Hospital Charity Care Gap: Why Patients Still Receive Surprise Bills
January 20, 2026
Overview
Many charity care laws cover charges from hospitals, but do not extend to independent hospital-based providers. For example, a patient who has surgery at a hospital may receive a bill from the hospital for myriad services and medications and a separate bill from the anesthesiologist who assisted with surgery. As a result, patients who qualify for free or discounted hospital care can still be billed in full by clinicians who practice inside the hospital but operate independently.
Maryland has invested heavily in consumer protections over the past several years, including expanded eligibility for free and discounted health care, new limits on medical debt collection, and prohibitions on reporting medical debt to credit bureaus. Yet many Maryland patients with low incomes still leave the hospital with staggering financial obligations. The reason is a persistent, structural loophole: Maryland’s charity care laws cover charges from hospitals, but do not extend to independent hospital-based providers.
For example, a patient who has surgery at a hospital may receive a bill from the hospital for myriad services and medications and a separate bill from the anesthesiologist who assisted with surgery. As a result, patients who qualify for free or discounted hospital care can still be billed in full by clinicians who practice inside the hospital but operate independently.
This problem is not unique to Maryland. Across the country, many core hospital services are delivered by physicians who are not employed by the hospital itself. In fact, some states prohibit the corporate practice of medicine, which may contribute to this dynamic. In those states, physician practices are separate from the hospital and have their own billing and collection practices, making application of hospital charity care inapplicable to the separately billed services. Emergency medicine groups, anesthesiologists, radiologists, and pathologists are frequently provided as contracted private practices or through corporate-owned staffing companies. They bill separately, set their own rates, and are not bound by hospital charity care requirements unless state law explicitly requires it. The consequences are predictable: even when a hospital writes off a bill because the patient qualifies for charity care, the patient may still receive thousands of dollars in charges from independent providers involved in the same hospital visit.
Even before its most recent reforms, Maryland maintained some of the strongest patient-protection laws in the country—signaling the state’s clear commitment to protecting patients from medical debt. Maryland’s recent medical-debt reforms, including the Medical Debt – Complaints for Money Judgment and Real Property Liens Act (2025), the Fair Medical Debt Reporting Act (2025), and the Hospitals – Financial Assistance and Collection of Debts – Policies Act (2025), collectively create one of the most comprehensive hospital-charity-care frameworks in the nation.
Patients with incomes below 200 percent of the federal poverty level receive free care, and those up to 500 percent of the poverty level may receive discounted care in cases of financial hardship. The state prohibits interest on medical debt for eligible patients, gives individuals 240 days to apply for financial assistance before collections can begin, restricts the use of liens and wage garnishments, and bars credit reporting of medical debt. These measures have strengthened Maryland’s consumer protections significantly. Other states have likewise focused on protecting patients from the crippling cost of hospital care.
But despite this progress, Maryland’s framework, and that in other states, does not apply to independent hospital-based providers. This means that a patient may receive free hospital care while still receiving full-price bills from the emergency physician who first evaluated them, the anesthesiologist involved in a surgical procedure, or the radiologist who interpreted imaging. In practice, the patient experiences these services as a single episode of care, yet the law treats them as fundamentally separate.
Nothing in the legislative history for Maryland’s most recent reforms suggests this exclusion was intentional. When the Hospitals – Financial Assistance and Collection of Debts – Policies Act (2025) was considered, no testimony flagged the independent provider gap, and no stakeholder expressed concern about including independent clinicians. This silence suggests the problem is not fully understood by advocates or legislators. However, the omission is particularly significant given that approximately 55percent of U.S. physicians work in private, physician-owned practices, meaning they frequently bill separately from the hospitals where patients receive care.
Other states have directly confronted this issue. Colorado’s Health-care Billing Requirements for Indigent Patients Act, which took effect in 2022, explicitly extends its protections to licensed health care professionals who bill separately from hospitals. This approach ensures that when a low-income patient qualifies for financial assistance, the determination applies to both the facility and the clinicians who deliver care within that facility. Patients therefore receive true, comprehensive protection rather than fragmented coverage.
New Mexico has adopted a similar approach. Under the Patients’ Debt Collection Protection Act, independent hospital-based providers who bill patients separately are covered if they generate at least $20 million in annual revenue. This threshold captures the large corporate staffing companies that dominate emergency medicine, radiology, anesthesiology, and pathology, and ensures that the primary sources of surprise hospital-based bills fall within the state’s protective framework. Like Colorado, New Mexico recognizes that financial assistance must apply across all providers involved in a hospital encounter to be meaningful.
Maryland’s failure to extend protections to independent providers is not aligned with the realities of modern hospital care. Patients rarely understand which clinicians are hospital employees and which are independent contractors. They reasonably believe that “hospital charity care” refers to the entire hospital experience. When large portions of that experience remain outside the law, Maryland’s framework becomes misleading and incomplete. It also undermines the state’s broader medical debt reforms, which were intended to prevent precisely the kind of surprise bills that independent hospital-based providers continue to generate.
To deliver on the promise of medical debt protections, Maryland—and other states interested in reducing medical debt—should consider the approach taken by Colorado and New Mexico. Both states demonstrate workable models for extending charity care rules to independent hospital-based clinicians. Maryland could adopt a broad approach like Colorado’s, covering all licensed professionals who bill separately, or a threshold-based approach like New Mexico’s, which targets high-volume independent groups. Either model would aid in closing the loophole that currently leaves Maryland patients responsible for major hospital-related charges even when they qualify for charity care.
This post was written by Jackie Ellis, student attorney, Public Health Law Clinic and member of the Class of 2026, University of Maryland Carey School of Law, and reviewed by Kathleen Hoke, J.D. Director, Network for Public Health Law—Easter Region and Professor, King Carey School of Law, University of Maryland.
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