When Considering Medical Debt Collection Rules, CFPB Looks at Consumer Impact

Debt problems can be hard to manage. And a collection call from a persistent creditor can make the things more challenging and stressful. In United States Consumer Financial Protection Bureau Agency is responsible for consumer protection in the financial sector. The medical market is one of its primary concerns when seeing at its regulation of the debt collection industry.The Customer Financial Protection Bureau is concerned about the transfer of information from an original creditor to third-party debt collection company and debt buyers, and from those parties to other debt collectors and credit agencies. The Customer Financial Protection Bureau wants to know how documents and records are currently transferred and how to improve the accuracy of that info. The Bureau believes that ensuring the integrity of info within the debt collection system is critically essential.

The Consumer Financial Protection Bureau also noted in April 2014, at its Consumer Advisory Board meeting, that healthcare debt collection accounts show on credit reports at a much earlier stage of delinquency than practically any other debt kind. The takeaway, Consumer Financial Protection Bureau officials noted, that there is a large amount of confusion among consumers with regard to their duties to pay certain medical bills, even when covered by insurance. This is easy to understand that a single medical event, even if it is relatively benign, can trigger billing from many healthcare providers all under different levels of coverage. And that’s assuming everything is in-network. This can effect in several small to moderate amounts owed by the consumer, who may not think they have to pay anything at all.

The issue facing medical collection agencies is the prospect of the CFPB recognizing income from medical debt collection in its calculation of Larger Market Participants. The CFPB at this time has supervisory authority over any collection agency with annual income above $10 million. But the Consumer Financial Protection Bureau rule excludes medical debt from the $10 million thresholds.

Now consumer groups and the National Consumer Law Center is pushing the Consumer Financial Protection Bureau to remove that exclusion and bring more medical segment ARM firms under supervision. The CFPB has yet to signal if it is ready to take that action.

Regardless of whether a law specific to healthcare debt makes it into the CFPB’s debt collection rules suggestions, ARM firms that specialize in the market should be aware of the notice. It might not occur this year, but the CFPB is sure to act on healthcare collections at some point in the future; they’ve put in overwork sit idle on the issue.