Government’s Focus on Medical Debt and Credit Reports Could Impact Various Industries | Brownstein Hyatt Farber Schreck

White House activity around medical debt

On April 11, 2022, the The White House announced plans consistent with the government’s recent emphasis on medical debt and credit reporting which could impact medical providers, the accounts receivable management industry, as well as creditors. Congress and several federal agencies have also focused on this issue, including the Consumer Financial Protection Bureau (CFPB).

The most recent news from the White House this week urges the Department of Health and Human Services (HHS) to assess the impact of provider billing practices on medical debt and medical debt collection. He warns that HHS plans to request data from more than 2,000 vendors on medical bill collection practices, patient lawsuits, financial assistance, financial product offerings, and contracting or contracting practices. purchase of debt by third parties.

The announcement also says the Biden-Harris administration plans to provide guidance to all agencies to eliminate medical debt as an underwriting factor in credit programs, “where possible and consistent with the law.” . The announcement argues, but does not provide data, that medical debt is not a reliable indicator of credit quality and mentions related actions by the United States Department of Agriculture (USDA), Department Veterans Affairs (VA), Small Business Administration and Federal Housing Finance Agency (FHFA). Recent final rules of the VA related to this issue indicates 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 that the responsible person is not severely disabled or not eligible for free medical care from the VA, and outstanding debt is greater than $25.

It also says the Office of Management and Budget (OMB) will issue new guidance to agencies to eliminate medical debt as an underwriting factor in credit programs or reduce its impact.

CFPB Medical-related activity

At the beginning of February, the CFPB published a newsletter and questions and answers related to the law without surprises. 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, misleading or misleading representations or means in connection with the collection of any debt and the means unfair or unreasonable to collect or attempt to collect any debt. The bulletin also reminds consumer reporting agencies and information providers to comply with the accuracy and dispute resolution requirements of the Fair Credit Reporting Act, including when collecting, providing information on and the declaration of medical debts covered by the No Surprises law.

The bulletin indicates that it is a statement of general policy exempt from notice and
comment on the regulatory requirements of the Administrative Procedure Act. However, it seems to create new expectations for the debt collection industry to have policies and procedures for identifying problems with insurance claims and increased coordination with hospitals and medical providers.

Publication of CFPB research

In early March, the CFPB published research on medical debt and also hosted a virtual roundtable on medical billing and collection practices with Director Rohit Chopra, U.S. Senator Jon Ossoff (D-GA), and consumer advocates in Georgia. the
The panel did not include views from the debt collection, credit reporting or healthcare provider industries.

CRA Actions

On March 18, the three national credit bureaus, Equifax, Experian and TransUnion, announced significant policy changes regarding the reporting of medical debt. The new policy is that starting July 1, 2022, paid medical collection debts will no longer be included in consumer credit reports. In addition, the time before unpaid medical collection debt appears on a consumer’s report will be increased from six months to one year. They will also no longer include medical collection debt less than at least $500 in credit reports.

Congressional legislation

In addition to administrative and agency activity related to medical debt, there are several pieces of legislation that, if enacted, would alter the scope of medical debt and the credit reporting landscape. HR 2457, the Comprehensive Debt Collection Improvement Act, which passed the U.S. House of Representatives, includes language prohibiting the collection of medical debt by debt collectors for the first two years and the declaration of solvency of debt arising from any medically necessary procedure.

HR 4350, the National Defense Authorization Act for fiscal year 2022, included changes in the House version that would have barred medical debt collection for two years for service members. The amendment would also have ended the ability to credit debts arising from medically necessary procedures for service members. The Senate version of the NDAA ultimately did not include these amendments. However, they are expected to be discussed again this year in the NDAA. Additionally, there are several stand-alone bills that could impact medical debt collection and credit reporting.

These bills are not expected to advance in the regular order by getting 60 votes in the Senate. However, the focus on this issue by all sectors of government in Washington, DC, as well as the private sector, is something that all medical providers, participants in the debt collection industry and creditors should follow up for any potential additional activity and impact on operations.