Regulating Medical Debt Assortment: A 2022 Evaluation and Look Forward

The COVID-19 pandemic created file quantities of sudden medical debt for customers, which solely exacerbated the rising quantity of delinquent medical debt. Even earlier than the pandemic, federal and state legislators and regulators recognized what they believed to be elementary flaws in how medical providers are billed and what understanding customers have of their monetary accountability for these providers.

Final 12 months noticed an inflow of federal and state regulation aimed toward what info have to be conveyed to customers in anticipation of the supply of medical providers in addition to restrictions on the gathering of medical debt. Anticipate extra exercise in 2023.


The No Surprises Act, efficient Jan. 1, 2023, created new federal protections for customers towards “shock medical payments.” The NSA regulates how medical suppliers could invoice customers for providers and particularly bans shock payments for emergency providers, bans greater co-pays for out-of-network providers, bans out-of-network costs for providers supplied throughout in-network facility visits, requires medical suppliers to offer customers with discover of the NSA protections, and requires medical suppliers to offer uninsured customers an up-front good religion estimate of prices for providers.

On the heels of the NSA, the Shopper Monetary Safety Bureau issued its first bulletin concerning the gathering and credit score reporting of medical debt. The bulletin’s goal functioned as a refresher of kinds, reminding those that function within the medical debt realm to adjust to the Truthful Debt Assortment Practices Act and the Truthful Credit score Reporting Act.

Importantly, the bulletin concluded that medical debt posed a “particular threat” to customers as a result of medical debt is usually an unanticipated indebtedness, customers are usually not at all times suggested of the prices of medical providers upfront, and there’s no actual “market” for medical providers the place customers can store for the very best worth. The CFPB additionally pointed to an absence of client schooling concerning medical insurance coverage and the way they’ll determine potential billing errors.

The CFPB warned it’s concentrating on abusive medical debt assortment, particularly assortment of quantities not correctly owed by operation of the NSA and can “intently evaluate the practices of these engaged within the assortment or reporting of medical debt.” To this finish, the CFPB reminded credit score reporting businesses (“CRAs”) and furnishers that they should have in place and comply with cheap procedures to guarantee the accuracy of the data being reported and furnished, in addition to for investigations and dispute decision.

In March of 2022, the CFPB issued its “official report” on the burdens confronted by customers created by medical debt. The report’s key findings have been that as of June 2021 there was roughly $88 billion in medical debt mirrored on client credit score information, with a lot of the associated tradelines being $500 or much less. As of 2021, 58% of all client tradelines have been medical debt, which, the report added, have been negatively impacting credit score scores.

The CFPB believed such tradelines weren’t a great predictor of creditworthiness, and considerably and disproportionately impacted sure communities. It concluded that present practices associated to medical debt collections and credit score reporting may cause “vital hurt” to customers. It additionally warned that CRAs and furnishers who fail to have cheap procedures in place to guarantee that medical debt info is correct might be held accountable.

Coming as no shock, additionally in March of 2022, the CRAs responded to the CFPB’s official report by figuring out modifications they have been implementing. Particularly, starting July 1, 2022, defaulted medical debt positioned for collections and which had subsequently been paid would not seem on a client credit score report, diverging from the textual content of the FCRA, which permits for defaulted debt to be reported for seven years, regardless whether or not it has been paid.

The CRAs additionally acknowledged that defaulted medical debt won’t be reported till one 12 months after default, diverging from the CRAs’ prior coverage of reporting similar after six months. And, starting March 30, 2023, the CRAs won’t place medical money owed with furnished balances under $500 on a client report.

In April of 2022, the CFPB issued a bulletin illustrating how medical billing and collections could negatively affect customers. The bulletin recognized the commonest client complaints concerning medical debt as (1) not recognizing or disputing that they owe a medical debt; (2) that assortment notices both contained too little info concerning the character of the debt or an excessive amount of private medical info; and (3) that medical debt was being credit score reported improperly.

The CFPB added, this “strongly recommend[s] that many medical payments reported on credit score reviews are disputed, inaccurate, or not owed” and that it intends to “maintain unhealthy actors within the client monetary providers market accountable.”


Final 12 months noticed a number of states enact legal guidelines much like the NSA to control medical debt and its assortment. The state legal guidelines share frequent themes together with:

  • offering higher protections to indigent sufferers by limiting the actions collectors and collectors can take to get better balances owed
  • requiring discover to be supplied to customers previous to assortment exercise starting with a chance to remedy any default
  • requiring the supply of detailed info concerning a medical debt
  • limiting the authorized treatments and recourses obtainable to get better on a medical debt, together with limits on the power to carry a swimsuit and executing on any judgment obtained on a medical debt


In late November, a invoice was launched within the U.S. Senate by Sen. Chris Murphy (D-Conn.) taking goal on the assortment of medical debt, S. 5150, the Strengthening Shopper Protections and Medical Debt Transparency Act.

The laws would supply for sure client protections associated to medical debt assortment relevant to each the medical supplier in addition to any “debt collector,” as outlined by the FDCPA. It might additionally restrict a medical supplier, or its debt collector, from partaking in “extraordinary assortment actions” (“ECAs”) previous to satisfying numerous circumstances.

ECAs are outlined to incorporate promoting a person’s debt to a different occasion; reporting opposed details about the person to client credit score reporting businesses or credit score bureaus; deferring or denying, or requiring a cost earlier than offering, medically crucial care due to a person’s nonpayment of present medical debt; and actions that require a authorized or judicial course of.

Among the many circumstances that have to be glad earlier than partaking in an ECA, the invoice requires a healthcare supplier or its debt collector to find out if the affected person qualifies for monetary help by way of state or federal applications, or by way of the power’s personal charity or help applications. It additionally prohibits partaking in an ECA till the expiration of a 180-day interval starting on the date on which an preliminary invoice is distributed to the patron. The laws would additionally prohibit an ECA from commencing (or require it to be halted) if discover is supplied {that a} medical insurance protection attraction is pending.

Past ECAs, the invoice would require that, previous to any assortment exercise, the medical supplier or its debt collector “make all cheap efforts to substantiate the identification of the debtor.” It might additionally require the affected person client to be supplied with “an easy-to-understand itemized assertion” of the debt owed previous to any debt assortment exercise together with a duplicate of any receipts for any funds made on the debt inside 30 days of any such cost.

The message ought to be acquired by the receivables administration business loud and clear: medical debt is an space of nice concern for state and federal regulators and lawmakers. The business wants to reply accordingly by making certain compliance with the newly enacted legal guidelines, together with the NSA and state rules. This consists of revamping insurance policies and procedures associated to resolving client disputes of medical debt and making certain the accuracy of any medical debt being furnished.

The accuracy and propriety of medical debt balances being collected upon and credit score reported will face heightened scrutiny from regulators and, in flip, the patron bar who will little doubt focus extra consideration on medical debt assortment. It will likely be thorough and detailed insurance policies and procedures with documented compliance that may handle the heightened scrutiny over medical debt assortment in 2023.

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