The changes to medical debt reporting announced by three of the leading credit bureaus back in March are set to take effect July 1. These changes underscore the seriousness of medical debt in America and the need to work toward common-sense solutions that help consumers while also supporting the provider community.
The medical debt crisis is real and growing. According to the Consumer Financial Protection Bureau (CFPB), there is currently $88 billion of medical debt involving 43 million credit reports.
As one of the larger organizations in the country helping patients with medical debt pay what they can afford, we share the sense of urgency and determination of policymakers and regulators to address medical debt across the United States. The Biden Administration announced plans to review collection practices from more than 2,000 providers, while the CFPB rightly vowed to hold patient rights violators accountable. However, any efforts to help solve such a complex problem must balance consumer needs for affordability with the needs of healthcare providers to generate the predictable revenue necessary to continue delivering the highest quality care.
Two changes announced by the credit bureaus - the removal of paid accounts from credit reports and a one-year waiting period on the reporting of medical debt -- will undoubtedly move the needle. Other, riskier proposals call for more lax standards, including a total ban on medical debt reporting or the omission of smaller amounts. With most physician bills under $500, emergency physicians, small doctor groups, and other providers with limited cash reserves would be hardest hit by limiting their collection recourse options. Such changes would effectively move the pendulum too far in the opposite direction, threatening the financial viability of America’s healthcare system.
Credit bureau reporting is a legitimate tool to accurately report consumer debts and to help properly resolve accounts. Hospitals operate under extremely low margins, further squeezed by the financial impacts of COVID. The removal of any solutions that help providers recover this essential revenue only makes the situation worse. Of course, such tools must rely on accurate and verified financial information so that the medical debt communicated and collected is the amount truly owed.
We must help patients pay what they can afford for medical care without saddling them with debt from which they’ll never be able to recover. Capio actively works with partner hospitals and patient-focused organizations to share our experience. We develop tools that help patients identify what they can afford to pay, as well as ways to help them prevent future debt and achieve lasting financial wellness.
The credit bureau reporting changes will be, in many ways, game-changers—ones that must be evaluated once implemented this July before hastily going further. We urge regulators and policymakers to work alongside providers and organizations that routinely manage medical debt, understand the challenges of patient-funded care, and have a track record of developing fair, practical, holistic solutions. Medical debt payments should be limited to a minimum percentage of a patient’s monthly income, and credit-building tools should be made available to the patients that need them.
As medical debt experts who understand how to effectively balance the needs of patients and providers, we stand ready to share our ideas and first-hand experiences as part of an open dialogue with policymakers and regulators. Working with 800 providers and helping more than 20 million patients burdened with medical debt, we understand the needs and concerns of both sides to the challenging medical debt equation.
Only through collaboration and balanced understanding will we, as a nation, be able to implement solutions to the medical debt crisis that are good for the patients, providers, and the overall sustainability of our American healthcare system. We owe it to everyone to fix the problem.
By Mark V. Detrick
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Mark Detrick is the CEO of Capio, a financial health company serving the healthcare sector. Capio empowers care providers and patients with sustainable solutions for long-term financial strength.