Progress for patients struggling with medical debt collection problems

Director Rohit Chopra of the Consumer Financial Protection Bureau (CFPB) announced a new advisory opinion to medical debt collectors, reminding them about prohibitions against misleading or deceptive behavior. In his accompanying remarks made at the White House on October 1, 2024, Director Chopra addressed the issue of medical debt and the burden it places on patients. “[Medical debt] often puts an enormous strain on people’s finances, draining their savings, hurting credit scores, and driving families toward bankruptcy.” PIRG and other advocates joined the event to cheer on the agency’s work against illegal medical debt collection.

Health care costs in the United States, especially those from medical debt, continue to burden many individuals and families. But that claimed debt isn’t always actually accurate. According to the CFPB, over four in ten people with medical debt have received an inaccurate bill, while almost seven in ten have been asked to pay a bill that should have been covered by insurance. Debt collectors often illegally coerce patients into paying inaccurate medical debt to drive up their profits. 

In order to help patients, the CFPB opinion reminded debt collectors that they should not attempt to collect on these “medical debts”:

• amounts already paid, 
• amounts not owed due to Federal or State law protections, 
• amounts exceeding what can be charged under Federal or State law
• amounts for services not received, and 
• unsubstantiated medical bills. 

The CFPB opinion also reminded debt collectors that they cannot misrepresent patients’ legal obligations by telling them that some amounts are certain, fully settled, or determined if they are not. 

To better support consumers, the CFPB also released updated tips to help patients know their rights and combat illegal medical debt collecting. Through this guidance, patients can find help reducing costs, negotiating owed amounts, submitting complaints, and receiving legal help. 

This recent CFPB action follows previous work by the agency which issued a proposed rule in June 2024. That proposal, if finalized, would prohibit lenders from seeing medical debt on credit reports, therefore eliminating their ability to use such debt as an indicator of financial responsibility.

PIRG supported the proposed rule, explaining why bills owed for medical services are different from other types of debt. We explained that even financially responsible patients can accumulate medical debt from things like unpredictable health issues, high out-of-pocket costs, and insurance claim denials. The CFPB itself issued a report in 2022 that said medical debt does not predict credit-worthiness. PIRG, in it’s comments, suggested the rule be strengthened to also exclude medical debt from credit reports requested by landlords and employers. This exclusion would ensure comprehensive protection of patients from unfair consequences of medical debt.

The proposed rule, and this recent guidance, is a big step in the CFPB’s and PIRG’s ongoing fight against medical debt reporting and illegal collection. Following the CFPB’s 2022 report on medical debt, the big three creditors changed some of their collection policies, but work remains to be done. The CFPB is working on finalizing the proposed rule and will continue to enforce prohibitions on illegal medical debt collection.