On December 11, 2014, the Consumer Financial Protection Bureau (CFPB) conducted a field hearing in Oklahoma City on medical debt collection practices in relation to consumer credit reporting. CFPB Director Richard Cordray cited a number of key statistics from the bureau’s recent study on credit reporting practices with regard to medical debt:
- One in five consumers with a credit report has a medical collection item on that report.
- About half of the 1.3 billion-plus actively reported trade lines are from medical bills.
- 15 million consumers have medical debt as the only collection item on their credit report, and many have no other seriously delinquent accounts.
The director reiterated how debt collection practices have long been a source of frustration for many consumers. According to Cordray, those sentiments have resulted in major new developments. He explained how, as part of the CFPB’s ongoing effort to improve the nation’s credit reporting system, the bureau will now require the largest credit reporting companies to provide regular, standardized accuracy reports specifying the number of times consumers dispute information on their credit reports during a reporting period, along with furnishers with the most disputes, industries with the most disputes, and furnishers with particularly high dispute rates relative to their peers.
The healthcare industry did not leave the discussion untouched. Since July 2011 when the CFPB launched its online consumer complaint portal and began monitoring consumer complaints with regard to medical debt collection practices, consumer medical debt complaints have risen from 8 percent of all consumer complaints to as high as 20.1 percent. In total, the bureau has noted a nearly 50 percent increase in medical debt collection complaints since January 2014.
As suggested by its name, the CFPB is tasked primarily with protecting consumers from unfair and abusive financial practices. It does so by enforcing consumer financial laws and examining regulations over banks and larger market participants in non-bank markets. The CFPB’s definition of “larger market participant” refers only to those that generate more than $10 million in fees annually from the collection of bad debt, excluding healthcare debt. As a result, the healthcare industry has largely fallen outside its purview.
However, given the statistics referenced in the CFPB’s report, it should come as no surprise that recent activity by the National Consumer Law Center – a leading consumer advocacy group wielding significant power and a loud voice in Washington D.C. – has pushed medical debt collection practices to the top of the bureau’s agenda.
The writing is already on the wall. There will soon come a day when healthcare collection practices shall be regulated like all others, and healthcare CFOs and patient account directors need to prepare themselves with these four crucial conversations:
1. “Have any of our patients filed complaints against us on the CFPB’s complaint portal, and have we responded?”
Consumers are encouraged to use the CFPB’s portal to log complaints about any organization that has left them dissatisfied with a financial product or financial service. The complaint need not identify an illegal practice, since the CFPB defines a “complaint” as nothing more than written or verbal evidence of a consumer’s dissatisfaction with a service industry member’s conduct, services, or practices.
You might not consider your hospital, extended business office (EBO), or health system to be a financial institution. To some extent, you are right. But because the CFPB’s portal is available to all members of the public – including patients – all healthcare providers and companies that service patients directly become a part of the financial services industry. In turn, they are subject to the power and authority of the CFPB at the moment a patient files a complaint.
It behooves any hospital or healthcare provider to similarly monitor the complaints filed against their respective organizations and service providers, and take corrective action as soon as possible.
Visit cfpb.gov to take a look at how you measure up.
2. “Are we waiting at least 180 days to report medical debt to credit reporting agencies?”
Since the Oklahoma City hearing, the nation’s three major credit bureaus, TransUnion, Experian, and Equifax, announced, in collaboration with several state attorneys general, the creation of a National Consumer Assistance Plan. The plan includes changes to how consumers’ medical debts are reported, and will enhance the CFPB’s ability to collect complete and accurate consumer information, while providing consumers with more transparency.
In particular, according to a press release regarding the matter, “medical debts won’t be reported until after a 180-day waiting period to allow insurance payments to be applied. The CRAs (credit reporting agencies) will also remove previously reported medical collections that have been or are being paid by insurance.”
The CFPB is monitoring these developments and will eventually determine whether the gesture is a hollow one. Hospitals and their business offices must ensure they are in compliance to avoid being caught in the crossfire.
3. “How are we managing our service providers’ compliance with consumer financial laws?”
Hospitals and healthcare organizations are generally familiar with requirements they must impose on their service providers and associates in order to comply with HIPAA, but they must be even more diligent today given 501(r) regulations, the CFPB’s newfound focus on medical debt collection practices, and the compulsion of consumer attorneys to sue healthcare organizations for their business associates’ noncompliance. A well-managed service provider program can improve both parties’ compliance with the law, improve patient satisfaction, and – most importantly – prevent legal battles.
Establishing a robust service provider management program begins with a team. Identify the members of your staff who will be held accountable for the program. Ask them to take inventory and prepare a list of every service provider that supports your revenue cycle in any way. This should include any business that touches, transmits, houses – or has access to – patients, responsible parties, PHI, or patient financial information.
Conduct a risk assessment of each service provider to help determine which pose the greatest risk of harm to your patients in terms of direct service or PHI data. Include a background check of the principals and key employees of each, and do not forget to review all litigation and consumer complaints filed against them on the CFPB’s complaint portal. Finally, ensure contracts are in place with each service provider and review them to ensure each one includes:
- CFPB compliance provisions;
- Requirements for on-site visits and dates to carry them out;
- Compliance training requirements and dates to carry them out;
- Policies and procedures regarding consumer financial laws; and
- Complaint and litigation review procedures.
Continue to exercise due diligence over your service providers throughout the term of your relationship. These are the very basic elements of service provider oversight. Your specific approach to billing, collections, scoring, and auditing will likely make the process more complex.
4. “How are we capturing consent to call our patients or communicate with them via SMS text?”
Hospitals, EBOs, and first- and third-party collectors must take note of the risks presented by the Telephone Consumer Protection Act (TCPA). As new communication technologies have come available, the language contained within the TCPA has increasingly been subject to interpretation, and the resulting compliance requirements have become difficult to lock down. Lessons from four particular court cases in the last year apply most directly to healthcare organizations and their partners:
- Lardner v. Diversified Consultants: If your equipment has the capacity to store or produce telephone numbers, then it meets the statutory definition of an automatic telephone dialing system and falls under stringent rules.
- Hudson v. Sharp Healthcare: Providing a mobile contact number to a creditor (hospital) constitutes prior express consent to be called at that number using an autodialer.
- Mais v. Gulf Coast Collection Bureau: Consent does not have to be provided to a hospital’s collection agency only via direct delivery; prior express consent exists when the subscriber/patient makes the number available to the hospital regarding the debt.
- Nunes v. Twitter: Contacting a cell phone number previously owned by a party who had granted consent, but which is later transferred to someone who has not, constitutes a TCPA violation.
These cases show how the method by which you contact your patients can have as much of a legal impact as what you contact them about.
Conclusion
These crucial conversations need to take place, from the board room to the patient financial services department. New compliance requirements will impact your day-to-day billing and collection processes, compliance protocols, applicable tax status, and your reputation in the community.
Now is the time to begin a comprehensive review of your hospital, EBO, or health system’s policies – it’s only a matter of time before the shift toward regulated healthcare collection practices becomes significant enough to warrant constant oversight.
