Consumer Bureau Report Highlights Harms of Medical Billing Errors

Report shows inaccurate bills, coercive debt collections

A report released by the Consumer Financial Protection Bureau (CFPB) shows that consumers with medical debt often suffer from inaccurate billing and aggressive collection tactics.

The report was an in-depth examination of complaints about medical billing and collections submitted to the CFPB. Among the top issues were inaccurate bill amounts and aggressive or coercive collection tactics.

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

The CFPB noted that inaccurate billing can result in harm to consumers as accounts are referred to collection agencies.

When allegedly unpaid or unresolved medical bills get referred to collections and reported to the credit reporting system, people face reduced access to credit, increased risk of bankruptcy, and difficulty securing employment and housing. These negative consequences can occur even when the underlying bill is erroneous, not owed, or unverified.

The report outlined a number of key findings, including that consumers:

• Do not recognize or owe alleged medical bills, but they continue to be contacted by debt collectors. Debt collectors are required to take reasonable steps to verify debts. Yet, in some complaints, individuals stated that they did not recognize the company sending them collection notices or that the notices did not contain sufficient information to identify and verify the alleged debt.

• Suspect unpaid medical bills are being surreptitiously and unlawfully placed on their credit reports. Many people submitting complaints about medical bills state that they only realized the bills were in collections when they checked their credit report or when they were applying for credit. This coercive use of the credit reporting system by debt collectors is an illegal but common debt collection tactic, especially for error-prone debts, such as medical bills.

• Experience their credit reports being used as weapons to force payments. People reported that once medical bills were placed in collections and furnished to credit reporting agencies, their credit scores stopped reflecting their ability to repay debts. Their lower credit scores became weapons debt collectors could use against them to force payment.

• Report that collection notices contained large amounts of highly sensitive medical information. Individuals described feeling that collection notices included more personal medical information than authorized or permissible under the Health Insurance Portability and Accountability Act (HIPAA). The notifications they received often included detailed bills, which listed procedures, tests, and medications.

A previous CFPB report indicated that Americans have some $88 billion in medical debt in collections on their credit reports.

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