Having already backtracked on its Payday Lending Rule and the Buy Now, Pay Later rule, nobody should be surprised that the Consumer Financial Protection Bureau yesterday announced it was pulling back the medical debt credit reporting rule, although it did introduce a pair of twists that caught everyone in the industry off-guard. Going forward, consumers who don’t pay their medical debts could have their medical devices repossessed and treatments reversed and all medical debts must be reported under the “Financial Obligation Oversight & Liquidation” (FOOL) program.
“Enforcing the new medical debt credit reporting rule would be too forgiving for consumers who do not pay, and simultaneously unfair to companies working tirelessly to secure revenue,” the CFPB said in a statement.
The CFPB’s new guidelines outline a comprehensive framework for the legal repossession of medical devices and reversal of treatments:
- Portable Medical Equipment: Items such as wheelchairs, CPAP machines, and home dialysis equipment can be repossessed after 60 days of delinquency.
- Implanted Devices: Pacemakers, insulin pumps, joint replacements, and other surgical implants may be recovered following a court-approved extraction procedure. Patients will bear all surgical costs plus a 15% “extraction fee.”
- Surgical Reversals: Certain procedures including dental work, cosmetic surgeries, and non-emergency interventions can be “undone” if payment falls 90 days past due. The CFPB emphasized that this would be done “using medically appropriate techniques.”
The CFPB has outlined an aggressive rollout:
- Effectively immediately: All medical debts will be required to be reported to credit bureaus regardless of amount or age
- May 1: Healthcare providers can begin adding FOOL program clauses to treatment agreements
- June 1: First wave of repossession actions permitted for portable equipment
- July 15: Surgical repossessions and organ donation payment options become available
The program mandates that all medical debts, regardless of balance size or insurance coverage, must be reported with a special “FOOL” notation to credit bureaus. “As soon as an invoice is generated by a healthcare provider, the CFPB expects immediate reporting under FOOL,” the Bureau said in its announcement. “These steps will ensure the stability of the credit ecosystem and reflect the importance of prompt payments in medical settings.”
Collection agencies have been advised to complete specialized training before engaging in medical repossession activities. The CFPB has published a 78-page guidance document detailing proper techniques for everything from wheelchair seizure to surgical reversal notifications.
If You Made It This Far and Haven’t Figured it Out Yet …
