CFPB Publishes Report on Credit Reporting and Medical Debts, Vows to Take Action Against ‘Questionable’ Medical Bills

I have no proof of this, but my gut tells me that Rohit Chopra is a pretty good chess player. All the proof I need are the press releases that the Consumer Financial Protection Bureau has been issuing over the past couple of months. To me, those releases are the CFPB putting all of its pieces into position before it starts taking action against companies in the form of enforcement actions. In the past two months, the CFPB has issued warnings and bulletins about “junk” convenience fees, illegal auto repossessions, student loan servicing, and credit reporting. Yesterday, it issued another report, this time on credit reporting of medical debts, asking the question whether medical debts should be allowed to be included on consumers’ credit reports. Anyone collecting and or reporting medical debts should be prepping their defenses, lest they get caught offguard if and when the CFPB takes action.

The CFPB’s report estimated that 43 million Americans had some form of medical debt on their credit reports as of last June, with the total amount of outstanding debt at $88 billion. Labeling a billing, payment, collection, and credit reporting system as “complicated and burdensome” while also noting that “mistakes are common” and that individuals are often in over their heads trying to decipher bills, manage insurance and charity care, and repay sizable debts.

To that end, the CFPB said it is planning on:

  • Holding credit reporting companies accountable
  • Working with federal partners like the Department of Health and Human Services to reduce coercive credit reporting
  • Determining whether unpaid medical debts should be included in credit reports

Chopra took the interesting step of questioning whether medical debts are even “real” debts, given that they are rarely voluntary, that patients often don’t know up front how much they are going to be charged, giving individuals no chance to compare prices. Medical debts that are reported to credit bureaus can make it more difficult for consumers to buy cars and houses or get low interest rates on credit cards. On the back end, Chopra noted, individuals and families “must confront a billing and collections system that can be best described as error-plagued, confusing, and labyrinthine.”

The CFPB’s report left out an important component of the process, noted ACA International in a statement responding to the report: insurance companies.

“We stand with the CFPB in our desire to not have a consumer’s credit report include bills that should have been paid by insurance companies. However, the report does not focus on the significant problems with insurance companies’ claim payment processes,” said Jack Brown III, an ACA International board member and president of Gulf Coast Collection Bureau Inc., in a statement. “Instead, the research attempts to place blame on medical providers, who have served on the front lines of the pandemic, and the debt collectors who support their work.”

What happens next is anyone’s guess, but after issuing warnings in January about making sure that companies collecting medical debt are complying with the No Surprises Act, nobody should be surprised if the CFPB takes strong action in how medical debts are collected and reported.

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