The National Consumer Law Center this week published a report calling for the CFPB to supervise larger collection agencies that focus on medical accounts, effectively changing a conclusion the Bureau had already reached with regard to healthcare debt.

The report, “Strong Medicine Needed: What the CFPB Should Do to Protect Consumers from Unfair Collection and Reporting of Medical Debt,” explores medical debts that enter into the collection system and specifically focuses on debt collection, credit reporting, and billing practices. One of the main recommendations is that the CFPB include revenue from medical accounts in its calculation of collection agency size for the purpose of supervision.

Under the Dodd-Frank Act, the CFPB has supervisory authority over “larger participants” in a market for consumer financial products and services, including debt collection. For the debt collection market, the CFPB has defined “larger participants” as any debt collector with receipts over $10 million.

But the CFPB rule excludes medical debt from the $10 million threshold of receipts. The NCLC says that this means that a debt collector that only collects medical debts, or has just a few non-medical debt accounts, escapes CFPB supervision. To protect consumers who are being dunned for medical debt, the CFPB should include medical debt collectors in its scope of supervision, says the report.

The CFPB excluded medical debt from the $10 million threshold because its supervision is limited to collection of debt resulting from “consumer financial product or services,” and the Bureau believed some types of medical debt did not fall within that category. The NCLC report argues that the CFPB could have included supervised medical debt collectors under a separate category, as furnishers of information to credit reporting agencies.

The CFPB could have done that, but it didn’t, a point noted by debt collection industry trade group ACA International in its statement on the report.

“ACA members welcome the opportunity to help patients gain greater access to available healthcare and financial assistance programs,” said CEO Pat Morris. “Unfortunately, yet predictably, the NCLC’s myopic report attempts to associate its concerns with only one of several stakeholders in the resolution of medical accounts – consumer debt collectors. As such, it disingenuously calls for the Consumer Financial Protection Bureau to exert authority it does not have. Instead of focusing on real solutions to real problems, the NCLC continues to be focused on vilifying the legitimate and critical debt collection industry.”

ACA noted that it has partnered with the Healthcare Financial Management Association and other stakeholders to develop best practices for resolution of medical accounts.

Other recommendations for the CFPB made by the NCLC report include:

  • Giving consumers notice before a debt is “parked” on a credit report.
  • Requiring a minimum period between when a medical bill is first sent to a consumer and when it can be reported to a credit reporting agency.
  • Protecting consumers’ credit scores and provide protections when consumers dispute medical debts that result from billing errors or insurance disputes.
  • Prohibiting collectors from dunning for excessive chargemaster prices if the consumer is low-income or qualifies for charity care/financial assistance.

The report also called for the passage of legislation that would give the CFPB the explicit authority to take the recommended actions, in addition to the passage of the Medical Debt Responsibility Act.


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