Hello, thank you for having me. The practices used to bill and collect health care services are of critical importance to American consumers, as they not only impact their economic livelihoods, but can also have a significant impact on patient health. .
Today, the billing and insurance complexities faced by both providers and patients, the impact on consumers when suspected unpaid medical bills are collected and appear on credit reports, and medical credit I would like to discuss a new CFPB report on the dangers cards pose to patients. and an installment loan.
The CFPB looks closely at medical billing and collection. One of the reasons is that it has a widespread impact on families in the United States. In a report published last year, the CFPB found that 43 million consumers had medical bills on their credit reports, costing American families as a whole about $88 billion in medical costs. bottom. The health debt contagion affects people’s ability to access affordable credit, find quality housing and get a job.
One of the CFPB’s findings is that many consumers report inaccurate medical billing statements on their credit reports. This is often because the bill must be covered by insurance or financial assistance, so the amount or procedure charged is incorrect. The patient has already paid. These findings raise concerns that consumers, in some cases, are being forced to pay bills they didn’t owe.
Of course, there are visible improvements. His three credit bureaus across the country have eliminated health care quotas under $500 from consumer reports, but there are some expected challenges, which we’ll discuss later.1
We also prioritized discussions with the business community, including hospitals, laboratories, outpatient facilities, payers and medical practitioners, to identify ways to reduce the stress of medical debt and mandatory credit reporting. We look for ways to work together to improve the financial health and outcomes of patients and consumers.
Claims and Insurance Complexity
We all recognize the challenges faced by healthcare administrators. Among these is the constant back and forth they face when dealing with insurance companies trying to avoid paying for patient care. Smaller or rural hospitals, in particular, may be at the mercy of insurance companies, resulting in less money being paid than the investment required for adequate care.
Unfortunately, all too often, patients can be embroiled in insurance or billing disputes and left with their bags. You might be forced to pay a bill that arrives at your door or have to do full-time detective work to figure out procedural codes. If the provider is in-network or out-of-network, the procedure is inpatient or outpatient, or a patient like older Americans has multiple insurance companies or insurance and Medicare, which company or agency should or should pay.
Suspected Unpaid Medical Expenses Appearing on Credit and Consumer Reports
If bill discrepancies or insurance disputes remain unresolved, patients may find that their bills have been forwarded to a third-party debt collection agency and reported on their credit history and reports.
When indebted, patients and families can face adverse events such as reduced access to credit, costly and lengthy collection lawsuits, and increased likelihood of bankruptcy.2
In fact, a 2019 study found that 66.5% of all personal bankruptcies were related to medical expenses.3
While this is a step in the right direction, the recent removal of medical expenses under $500 from credit reports should not be expected to significantly reduce the overall impact of medical expenses on personal bankruptcy rates. Our own research shows that even if medical billing were abolished, about half of all consumers who currently have a medical billing trade line on their credit report will continue to consume medical billing. This indicates that you are reporting to a reporting company.Four
mandatory credit checks
Our research shows that health care collections are no more predictive of people’s ability to repay future loans than other types of collection or payment information, and reporting health care collections is more predictive of people’s ability to pay. It has been shown that it can act as a method of coercing medical bills that you are not obligated to or should not pay. .
Along these lines, our market monitoring and analysis raises significant concerns about the accuracy of medical costs being collected as debt. In fact, complaints about recovering unpaid medical costs increased 31% from 2018 to 2021, and more broadly, debt collection Medical costs account for 15% of all complaints filed with the CFPB about
This is partly due to the inability to ascertain the accuracy of medical costs due to complex medical billing systems that leave patients and their families struggling with financial burden and anxiety. Payment assistance programs, which are required by law as a condition of many hospitals’ not-for-profit status, can be difficult for patients to access and poorly advertised by providers.
Compulsory credit reporting forces patients and their families to pay bills of questionable accuracy. And families who refuse to pay their bills because they question their accuracy may suffer from bad credit and diminished employment and housing prospects.
CFPB medical credit cards and financial planning report
Today we published a report on the use of payment products such as installment loans and medical credit cards to cover medical expenses. We want you to consider several important issues when determining whether these products are appropriate for your hospital, healthcare system, and the patients you care for.
The companies that sell these products are marketing them and their benefits to you, not your patients. There’s a reason for that. You stand to benefit far more than the patient. Healthcare payment products promise cost savings, payments within days, ease of administration, and ways to minimize financial risk.
However, our research indicates that the patient’s condition may worsen.
Among other findings, specialty medical credit cards and installment loans may not have more favorable terms than other general credit products, leaving patients and their families stranded with large amounts of deferred interest. It has been shown that there is even
Deferred interest is the golden ticket sold in many of these products. Not surprisingly, deferred interest plans are attractive to patients. However, if consumers fail to repay within the promotional period, they suffer from higher than average interest rates, principal balances, and postpaid interest added to the principal.
Unlike other purchasing categories where consumers can expect their ability to repay deferred interest loans, medical costs are rarely known in advance. For example, the patient cannot say to stop treatment when the tab reaches a certain mark. Patients may be taking these products not because they are affordable, but because they cannot afford the treatment they receive.
While the benefits of these products may be attractive to the many hospitals you represent, the long-term effects of financialization on healthcare costs are detrimental to the entire healthcare ecosystem. Making health care providers credit her card company’s sales team can undermine patient confidence and hinder patients from making important medical decisions.
Conclusion
We encourage everyone to be vigilant regarding our billing and debt collection practices and the types of credit-based repayment plans we offer our patients. To do.
The CFPB plays a key role in monitoring consumer markets such as medical debt and combating illegal activity in areas such as debt collection, credit checks and predatory lending products. But the problems that emerge in consumer complaints and investigations often start with decisions made long before medical bills are in the hands of debt collectors and credit bureaus.
It is important to investigate complex and confusing medical billing practices that allow inaccurate or misleading information to become the basis for mandatory debt collection and credit reporting transactions.
The CFPB plans to work with colleagues across federal and state governments to better understand and address this issue. We also look forward to working with you to protect patients in this country.
thank you.
footnote
- https://www.consumerfinance.gov/about-us/blog/debt-collectors-re-evaluate-medical-debt-furnishing-in-light-of-data-integrity-issues/#:~:text=CFPB% 20market%20monitoring%20 shows %20 and includes Reporting%20Act%2C%20%20dispute%20 processing.
- https://files.consumerfinance.gov/f/documents/cfpb_medical-debt-burden-in-the-united-states_report_2022-03.pdf
- https://ajph.aphapublications.org/doi/10.2105/AJPH.2018.304901?eType=EmailBlastContent&eId=a5697b7e-8ffc-4373-b9d2-3eb745d9debb&
- https://www.consumerfinance.gov/data-research/research-reports/paid-and-low-balance-medical-collections-on-consumer-credit-reports/