Medical debt is a major burden for many Americans, but a new advisory opinion from the Consumer Financial Protection Bureau (CFPB) offers important clarifications to protect patients. The CFPB, which enforces the Fair Debt Collection Practices Act (FDCPA), has highlighted how debt collectors can violate the law when trying to collect medical debt. Understanding these new rules can help protect you from unfair medical debt collection practices.
Key Violations in Medical Debt Collection
The CFPB’s advisory opinion lays out several scenarios where debt collectors might break the law under the FDCPA. These violations include:
- Trying to collect payments for services that were never provided.
- Collecting amounts that were double-billed or inflated due to incorrect coding (upcoding).
Additionally, the CFPB made two important clarifications that could have a major impact:
- Hospital Prices Aren’t Always Final: Just because a hospital assigns a price to a service doesn’t always mean the patient is obligated to pay it. In many cases the price must be proven reasonable and can be contested.
- Debt Collectors Must Verify the Debt: Debt collectors cannot simply accept the hospital’s word that everything was billed correctly. They must make sure the patient’s benefits, like insurance or charity care, were properly applied before attempting to collect the debt.
Protection Against Unreasonable Charges
The FDCPA prohibits debt collectors from misrepresenting the “character, amount, or legal status” of a debt. This is particularly relevant in cases where hospitals don’t provide a clear price in their patient agreements. In many cases, patients agree to pay whatever their insurance doesn’t cover, but the exact price isn’t specified. This creates what’s known as an “open price term.”
When a price term is open, the law requires that the hospital charges must be reasonable. If a debt collector tries to collect an amount that hasn’t been proven to be reasonable, they could be violating the FDCPA by misrepresenting the amount or character of the debt. This clarification gives patients more power to contest unreasonable medical bills.
Duty to Verify the Debt
The CFPB also made it clear that debt collectors have a duty to ensure that all benefits, like insurance or charity care, have been applied before pursuing collection. For example, if a hospital failed to bill insurance or didn’t apply charity care, the debt collector must catch these errors before trying to collect. Failing to do so could lead to a violation of the FDCPA.
This also applies to hospitals using third-party financing tools like Care Credit or AccessOne. If charity care is not applied to the amount sent to a third party, the patient may have a claim against the debt collector under the FDCPA.
How Dollar For Can Help You Access Charity Care
At Dollar For, we help patients apply for charity care to reduce or eliminate medical bills, ensuring all eligible benefits are applied before debt collection begins.
Key Takeaways
- The CFPB has clarified that debt collectors can violate the FDCPA by attempting to collect medical bills that were double-billed, overcharged, or for services never provided.
- Debt collectors cannot present a bill as final if the price was not agreed upon and is still open to negotiation.
- Debt collectors are responsible for verifying that all patient benefits, like insurance or charity care, were applied before attempting to collect the debt.
These clarifications provide significant protections for patients, ensuring that debt collectors follow proper procedures and don’t misrepresent what is owed. Understanding your rights can help you avoid paying unfair medical debt.
You can read the full advisory opinion here.