To say we’re behind on medical debt is an understatement on several levels. It wasn’t until 2021 when the Census Bureau finally caught up with data collected on this issue in 2017.
Long known as the primary reason why individuals file for bankruptcy, medical debt has continued to rise in the intervening years, with consumer complaints pacing that increase.
On Wednesday (April 20), the Consumer Financial Protection Bureau (CFPB) issued the complaint bulletin “Medical Billing and Collection Issues Described in Consumer Complaints” detailing the scope and complexity of the problem.
The CFPB said it sent over 750,000 complaints to companies for review and response in 2021. Previous CFPB research found $88 billion in medical debt held by consumers last year.
“The topic of medical debt frequently arose in the context of debt collection and consumer reporting,” the bulletin noted. “Last year, 15% of debt collection complaints were about attempts to collect a medical bill. Additionally, consumers mentioned ‘medical’ in several thousand complaints about credit or consumer reporting.”
Unlike most purchases, the CFPB noted, people often don’t have the time to shop around for care — and often make decisions about it under stressful circumstances. “People do not generally plan in advance” for medical emergencies, the bureau observed.
Medical Debt Pain Points
Attempts to collect debt people didn’t actually owe were the most common consumer complaint. Those rose 31% in 2021, the CFPB said. Other typical disputes were that the debt has already been paid — or that amounts quoted were inaccurate or just wrong.
“Third-party collectors often updated consumers’ credit reports following a dispute of the debt,” the bulletin stated in one concerning section. “This typically would occur without any follow up questions from the third-party debt collector to the consumer.”
The CFPB said, “These observations renew concerns regarding the potentially substantial deficiencies in the quality and quantity of information collectors receive at placement or sale of the debt that may result in collectors contacting the wrong consumers, for the wrong amount, or for debts that the collector is not entitled to collect.”
The 27-page report is filled with complaints that are all too familiar to anyone who’s ever gotten a shocking medical bill after a health incident they believed insurance would cover.
Here’s a typical example, taken from the report:
“I was transported via ambulance from [Hospital A] to [Hospital B] by [ambulance transport provider] on July [XX], 2021. They are an out of the network provider. Their services were selected by unknown person(s) at [Hospital A] without my specific knowledge.”
That story ends as many do, with that consumer being harassed by telephone for an outstanding balance from a provider they did not personally engage or approve use of.
COVID-19 complicated matters further as CFPB received numerous complaints about emergency room visits that patients believed were covered by CARES Act funding and other pandemic relief.
Medical Billing Needs Trust Transfusion
Among other common complaints, the CFPB said 32% of closed debt collection disputes “concern the topic of written notification about debt—a greater percentage than any other debt type, including debts that are not recognized by the consumer.”
Bills and notices in complaints are often claimed as containing incorrect information, incomplete information, and in some cases too much personally identifiable information (PII).
Another frequently cited issue is the inability to recognize the provider or procedure in question.
CFPB said, “This can happen when the name of the healthcare provider listed on the notice is different from the name of the professional or professionals who provided treatment—as is often the case when a provider is part of a larger medical group.
Per a press release accompanying the report, “many medical bills reported on credit reports are disputed, inaccurate, or not owed,” supporting earlier CFPB research that found medical bills “are less predictive of future repayment than other bills or credit obligations.”
“Specifically, medical bills do less to help lenders determine the likelihood that a credit applicant will repay a new credit extension, like a personal loan.”