Pile of envelopes with overdue utility bills isolated on white
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Medical debt weighs on millions of Americans – up to half by some estimates. But medical debt isn’t just a common problem; it’s thorny.
According to a new report released earlier this month by the Consumer Financial Protection Bureau (CFPB), medical debt was a key source of consumer complaints about debt.
In 2021, the CFPB sent over 750,000 consumer-reported complaints to approximately 3,400 businesses for review and response. Complaints related to issues such as debt collection and credit or consumer reporting.
In medical debt collection, the largest source of complaints were written opinions and disputed debts.
Nearly one-third (32%) of medical debt collection complaints were about related written notices. No other type of debt has such a high percentage of complaints relating specifically to written notices.
The nature of these complaints included that the notices often did not contain enough information to identify and verify the debt. Some consumers have reported that they do not recognize the healthcare provider listed on the collection notice; some complaints cited in the report indicated that the consumer had never even been to this provider. Although this issue makes it difficult for consumers to understand their medical bills and debts, it does not mean that the bills were incorrect. Individual providers or facilities often belong to larger organizations or billing groups; when the names of these entities appear on an invoice or collection notice, patients may doubt their legitimacy.
Other complaints about written reviews focused on the opposite problem: too much information was included. According to the report, collection notices detailing medical procedures, tests and prescriptions left some consumers feeling that their protected health information had not been protected.
These complaints were filed despite orientation the CFPB released in 2020 the information debt collectors are required to include in consumer notices.
The other major area of consumer complaints was debt collection, including complaints about communication tactics, misrepresentations or representations, and threats to take legal action or share consumer information inappropriately. .
According to the CFPB, nearly half of medical debt collection complaints were for disputed debts, up 31% from 2018. Specifically, consumers complained about being in collections for debts they had already paid or that another party, their insurance company, a government payor, or workers’ compensation – was supposed to pay,
The CFPB reported that a significant number of debt collectors stopped trying to collect the debt after the consumer complained to the CFPB.
Consumers have often complained to the CFPB about small and old medical bills. CFPB data shows that the median medical debt in the United States is $310, but some complaints were for even lower amounts.
Sometimes, according to the report, consumers weren’t aware of the medical debt until they discovered it had been flagged on their credit report. Many consumers reported that they were never contacted about the bills and discovered them on their own, such as when they checked their credit or applied for a loan.
As one complaint cited in the report states:
“I first learned of this ‘debt’ when I checked my credit report on [credit monitoring service]. My rating had dropped by 9 points because there was a collection of [debt collector] above. I have contacted [debt collector] and they told me I owed a doctor $10 since 2017. I told them I had never been notified by phone or in writing of such a debt. I called the doctor (and their billing company) and they told me their records showed no such debt, and they hadn’t given anything to a debt collection company. I called [debt collector] again and they told me the collection effort will stay on my credit report until I pay the debt, preferably online on their website.
The report says some consumers feel pressured to pay these bills to get them off their credit report.
According to the CFPB, certain groups, including people of color, low-income people, veterans and young adults, are more likely to see medical bills appear on their credit reports. The CFPB has previously reported that for black americans in particular, medical debt contributes to the racial wealth gap, findings consistent with a survey showing that black business owners are more likely than others to have medical debt.
The No Surprises Act, which took effect in early 2022, prohibits certain types of surprise medical bills. And in March, the three major credit bureaus announced that they would no longer include medical debts older than a year or less than $500 in consumer credit reports.
These measures should bring some relief to consumers in the future. But as the CFPB report shows, consumers struggling with historic medical debt may still face uphill battles. Consumer complaints, at least, appear to be a powerful tool, if only as a last resort, to gain clarity and resolve disputes.
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