On December 11, 2014, the CFPB released its “Consumer credit reports: a study of medical and non-medical collections.” Simultaneously, the Bureau issued a consumer advisory, “7 ways to keep medical debt in check,” and announced a new requirement that nationwide consumer reporting agencies must collate information to identify (1) particular furnishers who generate the most frequent consumer disputes, and (2) particular types of debt reporting that generate the most frequent consumer disputes.
The Bureau’s report emphasized one overriding concern: in light of the significance of a credit report to a typical consumer, does a medical debt collection tradeline on a consumer’s credit report accurately predict the consumer’s credit-worthiness or does it create a disproportionately negative image of the consumer. The Bureau’s analysis of data suggested that medical debt reporting was less predictive of credit-worthiness than other forms of debt collection reporting because, among other reasons, medical debt often results from unpredictable circumstances, can create large debts from a single unexpected event, and are often confusing to consumers because of inconsistent insurance coverage and insufficient up-front cost disclosures. The Bureau’s analysis suggested that persons with medical debt collection tradelines are very different than consumers with other forms of debt collection reports. For example, medical debtors were less likely to have other debt collection tradelines reported on their credit reports, as compared to the general population of consumers with reported debt collections. Further, persons with medical debt collection tradelines were more likely to dispute the amount of the debt and whether the debt had already been paid, as compared to non-medical debt collection. In short, the Bureau suggested that medical debt should be treated differently than other forms of debt when it comes to credit reporting.
The report also expressed concern about the reporting of medical debt collection, citing the fact that medical debt collections are performed by a highly-stratified field of collectors, and that many such debts are “parked” on credit reports rather than actively collected.
All said, the Bureau will be looking much more closely at medical debt collection in the coming year. Healthcare professionals and debt collectors are advised to pay close attention.