The announcement of the CFPB's plans to issue proposed regulations regarding the collection and transfer of consumer debt, including healthcare debt is already creating a major change in how healthcare providers think about their own internal billing and collection practices. It is also causing a shift in how they view their relationships with their first and third party collection agency partners. To help manage the impact of these potential rules, providers must stay abreast of new developments and consider how the pending new rules will affect their choice of agency partners. They also must consider how the new rules, once adopted, will impact their policies, processes and procedures regarding:
- Collection of patient data and guarantor information upon admission or intake;
- Management, storage and transfer of patient data;
- Conditions upon which they will approve credit agreements and payment plans;
- Policies pertaining to charity care;
- Processes pertaining to electronic payments;
- Legal basis to pull credit reports;
- Duties associated with furnishing data to a credit reporting agency;
- Patient dispute handling and investigation;
- Selection and management of their first and third party debt collectors; and
- Litigation of patient receivables.
Many have asked - Why the shift? Why is the CFPB interested in how we manage and collect patient receivables? At the hearing, the Bureau suggested the new rules under consideration come in response to the most frequent reasons consumers and patients generally file complaints against credit grantors, hospitals and debt collectors. Those reasons include:
● Repeated contact for debts patients do not owe;
● Harassment or a false sense of urgency to pay;
● Use of misleading, inaccurate or incomplete statements about the debt;
● Threats of illegal action;
● Not receiving or being sent required notices;
● Improper communication and contact from debt collectors
Complaints about medical debts have been a key source of concern by patients making these complaints, which makes these regulations of particular interest to the healthcare industry.
It makes sense to speculate on how the CFPB will address these complaints with healthcare providers based on the Bureau's history regulating the collection industry. The CFPB's viewpoint that most directly affects the healthcare industry today is that any creditor - i.e. any healthcare provider - is responsible for the actions of their collection partners. New 501r rules bear that sentiment out, stating that a non-profit healthcare provider will be held responsible for the actions of their outsource partners as they relate to 501r's requirements. The CFPB also commented that a separate avenue for first-party rules would be taken, by which creditor/provider requirements will be established.
Change is coming. And even though we do not know yet what the final rules will contain, here are a few key takeaways healthcare providers need to know as the industry prepares:
1. Be wary of limited or incorrect data. The CFPB seems to be focused on ensuring a full, accurate synopsis of what the patient owes is placed with outsource partners. We should know more when the final rule is issued, but for now, just understand that requirements surrounding which data elements are transferred to your outsource partners could be dictated by new compliance requirements.
2. Placing accounts with a secondary agency could become more difficult. There was considerable discussion in the proposed rules about requirements when placing accounts with a second or third agency. When accounts are reassigned for collection, specific account information involving data elements, and documented activity on those accounts will be required upon transfer. Onerous is the best way to describe these additional proposed requirements if they find their way into the final regulations. They would certainly require significant changes to your referral process.
3. Dispute processes could change. The rules under consideration place considerable emphasis on patient dispute management and the process used to respond to various dispute categories. If the new rules hold up, you and your agency partners will need to formalize your dispute handling process.
4. Credit reporting may take a back seat. The rules under consideration by the CFPB may make the practice of furnishing patient account data to credit reporting agencies so onerous that many will abandon the practice altogether. In particular, one of the rules under consideration will prohibit credit reporting on an account until the data furnisher communicates with the consumer about the debt, or sends the validation notice to the proper consumer.
5. Contact requirements with consumers may become more restrictive. The CFPB's rules also create a complicated matrix of limitations on the number of attempts you may make to reach a consumer per week, both before you associate the patient with an account, and after you associate the patient with the account. New limits will also go into effect regarding the number of conversations you may have with a patient per week per account.
The CFPB has not set a time line for the proposed rules' publication in the Federal Register or the length of time consumers and industry representatives my comment on the proposed rules. But a conservative estimate would predict that the new rules will be published, and the comment period will conclude by year's end. Final rules will likely follow with effective dates for compliance sometime in early 2017. Stay tuned.
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