$88 Billion in Medical Bills on Credit Reports According to CFPB
The Consumer Financial Protection Bureau released a report today that highlights the ever complicating medical billing system in place in the United States. The report uncovers that the U.S. healthcare system is supported by a billing, payments, collections, and credit reporting infrastructure where mistakes are very common. Patients are all too often struggling to get errors corrected to resolved.
CFPB director Rohit Chopra said: “When it comes to medical bills, Americans are often caught in a doom loop between their medical provider and insurance company, our credit reporting system is too often used as a tool to coerce and extort patients into paying medical bills they may not even owe.”
According to the reports, medical bills are often incurred through unexpected and emergency situations that are subject to nontransparent pricing rules. When a patient is in an emergency, patients might not sign a billing agreement until they have already received treatment. It is likely that the patient did not have a choice of location or physician of care either. Patients with chronic illness or those who are injured or ill, feel forced in into into accepting the costs for treatment when in a desperate need for care.
When medical bills end up in collections, the consequence can be expansive. Medical bills placed on credit reports can result in reduced access to credit, increased risk of bankruptcy, delay or even avoidance to medical care, and difficulty securing employment, even when the bill itself is inaccurate or incorrect.
The CFPB report outlines how these repercussions are especially severe for people who are low income, veteran, older adults, and young adults of all races and ethnicities.
The report goes into details about the challenges and sources of confusion when a persons’ medical bills go into collections or are placed on a credit report. Bills may be sent to collectors by a doctors office, hospitals, parent companies, or groups representing a service provider, so there may be multiple charges for the same visit. The amount billed can be hard to decipher and it can be difficult to determine what charges are actually inaccurate.
Key Points from the CFPB Report:
Approximately 20% of U.S. Households Report Medical Debt.
The CFPB found that medical trade-lines appear on 43 million credit reports. In the second quarter of 2021, 58% of bills that are in collections are medical bills that are reporting on credit reports of U.S. citizens.
Covid-19 has Affected the Situation.
Covid-19 related services has incurred substantial costs for both uninsured and insured patients. This includes testing and hospitalization. Many people have deterred and delayed routine medical care during the medical care or have been unable to receive care due to the pandemic. Costs and medical debt are expected to increase post-pandemic.
The CFPB plans to act to ensure that the consumer credit reporting system is not coercing patients and families to pay questionable medical bills. The CFBP intends to:
Hold credit reporting companies accountable:
Federal law requires credit reporting companies to have reasonable procedures in place to assure that medical debt on consumer reports are accurate. If furnishers , of medical debt or or otherwise, are tarnishing the credit reporting system with inaccurate reports, the CFPB expects the Big Three (Equifax, Experian, and TransUnion) to cut off their access to the system.
Work with federal partners to reduce coercive credit reporting: The CFPB is working with the U.S. Department of Health and Human Services to safeguard that patients are not forced into paying bills more than the amounts due. In January 2021, the CFBP issued a compliance bulletin that advised debt collectors, credit reporting companies, and others that it is illegal to collect or report as owing a debt that is not legally due or owing, including where the billed mount violates the No Surprises Act. The CFPB also supported recent changes by the Department of Veterans Affairs that will reduce financial distress for veterans by requiring all other methods of debt collection to be exhausted before a vert’s bill is reported to the credit reporting agencies. The CFPB will also further investigate, in cooperation with its federal partners, how best to facilitate patients’ access to financial assistance programs offered by medical providers.
Determine whether unpaid medical billing data should be on credit reports
The CFPB will oversee addition research on medical billing, collections, and credit reporting practices and their affect on patients and families. The information on those findings will help the CFPB assess whether the consumer credit reports should include data on unpaid medical bills.
You can read the CFPB’s full report here : Medical Debt Burden in the United States
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