In a move that can prove very important for chronic disease patients, three of the biggest credit reporting agencies in the U.S.—Equifax, Experian, and TransUnion—have announced that starting July 1, 2022, consumer credit reports will no longer reflect paid medical debt that had gone to collections.
The agencies are also extending the time in which unresolved debt appears on credit reports, from six to twelve months. This will allow consumers extra time to resolve their medical debt with either their health plan, their provider or both. Further, medical collection debt up to $500 will be dropped from credit reports.
Relief to Americans with Chronic Illness
For the 60% of Americans living with a chronic condition and incurring treatment costs, this announcement can be extremely beneficial. There is sufficient evidence to show that chronic health issues (e.g. cancer, diabetes) severely impacts finances and raises medical debt.
The announcement from the three agencies is quite timely given a recent report from the Consumer Financial Protection Bureau (CFPB). The report details the extent of errors that exist within the complicated—and often opaque—medical billing system. According to Rohit Chopra, CFPB’s Director, “Our credit reporting system is too often used as a tool to coerce and extort patients into paying medical bills they may not even owe.”
Medical Debt Virtually Unavoidable in the current system
Medical bills, the report states, often result from unexpected emergencies involving complicated insurance or charity care coverage and pricing rules. During a medical emergency, a patient or family may be distracted from identifying in- or out-of-network services or providers. If they could, they may feel that their need for care means accepting whatever are the associated costs of care. The resulting astronomical bills may end up in collection, from doctors’ offices, hospitals, or a health plan. Consequently, the patient may be billed multiple times for the same service. Disputing the wrong charges and clearing them is a complicated process that needs time.
Based on the report’s findings, CFPB plans to assess whether consumer credit reports should include data on unpaid medical bills. Additionally, CFPB will work with U.S Department of Health and Human Services ensuring patients don’t inadvertently pay more than their due.
Surabhi Dangi-Garimella, Ph.D. is a biologist with academic research experience, who brings her skills and knowledge to the health care communications world. She provides writing and strategic support to non-profit groups via her consultancy, SDG AdvoHealth, LLC.