The following is an excerpt from Ontario Systems‘s latest white paper, “Seven Crucial Compliance Conversations for Every Hospital CFO.”
On December 11, 2014, the CFPB conducted a field hearing in Oklahoma City on medical debt collection practices and the relationship between those practices and consumer credit reporting in general. The meeting was nothing short of a crystal ball regarding the future of medical debt collection. But somehow, it is one that has gone largely unnoticed by hospitals and the debt collection industry. Let’s review some of the hearing’s most important takeaways.
CFPB Director Richard Cordray shared the Bureau’s position that problems with debt collection are magnified when the debt collector reports a debt as a collection trade line to the national credit reporting companies. He characterized a collection trade line as a black mark – more like a scarlet letter − on any consumer or patient’s credit report, and explained how having a reported collection item or a severe delinquency can increase that patient or consumer’s interest rate and affect his or her ability to borrow money. He further highlighted some particularly startling statistics from the CFPB’s recent study on credit reporting practices with regard to medical debt:
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