Medical Debt Challenges Common Among Consumer Complaints

Americans continued to face medical debt challenges, with consumers reporting instances of debt collectors attempting to collect medical debt that was already paid or does not belong to them, according to data from the Consumer Financial Protection Bureau (CFPB).

The report analyzed consumer complaints submitted to CFPB.

In 2021, CFPB sent more than 750,000 consumer complaints to companies for review and response. Medical debt was a common topic in complaints about debt collection and credit or consumer reporting. According to CFPB, 15 percent of debt collection complaints were about attempts to collect a medical bill.

Past data has shown that including medical debt on consumer credit reports can hinder access to secure housing and employment opportunities. The complaints submitted to CFPB revealed additional challenges consumers face regarding medical debt collection.

Nearly a third of medical debt collection complaints were about receiving written notification about debt. Consumers frequently reported that they did not recognize the company sending them collection notices or the notices did not contain sufficient information to verify the alleged debt.

Consumers also stated that collection notices often included personal medical information that they felt violated the Health Insurance Portability and Accountability Act (HIPAA), such as detailed bills listing procedures, tests, and medications.

Receiving collection notices for incorrect bills was a common trend among consumer complaints. For example, individuals submitted complaints about being contacted for bills they had already paid, were covered by insurance, and or had been resolved through charity care.

Consumers also reported receiving collection notices for medical bills that did not belong to them.

Attempts to collect debt that was not owed was the most common issue in debt collections and made up nearly half of complaints. Between 2018 and 2021, the volume of these complaints increased by 31 percent, the report noted. However, the closed complaint volume for this issue has also increased.

Displaying past-due medical bills on consumer credit reports was also a common topic of complaints submitted to CFPB.

“The appearance of disputed, inaccurate, and not-owed bills on credit reports raises questions both as to legal compliance of market participants and may undermine the usefulness and integrity of the credit reporting system to creditors and other market participants,” the report stated.

Many people said that they first learned of a medical bill after checking their credit report or when they were in the middle of applying for credit. Some consumers noted that the debts were for small amounts or very old.

Despite some medical bills being incorrect, consumers reported paying the bills to improve their credit scores or stop debt collectors from contacting them. Debt collectors may be placing both valid and invalid debts on credit reports to motivate consumers to pay them off, CFPB suggested.

“Many Americans feel forced to pay medical bills that they have already paid or never owed to begin with,” Rohit Chopra, director of CFPB, said in a press release. “The credit reporting system should not be used as a weapon to coerce patients into paying medical bills they do not owe.”

Federal leaders and credit reporting agencies have taken action to mitigate the burden of medical debt.

Legislators passed the No Surprises Act, which went into effect on January 1, 2022. The law prohibits out-of-network providers from issuing surprise bills for emergency services and bans out-of-network cost-sharing for all emergency and select non-emergency services.

Additionally, the Biden administration recently announced a series of reforms to help alleviate medical debt burden. The administration plans to request medical billing collection information from providers and offer medical debt reporting guidance to several federal agencies.

Credit reporting agencies Equifax, Experian, and TransUnion announced plans to remove nearly 70 percent of medical collection debt tradelines from consumer credit reports. In addition, the companies will no longer include medical debt collection under $500 and paid medical debts on credit reports.