Van Hollen, Murphy Call on Consumer Financial Protection Bureau to Address Medical Debt, Increase Transparency as Americans Face Steep Bills in the Wake of COVID-19

June 25, 2021

Today US Senator Chris Van Hollen (D-Md.), Member of the US Senate Committee on Banking, Housing and Urban Development, and US Senator Chris Murphy (D-Conn.), Member of the US Senate Health, The Committee on Education, Labor and Pensions urged the Consumer Financial Protection Bureau (CFPB) to address medical debt as Americans face heavy bills, largely due to COVID-19. In a letter to Acting Director Dave Uejio, the Senators explicitly urge the CFPB to take several steps to curb debt collection agencies’ practices on medical debt, increase transparency about the data collected and available to the public, and ensure that The calls contain help information on various types of finance. The US Senators Richard Blumenthal (D-Conn.), Cory Booker (DN.J.), Tammy Baldwin (D-Wis.) And Elizabeth Warren (D-Mass.) Also signed the letter to the acting director Uejio.

“While the COVID relief packages passed by Congress helped cover some of these costs through financial subsidies and coverage for COVID-19 vaccines and tests, consumers are still paying the associated health care costs for treating the disease. For those Americans who have applied for treatment through their networks, they can bear the full cost of their COVID-19 treatments, ”the Senators wrote.

The Senators continued, “We are writing today to call on the Consumer Financial Protection Bureau (CFPB) to review the consumer debt problem for health care and to take far-reaching measures within the powers of the agency to protect consumers against rising collection rates and the often egregious protection practices associated with these collections. The COVID-19 pandemic has highlighted the many cracks in our healthcare system that people fall into, and sometimes crash, about over health care debt. Just a few weeks ago, a news agency reported that a large hospital was suing thousands of patients while the pandemic devastated their families and livelihoods. It is time to review the consumer medical debt exposure. “

“Medical debt is almost never voluntary, and the complexities of medical billing can often take months to resolve. The CFPB has an opportunity to strengthen and enhance protections for the economic well-being and health of Americans, “concluded the Senators.

In the last Congress, Van Hollen and Murphy introduced laws to strengthen consumer protection and reform medical debt practices. The Law on Strengthening Consumer Protection and Transparency of Medical Debt would establish standard practices to ensure that healthcare facilities notify consumers of all debts owed and to alert consumers of any assistance they are entitled to before debt is collected. Legislation also directs the U.S. Department of Health (HHS) to set up a public database to collect information from healthcare facilities about their collection practices.

The full text of the letter can be found here and below:

Dear Drama Director Uejio,

COVID-19 has left many Americans unemployed, newly uninsured, and faced potentially expensive long-term healthcare costs after a COVID-19 diagnosis for themselves or their loved ones. While the COVID relief packages passed by Congress helped meet some of these costs through financial grants and coverage for COVID-19 vaccines and tests, consumers are still paying the associated health care costs for treating the disease. For those Americans who have applied for treatment through their networks, they can bear the full cost of their COVID-19 treatments.[1]

We are writing today to call on the Consumer Financial Protection Bureau (CFPB) to review the consumer debt for medical care issue and, under the agency, to take far-reaching measures to protect consumers from rising collection rates and the egregious practices that often are associated with these collections. The COVID-19 pandemic has highlighted the many cracks in our healthcare system that people fall into, and sometimes crash, about over health care debt. Just a few weeks ago, a news agency reported that a large hospital was suing thousands of patients while the pandemic devastated their families and livelihoods. It is time to review the medical consumer debt burden.

In 2014,[2] The agency released a report on the health care issue and found that nearly half of the categories of debt collection report are for consumer medical debt. The report found that individuals often don’t know they owe the debt because they have health insurance or don’t recognize the name of the provider on the bill. It is also possible that debtors do not know the guilt as they have not received any letters due to moving house or phone calls, due to their phone numbers changing or the service being shut down. In addition, the University of Connecticut’s Health Disparities Institute released a report showing that credit agencies are often tracking the wrong debtor. Also, for some consumers, it can take months to get medical bills ready and to know what charges are correct and whether the insurer has already paid a provider.

According to the US Census Bureau, 19 percent, nearly one in five Americans, cannot afford medical care beforehand.[3] Unfortunately, this number differs depending on whether a household has children under the age of 18, with those who say children are more likely to have debt at 24.7 percent, compared with 16.5 percent for households without children. And unsurprisingly, reported medical debts are disproportionately distributed based on socioeconomic status, demographics, and health issues. As mentioned earlier, COVID-19 has only exacerbated these differences.

At the national level, we hear heartbreaking stories from patients who lost their homes, had their wages or government tax refunds impounded, or were arrested over an unpaid medical bill that, in some cases, was as low as $ 28.[4] The 2014 CFPB report finds that nearly a fifth of consumers with medical collection agencies have their credit reports compromised, even though the average unpaid medical debt is $ 207 and the average is $ 579. A 2019 report also showed that in the second quarter of 2018, 58 percent of third-party collections were for medical debt.[5] With this low debt burden, we can certainly do something good for Americans.

We urge your agency to re-examine this medical debt issue as a delinquency report can have long-term effects on a person’s economic security, such as: B. the ability to get home and car loans. To this end, we urge you to consider the following measures:

• Forbid providing medical claims to credit bureaus, or at least reporting medical debts to credit bureaus, for the first year to give consumers time to resolve insurance coverage, billing disputes, or apply for financial assistance;
• Require collection agencies in their communications with patients to disclose all applicable grants, charity programs, and potential coverage such as Medicaid and Affordable Care Act plans;

• Working with the Internal Revenue Service to issue frequently asked questions about the charity provisions of the Affordable Care Act to remind collectors that false or misleading claims are made regarding the patient’s eligibility for financial aid, charity or other assistance against fair debt collection Practices Act violated
• Ask debt collection agencies to stop collecting or reporting if individuals notice they are objecting to rejection of coverage, contesting vendor billing, or requesting financial assistance;

• Limit the number of collection calls per consumer. The current call limit of seven calls in seven days per account in collection is harmful to consumers. Some individuals have multiple medical debt collections because each hospitalization or procedure can generate multiple bills that can result in separate accounts in collections. This multiplies the number of calls allowed;
• Perform additional analysis of medical debt complaints received and include the results in a new section for future annual consumer response reports; and
• Issuing a comprehensive data report to help researchers and policy makers fully understand medical debt recovery, including the use of debt collection practices such as legal proceedings, garnishments and liens by hospitals and debt collection agencies; the breakdown by postcode of debt collection cases that have been assigned to a debt collection agency; and the amount of revenue hospitals generate from these collection practices.

As agency reports have found, medical debts are almost never voluntary, and the complexities of medical billing can often take months to resolve. The CFPB has an opportunity to strengthen and enhance protections for the economic well-being and health of Americans. Thank you for your attention.

With best regards,

[1] Jayakumar, A, prepare for COVID-19 medical bills. 04/13/21 Market observation.

[2] Consumer Protection Office. “Consumer Credit Reports: A Study of Medical and Non-Medical Collections.” Dec 2014. https://files.consumerfinance.gov/f/201412_cfpb_reports_consumer-credit-medical-and-non-medical-collections.pdf

[3] Bennett, N., Eggleston, J., Mykyta, L. & Sullivan, B. 19% of US households could not afford to pay for medical care immediately. US Census Bureau. April 2021.

[4] Presser, L. “Welcome to Coffeyville, Kansas, where the judge has an undergraduate degree, debt collection agencies get bail cuts, and Americans watch their lives – and their freedom – vanish from pursuing medical debts.” ProPublica. Oct 2019. https://features.propublica.org/medical-debt/when-medical-debt-collectors-decide-who-gets-arrested-coffeyville-kansas/

[5]Consumer Financial Protection Bureau, Market Snapshot: Tradeline Reporting for Third Party Debtors, July 2019. https://files.consumerfinance.gov/f/documents/201907_cfpb_third-party-debt-collections_report.pdf