Hospital Debt Reform May Have Unintended Consequences

As the article below suggests, medical debt reform, specifically hospital bad debt reform, is on the horizon of the Consumer Financial Protection Bureau. We already have sweeping changes being made preemptively by the three major credit bureaus including changes in the minimum amount of what can be reported to the credit bureaus, how long before a debt can be reported, and that once paid, the tradeline will be removed.

While in many circumstances, medical debt is unplanned, in instances where the patient has the means to pay for copays and deductibles, they certainly should do the right thing and pay the provider. But when they don’t, the effort of the collections agency along with the leverage of credit reporting or other legal processes may become necessary to assist the hospital or provider recover what they are legally owed.

Communication is a critical success factor in getting paid for services rendered. The hospital must communicate its financial policies and charity guidelines, if applicable so that expectations are not misunderstood. But the patient also has a responsibility to communicate with the provider to ensure payment is made through insurance, the patient, some other third party, or a combination thereof. Sometimes, it is simply a matter of the patient needing to answer a few questions or updating policy information with the provider.

The lack of communication will most like lead to unintended consequences like credit reporting and the patient paying higher costs in interest, facing lawsuits, liens, wage garnishment, and judgments. Uncollected receivables will lead to higher costs and pricing. An excerpt from the article below should put healthcare providers and billing companies on high alert for what is to come.

“At the federal level, the Fair Debt Collection Practices Act, (FDCPA), which currently applies only to “debt collectors,” (that is, typically not health care entities) should be amended to cover any health care provider engaged in debt collection.”

Providers need to be active with their associations and their lobbying groups to focus a spotlight on the proposals being floated around by governmental regulators, lawmakers, and groups like the National Consumer Law Center. Agencies also need to be active in their state associations, their lobbying efforts, and the American Collectors Association International and other industry trade groups to stay informed and educate those that make proposals to change existing laws.

You can read the article here.