonpayment before the time the extended payment plan is declared to be no longer operative. For purposes of this section, the notice and telephone call to the patient may be made to the last known telephone number and address of the patient.

(j) (1) A hospital shall maintain all records relating to money owed to the hospital by a patient or a patient’s guarantor for five years, including, but not limited to, all of the following:

(A) Documents related to litigation filed by the hospital.

(B) A contract and significant related records by which a hospital assigns or sells medical debt to a third party.

(C) A list, updated at least annually, of every person, including the person’s name and contact information, that meets at least one of the following criteria:

(i) The person is a debt collector to whom the hospital sold or assigned a debt that a patient of the hospital owed the hospital.

(ii) The person is retained by the hospital to pursue litigation for debts owed by patients on behalf of the hospital.

(2) Any contract entered into by a hospital related to the assignment or sale of medical debt shall require the assignee or buyer and any subsequent assignee or buyer to maintain records related to litigation for five years.

(3) For purposes of this subdivision, “debt collector” and “person” have the same meanings as defined in Section 1788.2 of the Civil Code.

(k) This section does not diminish or eliminate any protections consumers have under existing federal and state debt collection laws, or any other consumer protections available under state or federal law. If the patient fails to make all consecutive payments for 90 days and fails to renegotiate a payment plan, this subdivision does not limit or alter the obligation of the patient to make payments on the obligation owing to the hospital pursuant to any contract or applicable statute from the date that the extended payment plan is declared no longer operative, as set forth in subdivision (i).

(l) Any prohibitions or restrictions for the sale of debt pursuant to this section do not apply to the sale of medical debt to a medical debt relief coordinator pursuant to Section 15464 of the Government Code.

SEC. 3.

Section 128740 of the Health and Safety Code is amended to read:

128740.

(a) The following summary financial and utilization data shall be reported to the department by a hospital within 45 days of the end of a calendar quarter. Adjusted reports reflecting changes as a result of audited financial statements may be filed within four months of the close of the hospital’s fiscal or calendar year. The quarterly summary financial and utilization data shall conform to the uniform description of accounts as contained in the Accounting and Reporting Manual for California Hospitals and shall include all of the following:

(1) Number of licensed beds.

(2) Average number of available beds.

(3) Average number of staffed beds.

(4) Number of discharges.

(5) Number of inpatient days.

(6) Number of outpatient visits.

(7) Total operating expenses.

(8) Total inpatient gross revenues by payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.

(9) Total outpatient gross revenues by payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.

(10) Deductions from revenue in total and by component, including the following: Medicare contractual adjustments, Medi-Cal contractual adjustments, and county indigent program contractual adjustments, other contractual adjustments, bad debts, charity care, restricted donations and subsidies for indigents, support for clinical teaching, teaching allowances, and other deductions.

(11) Total capital expenditures.

(12) Total net fixed assets.

(13) Total number of inpatient days, outpatient visits, and discharges by payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, self-pay, and other payers.

(14) Total net patient revenues by payer, including Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.

(15) Other operating revenue.

(16) Nonoperating revenue net of nonoperating expenses.

(17) (A) A balance sheet detailing the assets, liabilities, and net worth at the end of the quarter, as specified by the department.

(B) The department shall allow and provide for, in accordance with appropriate regulations, additions, or deletions to the summary financial and utilization data to meet the purposes of this chapter.

(b) The department may adopt regulations, including emergency regulations, necessary to implement this section.