Consumer Groups Lobbying Federal Gov’t For Medical Debt Protections

With the Biden Administration’s fight to eliminate student loan debt before the Supreme Court, consumer advocacy groups and patients’ rights advocates are now calling on the administration to do something about the growing medical debt problem in America.

The groups have sent separate letters to the Internal Revenue Service and the Consumer Financial Protection Bureau calling for rules that would, among other things, prohibit debts from “medically necessary care” ever appearing on a consumer’s credit report.

Copies of the letters can be accessed by clicking here and here.

The groups also want to prohibit hospitals and healthcare organizations from selling debt, require collectors to ensure patients have been fully informed about and screened for financial assistance prior to initiating any collection action, and failure to do so should be considered an unfair and deceptive practice.

By issuing a rule related to how medical debts are reported, it “would spotlight the importance of medical debt and create uniform standards for all credit reporting companies, including smaller and specialty companies not bound by the national CRAs’ recent activity,” the groups wrote in their letter to CFPB Director Rohit Chopra.

Noting that one-third of Americans are carrying some amount of unpaid medical debt and 80% of medical debt is held by households with negative net worth, the groups want the federal government to issue stronger rules, enforce them, and work with state Attorneys General to bring actions when violations are uncovered.

Actions taken by the credit reporting agencies to lessen the impact of medical debts on consumers’ credit reports are not legally binding, the groups noted in their letter, and other states have enacted laws expanding consumer protections and making it harder for healthcare facilities to recover and collect on unpaid debts.

The groups also called on the CFPB to eliminate deferred interest in medical debt credit cards.