New watchdog report reveals medical debt is a top source of consumer complaints


Medical debt plagues millions of Americans — by some estimates, as much as half. But medical debt isn’t just a common problem; it is a thorny one.

Medical debt has been a top source of consumer-reported debt grievances, according to a new report released earlier this month by the Consumer Financial Protection Bureau (CFPB).

In 2021, the CFPB sent more than 750,000 consumer-reported complaints to approximately 3,400 businesses for review and response. Complaints have focused on issues such as debt collection and credit or consumer reporting.

The largest source of complaints related to medical debt collection was written reminders and disputed claims.

Almost a third (32%) of the complaints about the collection of medical claims related to the associated written reminders. No other type of debt has such a high percentage of complaints, specifically about written reminders.

The nature of these complaints meant that notices often did not contain enough information to identify and verify the debt. Some consumers indicated that they did not recognize the healthcare provider listed on the summary notice; Some complaints cited in the report stated that the consumer had never been to that provider. While this issue makes it difficult for consumers to understand their medical bills and debts, it doesn’t mean the bills were wrong. Individual providers or facilities often belong to larger organizations or billing groups; When the name of these entities appears on an invoice or court order, patients may question their legitimacy.

Other complaints about written communications related to the opposite problem: too much information was included. Summary notifications detailing medical procedures, tests and prescriptions left some consumers feeling their protected health information was not protected, the report found.

These complaints came despite the CFPB’s 2020 guidance on the information debt collectors must include in consumer communications.

The other main area of ​​consumer complaints was debt collection, including complaints about communication tactics, misrepresentations or representations, and threats of legal action or improper disclosure of the consumer’s information.

According to the CFPB, nearly half of medical debt collection complaints were about disputed debt, a 31% increase compared to 2018. Specifically, consumers complained that they were unable to pay due to debt they had already paid, or that another party – their insurance company, a government payer or workers’ compensation – should pay,

The CFPB reported that a significant number of collection agencies gave up trying to collect the debt after the consumer complained to the CFPB.

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

Sometimes, the report showed, consumers were unaware of medical debt until they realized it had been reported on their credit report. Many consumers noted that they were never contacted about the bills and discovered them themselves, for example when they checked their creditworthiness or applied for a loan.

As one complaint cited in the report stated:

“I first learned about this ‘debt’ when I checked my credit report [credit monitoring service]. My rating had dropped 9 because there was a pickup [debt collector] thereon. I contacted [debt collector] and they told me i owe a doctor $10 since 2017. I told them I had never been notified of any such debt by phone or in writing. I called the doctor (and his billing company) and they told me that their records show no such debt, nor that they had turned anything over to a collection agency. I called [debt collector] again and they told me the collection effort would remain on my credit report until I paid the debt, preferably online on their website.”

According to the report, some consumers feel pressured to pay those bills to get them off their credit reports.

According to the CFPB, certain groups — including people of color, low-income people, veterans, and young adults — are more likely to have medical bills appear on their credit reports. The CFPB previously reported that medical debt is a contributing factor to the racial wealth gap, particularly for black Americans. The results align with a survey showing black business owners are more likely than others to have medical debt.

The No Surprises Act, which came into effect in early 2022, bans some types of surprise medical bills. And in March, the big three credit bureaus announced that they would no longer include medical debt younger than a year or less than $500 in consumer credit reports.

These measures should bring some relief to consumers. But as the CFPB report shows, consumers grappling with historic medical debt can still face uphill battles. Consumer complaints appear to be at least one effective tool – albeit only a last resort – to provide clarity and resolve disputes.


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