What should a hospital include in an RFP for early-out and bad-debt collection services?

Change any gate, weight or question in the template to fit your hospital; the scoring summary recalculates.

How to use this kit

Decide 4 things before you write:

1. Stage and scope: early-out (patient balances worked in your name before write-off), bad debt (after write-off, in the agency's name) or both, and how accounts move between vendors. See how EBO, early-out and bad debt differ.
2. Your policy: whether credit reporting, lawsuits, liens, interest or late fees are allowed at all. The vendor follows it, so write it down first.
3. Your systems: which EHR and billing system the vendor exchanges files with, and whether bad-debt accounts stay in your system or move to the vendor's.
4. Who scores. Revenue cycle, compliance, privacy and security, patient experience and finance each score their own section alone before the panel meets.

The rules that shape the RFP

For a tax-exempt hospital, 501(r) follows the account to the vendor. The hospital is treated as having taken any extraordinary collection action (ECA) that "any debt collection agency or other party to which the hospital facility has referred the individual's debt" takes (26 CFR 1.501(r)-6(a)(2)). ECAs include selling the debt, reporting it to credit bureaus, and actions that need a legal or judicial process, such as lawsuits, liens and wage garnishment.

Before any ECA, the hospital must make reasonable efforts to learn whether the patient qualifies for financial assistance. One way is to notify the patient and hold ECAs "for at least 120 days from the date the hospital facility provides the first post-discharge billing statement for the care" (26 CFR 1.501(r)-6(c)(3)(i)), while accepting applications through at least the 240th day after that statement (26 CFR 1.501(r)-1(b)(3)). A hospital that refers debt needs a written agreement that makes the vendor suspend ECAs if the patient applies within that period, and pass the same terms to anyone it refers the debt to (26 CFR 1.501(r)-6(c)(10)).

When an uninsured or self-pay patient disputes a bill that's substantially higher than the good faith estimate, the provider "must not move the bill for the disputed item or service into collection or threaten to do so" while the dispute is pending, should stop collection already under way, and must suspend late fees (45 CFR 149.620(c)(5)).

HIPAA lets you share protected health information with a vendor only with assurances documented in a written contract, the business associate agreement, and the vendor needs the same from its own subcontractors (45 CFR 164.502(e)). At contract end, that agreement requires the vendor to return or destroy the information where feasible (45 CFR 164.504(e)(2)(ii)(J)).

Credit reporting rules are moving. A federal court vacated the CFPB's January 2025 medical debt rule on July 11, 2025. The National Consumer Law Center counts 15 states and the District of Columbia that limit medical-debt reporting (September 2026 update), and a CFPB interpretive rule from October 2025 says federal law "generally preempts State laws that touch on broad areas of credit reporting." Your policy can be stricter than all of them.

Pass/fail gates

Screen every response on these before scoring. A vendor that fails one doesn't reach the scoring sheet.

• Licensed or registered wherever the work and the law require it, with a license inventory
• Will sign your business associate agreement, and has one with every subcontractor that touches PHI
• Every regulatory order, consent agreement, settlement and pending lawsuit disclosed, with dates
• Will follow your policies on financial assistance, interest, credit reporting and legal action, including any prohibition
• Insurance, including cyber coverage, at the levels you set
• Current independent security audit reports, with scope and dates
• References from hospitals or health systems like yours

The 8 criteria and default weights

Patient protections get the most weight because a vendor's mistake there is the hospital's mistake under 501(r), and it lands on your patients first.

Model questions, and what a strong answer shows

The template holds 35 questions. These separate vendors fastest.

How to score each answer

Score each answer from 0 (no answer) to 5 (checked evidence plus a commitment you can write into the contract), on the scale the collection services RFP kit defines point by point. The template averages scores within each criterion, then weights them: criterion points = weight × (average score ÷ 5), for a total out of 100.

Before you award

• Send a test file through your EHR interface, and check the acknowledgement, the exceptions and the first statement or letter.
• Check test accounts for hold dates that match your policy and your first post-discharge statement dates.
• Listen to scored calls, including one where a patient asks about financial assistance.
• Consider a pilot on one facility or segment before a full award.

Download the template

The early-out and bad-debt vendor RFP template (Excel) has 5 tabs: instructions, pass/fail gates, criteria and weights, the 35 model questions with what a strong answer shows and a score column for each vendor, and a scoring summary for up to 5 vendors. It uses plain formulas, so it works in Excel, Excel for the web and SharePoint. Download the template.

Add TSI to your invite list

If you're building an invite list now, send your RFP or invite-list request to TSI. The pages linked in the criteria table are TSI's own answers to this kit. Outside healthcare, use the collection services RFP kit. For a wider look at partners, see how to evaluate a healthcare RCM partner.