Medical Debt
The Fair Credit Reporting Act (FCRA) and the Health Insurance Portability and Accountability Act (HIPAA) generally allow furnishers to report medical debts to consumer
Policies of individual consumer reporting agencies impose further restrictions on credit reporting this type of debt.
Key Points
- The Fair Credit Reporting Act (FCRA) and the Health Insurance Portability and Accountability Act (HIPAA) generally allow furnishers to report medical debts to consumer reporting agencies, though some restrictions apply. The policies of the individual consumer reporting agencies impose further restrictions on credit reporting this type of debt.
- ACA recognizes that most patients want to resolve their medical accounts in a responsible manner. However, one of the challenges facing them is the highly variable processes used to resolve accounts, which contributes to confusion.
- Moreover, consumers could be at risk if they are obtaining unaffordable credit and services during the lengthy timeframe credit reporting would be delayed if this legislation were to become law, since credit providers will not understand a consumer’s financial situation if they have an inaccurate credit report.
- The FCRA permits health care providers and their agents to furnish information about medical debts to consumer reporting agencies (CRAs). However, the FCRA requires furnishers to encrypt certain information to protect the consumer’s privacy.
- ACA members have examined how paid debt should be treated to ensure that a consumer is not penalized beyond resolution of the account.
- In 2014, ACA partnered with HFMA (the Healthcare Financial Management Association) and gathered a task force of stakeholders to establish best practices for the fair resolution of patients’ medical bills. The stakeholders represented on the task force include a diverse group of providers, consumer advocates, collections agencies and credit bureaus.
- Likewise, HIPAA allows medical providers or their debt collector agents to report medical debts to CRAs provided that the information used is limited to the minimum amount necessary. The CRAs themselves also have certain policies that impact the furnishing of medical information.
- ACA has several concerns regarding a year-long delay in reporting medical debt and the lack of clarity surrounding what is a “medically necessary procedure.” Many consumers are unaware of the options they may have to handle their debt obligations and deadlines they face for insurance corrections and charity care options. After exhausting other options, credit reporting can be the best way to alert consumers of their outstanding debts.
- The task force reconvened in 2020 to update the best practices and add best practices for modifying financial assistance policies in response to the COVID-19 pandemic and potential future public health emergencies. This document reflects the task force’s consensus on the state of best practices related to the equitable resolution of the patient portion of medical bills.
According to JAMA Internal Medicine, 41% of insured adults were surprised by a medical bill in the past two years and almost half of those, 19% received a surprise medical bill because the provider was out-of-network.
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As of July 2020, almost 30 states have enacted some level of surprise billing protection, with other states considering similar legislation.
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