New medical debt watchdog report shows major source of consumer complaints

Medical debt burdens millions of Americansup to half By some estimates. But medical debt isn’t just a common problem; It’s sticky.

according to new report Released earlier this month by the Consumer Financial Protection Bureau (CFPB), medical debt has been a major source of consumer complaints about debt.

In 2021, the Canadian Consumer Protection Bureau sent more than 750,000 consumer-reported complaints to nearly 3,400 businesses for review and response. The complaints focused on issues such as debt and credit collection or consumer reports.

In the context of medical debt collection, the biggest source of complaints were written notifications and disputed debts.

Nearly a third (32%) of complaints about medical debt collection were related to relevant written notifications. No other type of debt has such a large percentage of complaints specifically about written notices.

The nature of these complaints included that notifications often did not contain sufficient information to identify and verify debts. Some consumers reported that they did not recognize the health care provider listed on the collection notice; Some of the complaints in the report stated that the consumer had never gone to this provider. Although this problem makes it difficult for consumers to understand their medical bills and debts, this does not mean that the bills were incorrect. Individual service or utility providers often belong to larger organizations or billing groups; When the name of these entities appears on an invoice or a collection note, patients may doubt their legitimacy.

Other complaints about written notifications relate to the opposite issue: Too much information was included. According to the report, collection notices detailing procedures, tests and prescriptions made some consumers feel that their protected health information was not being protected.

These complaints arose though guidance The CFPB released in 2020 what information debt collectors must include in consumer notices.

Another major area of ​​consumer complaints has been debt collection, including complaints about communication methods and false statements or representations and threats of legal action or improper sharing of consumer information.

According to the CFPB, nearly half of medical debt collection complaints were about disputed debts, up 31% compared to 2018. Specifically, consumers complained that they were in collections for debt they had already paid or that another party — their insurance company , government pay, or worker’s compensation – he was supposed to pay,

The CFPB reported that a large number of debt collectors stopped trying to collect debts after a consumer complained to the CFPB.

Consumers often complained to CFPB about small, outdated medical bills. CFPB data shows the average medical debt in the United States is $310, but some complaints involved smaller amounts.

The report showed that consumers sometimes weren’t aware of medical debt until they discovered it was reported on their credit report. Many consumers note that they were never contacted about bills and found out themselves, for example when they checked their credit or applied for a loan.

One of the complaints contained in the report stated the following:

“I first learned this ‘debt’ when I checked my credit report in [credit monitoring service]. My rating has gone down by 9 points due to a bunch of [debt collector] on him. I contacted [debt collector] They told me I had owed $10 to a doctor since 2017. I told them that I had not been notified over the phone or in writing of any such debts. I called the doctor (and their billing company) and they told me their records don’t show any such debt, and they haven’t handed anything over to a debt collection company. I called [debt collector] Again they told me the collection efforts would remain on my credit report until I paid off the debt, preferably online on their website.”

The report says some consumers feel pressure to pay these bills to get them off their credit reports.

According to the CFPB, certain groups—including people of color, low-income, veterans, and young adults—are more likely to show medical bills on their credit reports. CFPB earlier reported that for Black Americans In particular, medical debt contributes to the racial wealth gap, and the results are consistent with a survey It shows that black business owners are more likely than others to have medical debt.

The Law no surprisesWhich came into effect at the beginning of 2022, prohibits some types of medical surprise bills. And in March, the three major credit bureaus announced that they would no longer include medical debts older than a year or less than $500 in their consumer credit reports.

These measures should bring some relief to consumers moving forward. But as the CFPB report shows, consumers grappling with historical medical debt may still face uphill battles. Consumer complaints, at least, seem to be a powerful tool – if only a last resort – in gaining clarity and resolving disputes.