The Consumer Financial Protection Bureau issued new guidance yesterday regarding unlawful medical debt collection tactics. The advisory opinion clarifies that debt collectors, including third-party revenue cycle management companies, violate federal law when collecting inaccurate or legally invalid medical debts.
Key details:
- The CFPB released an advisory opinion clarifying that debt collectors violate federal law when collecting on inaccurate or legally invalid medical debts.
- Director Rohit Chopra cited the prevalence of errors in medical billing as a key motivation for this action.
- The guidance specifically targets third-party “revenue cycle management” companies, which may have obligations under the Fair Debt Collection Practices Act.
Zoom in: The CFPB outlined several illegal practices, including:
- Double billing: Companies cannot attempt to collect on medical bills that have already been paid by the consumer, insurance, or a government program such as Medicare or Medicaid. This practice can coerce consumers into paying twice for the same service, causing significant financial harm.
- Exceeding legal limits: Companies must not attempt to collect amounts that surpass federal or state caps, such as those set by the federal No Surprises Act or state laws on “reasonable” rates. These violations can saddle consumers with unjustifiably high medical debts, burdening their finances and deterring them from seeking future care.
- Falsified or fake charges: Debt collectors must not collect on bills that include “upcoded” or exaggerated services, or charges for services the consumer did not receive. This deceptive practice can drastically inflate consumers’ medical debts, potentially leading to long-term financial distress or even bankruptcy.
- Collecting unsubstantiated medical bills: Debt collectors must not attempt to collect medical debts unless they are substantiated, which may include having documentation of payments or financial assistance eligibility. Collecting unsubstantiated bills can result in consumers being harassed for debts they do not owe or for which they qualify for financial assistance.
- Misrepresenting consumers’ rights to contest bills: Companies must not misrepresent to consumers that the amount being collected is fully settled, when the payment obligation may be uncertain. Misrepresenting the status of the amount may pressure consumers into paying disputed or negotiable debts.
What they’re saying: “The CFPB is taking action to ensure that Americans are not unfairly chased by debt collectors over unsubstantiated or invalid medical bills,” Chopra said.
