Final CFPB Medical Debt Reporting Regulation: What Healthcare Providers Need to Know

By Shawn Gretz, President

On January 7, 2025, the Consumer Financial Protection Bureau (CFPB) finalized the Medical Debt Credit Reporting Rule, a rule that will fundamentally alter how medical debt is treated in the financial ecosystem. This update amends Regulation V under the Fair Credit Reporting Act (FCRA), introduces significant limitations on the reporting and use of medical debt in credit eligibility determinations. For healthcare providers, the final CFPB medical debt reporting regulation could impact how patient financial obligations are managed and collected.

Key Changes in the Final CFPB Medical Debt Reporting Regulation

1. Prohibition on Creditors Using Medical Debt:
   • Creditors are now barred from using medical information, including debts, when determining credit eligibility. This removes a longstanding exception that allowed creditors to rely on medical debt data for underwriting.
2. Limited Reporting by Consumer Agencies:
   • Credit reporting agencies (CRAs) are prohibited from furnishing medical debt information to creditors for credit decisions unless specific conditions are met.
3. Scope of Medical Debt Definition:
   • The rule defines medical debt as any obligation owed directly to a healthcare provider or its agent, regardless of whether the debt is past due or settled.
4. Effective Date:
   • The rule takes effect 60 days after its publication in the Federal Register.

Impacts on Healthcare Providers

1. Potential Decline in Collections via Credit Reporting:
   • With medical debt excluded from credit assessments, its leverage as a collection tool diminishes. Providers may find it more challenging to compel patients to settle outstanding balances solely to maintain a good credit score.
2. Higher Scrutiny on Billing Practices:
   • The rule’s emphasis on medical debt accuracy and consumer protection highlights the importance of clean, error-free billing. Healthcare providers must ensure accurate patient accounts and avoid inflated or erroneous charges.
3. Increased Focus on Financial Assistance:
   • Providers may need to expand their financial assistance and payment plan options to address patient affordability, as the ability to report unpaid medical debt becomes less impactful.
4. Shifting Collection Strategies:
   • Healthcare systems might pivot toward utilizing an early out partner and proactive patient outreach instead of relying on late-stage collections and reporting to CRAs.

Americollect’s Position on the Final CFPB Medical Debt Reporting Regulation

At Americollect, we support fair and transparent practices in medical debt management. However, this regulation raises concerns about the potential ripple effects for healthcare providers and their ability to recover costs effectively.

The limitation on medical debt reporting, while intended to protect consumers, could increase the financial strain on providers already grappling with uncompensated care. It may also embolden patients to deprioritize medical bill payments, knowing that these debts no longer impact their creditworthiness.

What Could Change Under a New Administration?

Looking ahead to the next presidential administration, there may be opportunities to revisit or even rescind the final CFPB medical debt reporting regulation. When Donald Trump assumes office, tools like Rule Recissions and the Congressional Review Act  could be utilized to eliminate this regulation. These mechanisms have been used in the past to swiftly remove recently enacted rules.

• Rule Recissions: This administrative process allows a new administration to undo regulations from a prior term without lengthy rulemaking.
• Congressional Review Act: A streamlined legislative tool that permits Congress to overturn agency regulations within a defined window.

If healthcare providers feel that this regulation poses challenges to their operations, Americollect will advocate for meaningful dialogue with policymakers to address these concerns. By working with congressional and senate leaders to leverage potential rule rescissions or the Congressional Review Act, we aim to restore balance and ensure that the needs of providers, patients, and the financial ecosystem are met.

Conclusion

The final CFPB medical debt reporting regulation is a notable shift in the financial treatment of healthcare obligations. While it brings new challenges, Americollect remains committed to supporting our clients with innovative solutions. We also remain vigilant in monitoring policy changes and advocating for measures that align with the best interests of healthcare providers.

To boost your revenue with early out or healthcare call center services, contact Americollect today. Together, we can navigate these changes and prepare for the road ahead.