As with most types of debt in the collection industry these days, medical debt continues to grab the attention of the media, lawmakers, and regulators. According to a recent CFPB study, medical debt represents over half of the collection accounts on consumer credit reports. There is no doubt change is coming to those who outsource medical accounts, which medical accounts are placed for collection, and how those accounts are eventually collected. While the core of what medical debt collectors do does not change, the landscape of how medical debt collectors collect continues to be reshaped as it relates to credit reporting, data integrity, and brand protection.
Credit Reporting
Reporting delinquent medical debt to credit report agencies has generally been a traditional method utilized by debt collection agencies. The three nationwide credit reporting agencies, Experian, Equifax, and TransUnion took matters into their own hands earlier this year by launching the National Consumer Assistance Plan. As it relates to medical debts, there will now be a 180-day waiting period between the time an account is created and the time it can be recorded on a credit report due for collection. In addition, the plan calls for the erasure of paid medical debts that can be a plus in the discussion with consumers for resolution.
An interesting discussion regarding rights under the Fair Credit Reporting Act has always been whether credit reporting was used as a collection tactic or it was the right of the hospital or provider to have collection accounts reported to the bureaus. Lawsuits and out-of-court demands have continued to grow over the last decade pertaining to consumers’ rights being violated under the Fair Credit Reporting Act. The rise of technical and frivolous claims relating to credit reporting has shifted some debt collectors to minimize the accounts they have reported or ceased credit reporting all together. With the resource-draining amount of time spent dealing with credit report disputes, most notably due to credit repair companies, some debt collectors might not be too upset about the limitations and restrictions being placed on this process.
Data Integrity
Given the fact that regulators and lawmakers are zoning in on debt collection (specifically medical debt collection) one of the areas many are focusing on is the integrity of the data for the accounts being sent to debt collectors. Medical debt affects the most individuals; therefore there is a trickle-down effect with more complaints and more errors that are most likely proportionate with other segments of debt collection. However, this doesn’t matter because the sheer number of individuals affected by medical debt is too large for regulators and lawmakers to ignore. It is therefore imperative the necessary checks and balances are in place from start to finish. This means hospitals and providers have to do additional due diligence to ensure the accounts they are sending to debt collectors are owed and accurate. Debt collectors should make sure to work with their partners to establish safeguards for data integrity. This will be beneficial for both parties.
Brand Protection
The most important element of every business is their brand. Hospitals and providers are recognizing this more and more as medical debt collection continues to soar. Given debt’s generally negative connotation and the rising all-time-highs of medical treatment costs, more individuals are finding themselves unable to afford their medical bills thus sending more accounts to debt collectors. Depending on the debt collector, the experience an individual has may be positive or negative. It only makes sense a consumer would associate his or her debt collection experience with the provider as a debt collector is an extension of the hospital or provider. Providers and hospitals understand the importance of their brands, therefore it is imperative they partner only with those debt collectors who take their brand protection as seriously.
The medical debt collection environment is as fluid as the rest of the debt collection industry. The one thing that is important to understand about medical debt in particular is simply the amount of individuals affected by medical debt directly. Compounding the rise in healthcare costs with consumer protection, medical debt collection will continue to be at the forefront of the media, lawmakers, and regulators.
Nick Jarman is COO at Delta Outsource Group, Inc. He also serves on the Board of Directors for ACA International.