White House Activity Surrounding Medical Debt
On April 11, 2022, the White House announced plans in line with a recent government focus on medical debt and credit reporting that could impact medical providers, the accounts receivables management industry, as well as creditors. Congress and several federal agencies have also been focused on this issue, including the Consumer Financial Protection Bureau (CFPB).
The most recent news this week from the White House urges the Department of Health and Human Services (HHS) to evaluate how providers' billing practices impact medical debt and medical debt collection. It warns that HHS plans to request data from more than 2,000 providers on medical bill collection practices, lawsuits against patients, financial assistance, financial product offerings, and third-party contracting or debt buying practices.
The announcement also states that the Biden-Harris administration plans to provide guidance to all agencies to eliminate medical debt as a factor for underwriting in credit programs, "whenever possible and consistent with law." The announcement argues, but does not provide data, that medical debt is not a reliable indicator of credit quality and mentions related actions at the United States Department of Agriculture (USDA), the Department of Veterans Affairs (VA), the Small Business Administration and Federal Housing Finance Agency (FHFA). Recent final rules from the VA related to this issue state that the VA will only report medical debt that meets all of the following standards: the VA has exhausted all other debt collection efforts, the VA has determined the individual responsible is not catastrophically disabled or entitled to free medical care from the VA, and the outstanding debt is over $25.
It also states that the Office of Management and Budget (OMB) will be issuing new guidance to agencies to eliminate medical debt as a factor for underwriting in credit programs or reduce its impact.
CFPB Activity Related to Medical
In early February, the CFPB released a bulletin and questions and answers related to the No Surprises Act. The bulletin states that its purpose is to remind debt collectors of their obligation to comply with the Fair Debt Collection Practices Act's prohibition on false, deceptive or misleading representations or means in connection with the collection of any debt and unfair orunconscionable means to collect or attempt to collect any debt. The bulletin also reminds consumer reporting agencies and information furnishers to comply with the Fair Credit Reporting Act's accuracy and dispute resolution requirements, including when collecting, furnishing information about and reporting medical debts covered by the No Surprises Act.
The bulletin states that it is a general statement of policy exempt from the notice and comment rulemaking requirements of the Administrative Procedure Act. However, it appears to create new expectations for the debt collection industry to have policies and procedures to identify insurance claim-related issues and increased coordination with hospitals and medical providers.
CFPB Research Released
In early March, the CFPB released research on medical debt and also held a virtual panel discussion on medical billing and collection practices with Director Rohit Chopra, U.S. Sen. Jon Ossoff (D-GA), and consumer advocates in Georgia. The panel did not include any perspective from the debt collection, credit reporting or health care provider industries.
CRA Actions
On March 18, the three nationwide credit reporting agencies, Equifax, Experian and TransUnion, announced major policy changes to reporting for medical debt. The new policy is that starting July 1, 2022, paid medical collection debt will no longer be included on consumer credit reports. Also, the time frame before unpaid medical collection debt would appear on a consumer's report will be increased from six months to one year. They will also no longer include medical collection debt under at least $500 on credit reports.
Congressional Legislation
In addition to the administration and agency activity related to medical debt, there are several pieces of legislation that if enacted would change the scope of the medical debt and credit reporting landscape. H.R. 2457, the Comprehensive Debt Collection Improvement Act, which passed in the U.S. House of Representatives, includes language that prohibits collection of medical debt by debt collectors for the first two years and credit reporting of debt arising from any medically necessary procedures.
H.R. 4350, the National Defense Authorization Act for Fiscal Year 2022, included amendments in the House version that would have prohibited the collection of medical debt for two years for servicemembers. The amendment would have also stopped the ability to credit report debt arising from medically necessary procedures for servicemembers. The Senate version of the NDAA ultimately did not include these amendments. However, it is expected they will be up for discussion again this year in the NDAA. Additionally, there are several standalone bills that could impact medical debt collection and credit reporting.
It is not expected that these bills will move forward in regular order by securing 60 votes in the Senate. However, the clear focus on this issue from all areas of the government in Washington, D.C., as well as the private sector, is something all medical providers, debt collection industry participants, and creditors should be following for any potential additional activity and impact on operations.
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