The Financial Consequences of Medical Billing, Coercive Credit Reporting, and Privacy Intrusions Due to Inaccurate Medical Bills
The Consumer Financial Protection Bureau (“CFPB”) has issued a report that examines the financial consequences of medical billing and collections endured by individuals and families across the country.
According to the CFPB:
People report that they receive medical bills that are inaccurate or not owed, and they describe the subsequent and significant difficulties identifying, verifying, or eliminating the bills.
People also report learning of an outstanding medical bill only after experiencing a drop in their credit score and being told that only paying the bill would remove the negative collections information from their credit report.
When they did receive prior notice of medical bills in collections, people reported that debt collectors included detailed medical information that resulted in privacy breaches of sensitive medical information. Many people reported paying medical bills to avoid adverse financial and privacy consequences, even when they did not believe the bill to be valid.
When allegedly unpaid or unresolved medical bills get referred to collections and reported to the credit reporting system, people face reduced access to credit, increased risk of bankruptcy, and difficulty securing employment and housing. These negative consequences can occur even when the underlying bill is erroneous, not owed, or unverified.
More Key Findings from the CFPB Report
People do not recognize or owe alleged medical bills, but they continue to be contacted by debt collectors. Debt collectors are required to take reasonable steps to verify debts. In some complaints, however, individuals stated that they did not recognize the company sending them collection notices or that the notices did not contain sufficient information to identify and verify the alleged debt. People also submitted complaints about being contacted by debt collectors for bills that had already been paid in full, covered by insurance, or resolved through charity care.
People suspect unpaid medical bills are being surreptitiously and unlawfully placed on their credit reports. Many people submitting complaints about medical bills state that they only realized the bills were in collections when they checked their credit report or when they were applying for credit. This coercive use of the credit reporting system by debt collectors is an illegal but common debt collection tactic, especially for error-prone debts, such as medical bills.
People experience their credit reports being used as weapons to force payments. People reported that once medical bills were placed in collections and furnished to credit reporting agencies, credit scores stopped reflecting their ability to repay debts. Their lower credit scores became weapons debt collectors could use against them to force payment. In some instances, individuals reported becoming so frustrated trying to resolve allegedly unpaid bills that they gave in and paid the debt collector. They just wanted to make the collection efforts stop and to increase their credit scores.
People report that collection notices contained large amounts of highly sensitive medical information. Individuals described feeling that collection notices included more personal medical information than authorized or permissible under the Health Insurance Portability and Accountability Act (“HIPAA”). The notifications they received often included detailed bills, which listed procedures, tests, and medications.
The consumer experiences in the report, according to the CFPB, strongly suggest that many medical bills reported on credit reports are disputed, inaccurate, or not owed.
According to the CFPB, this finding supports previous CFPB research that found medical bills are less predictive of future repayment than other bills or credit obligations. Specifically, medical bills do less to help lenders determine the likelihood that a credit applicant will repay a new credit extension, like a personal loan.
For more information about the CFPB’s report and for details about efforts by the CFPB to mitigate the impact allegedly owed medical bills can have on a person’s ability to participate in the financial marketplace, please CLICK HERE.