The CFPB's Ongoing focus on Medical Debt Highlights Billing Practices' Significance

The 2023 Annual Report on the Fair Debt Collection Practices Act (FDCPA), which details the CFPB’s observations and operations about debt collection in 2022, was released by the Consumer Financial Protection Bureau (CFPB) last month. 

The Consumer Financial Protection Bureau (CFPB) is persisting in its emphasis on medical debt. 

The Consumer Financial Protection Bureau (CFPB) has once again turned its attention to the issue of medical debt, stressing the critical importance of accurate and transparent provider billing practices. 

This renewed focus underscores the potential financial challenges faced by individuals due to misleading or incorrect medical billing.

The CFPB claims that errors abound in the gathering, providing, and disclosing of medical bills. 

More than 8,500 debt collection complaints about purportedly past-due medical bills were sent to the CFPB by patients, older persons, and servicemembers in 2022.  

Customers complained that medical bills were being collected long after services were rendered—some collecting medical bills for decades after treatment—that the pursued bills had already been paid, were not owed by the patient or family, or were for incorrect amounts, and that collectors had entered medical bills into consumers’ credit reports without first getting in touch with the customers.  

Furthermore, the CFPB stated that doubts existed regarding the accuracy and comprehensiveness of the data obtained throughout the gathering procedure.

Citing research from the American Cancer Society as well as its own, the CFPB warned that the following behavior may be illegal under the Consumer Financial Protection Act (CFPA), the Fair Credit Reporting Act (FCRA), or the FDCPA’s prohibition on unfair, deceptive, or abusive acts or practices. Billing and collection errors can have serious negative effects on people’s physical, mental, and financial well-being including:

• Pursuing payment for unpaid medical or dental expenses
• Gathering an incorrect quantity
• Collecting money for treatments that patients did not receive
• Upcoding, or charging for versions of services that are more expensive than what was actually rendered
• Cramming is the practice of adding costs for treatments that patients never got to the underlying medical bills
• Charging at a rate that is not permitted by state law
• Medical bills that are not allowed under the No Surprises Act (which forbids some out-of-network providers from charging balances)
• Assigning a caregiver’s obligations from a nursing home in contravention of the Nursing Home Reform Act.

All of this is nothing new, but the focus might indicate that the CFPB will continue to enforce its regulations more strictly. 

Beyond the enforcement of federal laws, the CFPB has expressed the view that the FDCPA and FCRA do not supersede contemporary state legislation governing the collection of medical debt or the providing and reporting of medical debt information, nor do they violate the First Amendment.

Medical and dental practitioners should be aware of the CFPB’s ongoing focus on medical debt due to its potential effects on them, even though the FDCPA typically only applies to third-party debt collectors and not the initial creditor.  

When a patient first disputes a charge, many third-party debt collectors will dismiss their file without looking into it further, which the CFPB saw and concluded may indicate that the collectors themselves lack trust in the information they had.  

In order to optimize the return on their receivables, doctors and dentists should continue to be cautious in their own billing and credit reporting procedures as well as in the quality of the data they give collection agencies. This is because providers frequently work with collection agencies on a contingency fee arrangement.