Foreign Patient Billing: How Hospitals Collect Payments

Hospitals and healthcare providers in the United States bear substantial costs by treating uninsured individuals, including foreign nationals. While hospitals may not be able to collect payment from foreign nationals, the costs associated with their care are passed on to taxpayers in the form of higher taxes, premiums, and fees for medical services. Uncompensated care costs have exceeded $35 billion in the last 10 years, with hospitals sometimes driven into insolvency. If a foreign national acquires medical debt in the US, there may be consequences such as a negative impact on their credit score, harassment by debt collectors, and potential difficulties entering the US in the future if the hospital engages an international collection agency.

Debt collection agencies

Hospitals and debt collection agencies have a history of alliance, particularly in advocating for fewer regulations around collections. This has resulted in aggressive collection tactics becoming commonplace in hospital billing. Nonprofit hospitals, in particular, have wide discretion over medical debt collection due to the US government's lack of oversight.

When a hospital's internal team is unable to collect a patient's debt, the account is often assigned to a third-party collection agency, which can result in a derogatory mark on the patient's credit report. Debt collection agencies are known to employ aggressive tactics to collect on the debt, causing stress for patients. They are also not subject to the same restrictions as hospitals when pursuing overdue bills, as they are not designated debt collectors under the Fair Debt Collection Practices Act (FDCPA).

To avoid dealing with debt collection agencies, it is important to communicate with the provider or hospital when you cannot pay what is due. Providers will usually set up a payment plan, but it is important to get this in writing. Some hospitals have agreements with banks that will spread payments over 2-3 years at no interest, provided payments are made on time.

If your medical debt has been turned over to a collection agency, you have certain rights and protections. Debt collectors are not permitted to report a medical bill to credit reporting companies without first attempting to collect the debt from you. You have the right to dispute the information and ask for verification of the debt, as well as information about the collector and the bill being collected. Additionally, you may have protections under the No Surprises Act, which aims to protect patients from unexpected gaps in insurance coverage and surprise medical bills.

Lawsuits and court orders

For foreigners acquiring medical debt in the US, there are a few potential consequences. While civil debt alone does not impact eligibility to enter the US, it may cause issues if it is related to criminal activity. The Department of Homeland Security may consider an individual's financial status when determining whether they are likely to become a public charge as a visa applicant. If a foreigner with medical debt has no intention of living or working in the US, the main consequence may be a negative impact on their US credit rating, which is a non-issue in this case. However, if the debt is substantial, the hospital may engage an international debt collector.

In terms of lawsuits and court orders, debt collectors may wait for the debtor at a US airport to serve them with a lawsuit or court order to seize assets. This is more likely if the debt collector learns of the debtor's intention to enter the US. While it is more challenging to sue someone abroad, it is possible, and both the original creditor and collection agency can sue for the money.

In the US, hospitals have been independently liable under an increasing number of theories for the care delivered to inpatients since the 1967 Illinois Supreme Court decision in Darling. Injured patients' lawyers have successfully expanded the number of defendants against whom liability could be imposed, and plaintiffs' attorneys have convinced courts and juries of the viability of pain and suffering and new bases for compensation for non-economic damages. As a result, foreign healthcare providers must be prepared to defend themselves against clever, resourceful, and aggressive lawyers and sympathetic judges.

One way to challenge jurisdiction is to argue that there is insufficient proof of a connection between the act allegedly occurring in the state where the lawsuit is filed, the recommendation or referral, and the injury. However, a court can exercise specific personal jurisdiction over a non-resident defendant when their activities within the state serve as or are related to the basis of the lawsuit. For example, if a patient calls a medical tourism facilitator in another state, acting as a representative of a foreign healthcare provider, and the representative assists the patient in selecting a hospital, the patient may allege negligent care. In addition to suing the hospital and physicians for negligence, the patient might claim that the decision to travel abroad for the procedure and the referral to the specific hospital or physician was the proximate cause of the injury.

It is important to note that medical malpractice is handled differently outside of the US. In other countries, damages often have caps, judges determine cases instead of juries, and some countries do not take cases to court, opting for a medical review board instead. For example, in the UK, the National Health Service handles malpractice coverage, claims, and payouts, as it is usually the NHS that is sued, not individual physicians. In Australia, plaintiffs can sue individual medical practitioners and their employers if they present a credible case of failure to provide medical services at a reasonable standard of care.

Credit ratings

Hospitals can be expensive, and medical debt is a common issue for many people, even those with insurance. In the US, medical debt has been known to impact credit ratings and can result in harassment from debt collectors.

In 2025, a new federal rule was introduced to remove medical debt from credit reports. This was expected to remove about $49 billion in medical bills from the credit reports of 15 million Americans. This change was implemented by the three main credit bureaus: Experian, TransUnion, and Equifax. While this change improves privacy protections and prevents debt collectors from pressuring consumers to pay bills they don't owe, it does not protect patients who used a credit card or a medical credit card to pay their medical bills.

For foreign nationals, the consequences of acquiring medical debt in the US can vary. The local laws of the patient's country apply, so whatever means of debt collection exist in that country can be applied. There are international debt collection agencies that operate internationally, and hospitals can hire them to collect debt. If the amount owed is large enough, the hospital may engage an international collection agency to make travel to the US more difficult for the debtor. This could potentially cause problems with entering the US in the future. However, unless there is a criminal case involved, it is unlikely that US immigration will be an issue.

To avoid issues with medical debt, it is highly advisable for foreign nationals to have medical travel insurance before seeking treatment in the US. This is typically very inexpensive and can cover a considerable amount of risk.

In other countries, such as India, hospitals are known for their transparency in pricing. It is still essential to obtain a detailed cost estimate before treatment and to clarify any doubts about payment methods and insurance coverage. Some hospitals in India have relationships with local hotels or provide accommodation within the hospital for international patients.

International tax agreements

The United States has income tax treaties with several foreign countries. These treaties are bilateral agreements that aim to avoid double taxation, where income is taxed by two countries. These treaties generally reduce the US taxes of residents of foreign countries, but they do not reduce the US taxes of US citizens or residents.

Under these treaties, residents of foreign countries may be eligible for reduced tax rates or exemptions from US income taxes on certain types of income they receive from sources within the US. These include income from teaching and research. For example, an Indian national sponsored by a hospital for a medical residency under a J-1 visa would be evaluated as a nonresident alien and would be exempt from income tax under the India-US tax treaty.

Similarly, US citizens and residents who receive income from a treaty country may be entitled to certain credits, deductions, exemptions, and reductions in the taxes of those foreign countries. US citizens residing in a foreign country may also benefit from that country's tax treaties with third countries.

In addition to income tax treaties, there are also international Social Security agreements, often called "Totalization agreements." These agreements aim to eliminate dual Social Security taxation, where individuals are required to pay Social Security taxes to two countries on the same earnings. They also help fill gaps in benefit protection for workers who have divided their careers between the US and another country.

To claim tax treaty benefits, foreign nationals must have a US tax identification number, such as an Individual Taxpayer Identification Number (ITIN). They must also file the appropriate tax returns and comply with US tax laws to avoid fines and penalties.

Immigration issues

The consequences of a foreigner acquiring medical debt in the US vary. If a foreigner has no intention of living or working in the US, the main consequence would be a negative impact on their US credit rating, which is only relevant if they plan to live in the US. However, if the amount owed is large enough, the hospital may engage an international debt collector or an international debt collection agency.

In terms of immigration-related issues, there could be potential problems with entering the US in the future. While civil debt does not usually impact eligibility to enter the US, it may do so if it is related to criminal activity. The Department of Homeland Security may consider a non-citizen's financial status when evaluating their visa application and deciding whether they are likely to become a public charge.

If a foreigner does intend to enter the US, there is a risk that debt collectors could wait for them at the airport to serve a lawsuit or court order to seize assets. However, this is only likely to occur if the debt collector is aware of the debtor's intention to enter the US. Lack of travel insurance may also cause issues with the Department of State or USCIS/ICE, as this could be considered a violation of the visa.

It is highly advisable for foreigners to purchase medical travel insurance before entering the US, as this covers a considerable risk and is typically inexpensive.

Frequently asked questions