Just a little more than a month after issuing a report taking aim at medical debt collections, the CFPB has issued a new report on “Medical billing and collection issues described in consumer complaints.”

The report analyzes debt collection and credit or consumer reporting complaints submitted to the Bureau in 2021 that involved medical debt.  The CFPB makes the following key findings:

  • In 2021, approximately 15% of debt collection complaints were about attempts to collect a medical debt. Nearly half of medical debt collection complaints involved attempts to collect a debt the individual said was not owed. From 2018 to 2021, complaints about collection attempts on medical bills that were not owed increased by 31%.
  • Another prevalent topic raised in complaints was that collection notices for medical debts either did not contain sufficient information to identify and verify the debt or contained too much information, such as personal medical information.
  • In complaints about medical debt and consumer reporting issues, consumers often stated that they learned about medical debts when checking their credit reports or when applying for credit.  (According to the CFPB, “[t]his suggests that some debt collectors may be placing debts on credit reports, whether or not they are valid, to motivate consumers to pay off the debt.”)

The CFPB comments that the consumer experiences described in the report “strongly suggest that many of the medical bills reported on credit reports are disputed, inaccurate, and not owed,” and thus support CFPB research released in 2014 that “found medical bills are less predictive than more ordinary credit extensions, such as a mortgage or credit cards, as to the likelihood that the individual will repay a new credit extension.”  In its press release about the report, the CFPB goes a step further, stating that “[d]ue to the various concerns around accuracy and validity, as well as lower predictive value, the inclusion [of medical debt on credit reports] appears to be of little use to creditors and other market participants.”

When it issued its March 2022 report, the CFPB indicated that it intends to “[d]etermine whether policies should be implemented to eliminate unpaid medical billing data on credit reports altogether.”  In the press release, the CFPB reaffirms its intention to “[d]etermin[e] whether unpaid medical billing data should be included in credit reports.”  In recent remarks, CFPB Deputy Director Zixta Martinez called the announcement by TranUnion, Equifax, and Experian that they will no longer include on consumer credit reports medical debt that was paid after it was sent to collections and will only include unpaid medical bills that remained unpaid for at least 12 months “a first step, but it is not enough.”  Her comment and the CFPB’s statement that the inclusion of medical debt on credit reports appears to be of little use to creditors strongly suggest that the CFPB is headed in the direction of taking steps to block or limit the reporting of medical debt.

The CFPB’s report followed by just nine days the White House’s release on April 11 of a fact sheet describing actions that the Biden Administration is taking related to medical debt.  Those actions include:

  • Directing the Department of Health and Human Services (HHS) to evaluate how providers’ billing practices impact access and affordability of care and the accrual of medical debt.  HHS will (1) request data from more than 2,000 providers on medical bill collection practices, lawsuits against patients, financial assistance, financial product offerings, and third party contracting or debt buying practices, and (2) for the first time, use this information in making decisions about grants, publish data and policy recommendations, and share potential violations with the appropriate enforcement agencies.
  • Providing guidance to all agencies to, whenever possible and consistent with law, eliminate medical debt as an underwriting factor in credit programs or reduce its impact.  (Seeming to preview the CFPB’s report, the White House states that “the inclusion of medical debt on credit reports and in credit scores and loan underwriting can hold Americans back from financial opportunities while failing to improve the accuracy and predictiveness of lending programs.”)