Industry News: CFPB Addresses Medical Collections
As part of a wide-ranging report this week, the Consumer Financial Protection Bureau (CFPB) addressed an issue that is relevant to many people and many companies: medical debt.
From health care providers to collection agencies to concerned consumers, the rising levels of medical debt are important and need to be discussed. What emerges is the understanding that consumers and companies need to work together to address these issues rather than taking any sort of adversarial approach to the situation.
This particular report came in the context of new CFPB requirements when it comes to credit reporting. Patrick Lunsford of InsideARM outlines the announcement:
In a speech in Oklahoma City Thursday, Cordray will announce that large national credit reporting bureaus will now be required to track which creditors, debt collectors, debt buyers, and other companies are providing information for publication on consumer credit reports that see the highest level of disputes from those consumers. The credit reporting agencies will then provide an “accuracy report” to federal regulators.
And why is that relevant to medical debt collection? Because more than half of the debt on credit reports comes from debt collections. Consider the following information from the same InsideARM article:
Still, the CFPB’s report showed that 52 percent of all debt on credit reports is from medical expenses. So a lot of the information in the report, and in Cordray’s speech, was focused on medical debt...
...The CFPB’s research revealed that nearly 20 percent of all Americans have a medical debt on their credit report, with seven percent having only a medical debt collection tradeline and no other negative marks.
The impact medical debt has on consumers’ credit reports is a huge concern for the CFPB, especially since the transaction that creates the debt is often far different from typical credit behavior. The report is also a continuation of the work the CFPB has been doing in the area.
For collection agencies, these kinds of reports always point to an important reminder: it needs to be clear to the medical companies and the consumers that agencies work with that there is going to be a sense of cooperation involved. Agencies have to show a commitment to educating all parties and working together with people to solve debts. Such a philosophy is more effective and it is the right thing to do at a time when concerns about medical debt collection aren't going anywhere anytime soon.