By: Account Management Resources

Recently, the three major credit reporting agencies (CRAs) announced they will no longer report medical debt under $500 and will extend reporting overall medical debt from six months to one year. Stacy Willis, Director of Operations for Account Management Resources (AMR), shares how this change will affect debt collection and the economy at large — and what to do about it.

Q: Can you explain the significance of this announcement?

A: In July, Experian, TransUnion and Equifax will stop including medical debt under $500 on credit reports and delay overall medical credit reporting. When this happens, it will become nearly impossible for medical providers or debt collection agencies to recoup the funds owed, and medical practices will likely have to absorb the costs.

Q: How did this decision come about? Was a law passed?

A: The Consumer Financial Protection Bureau (CFPB), Experian, TransUnion and Equifax exclusively decided on the new policy, after which the companies made this joint announcement. This is a major red flag because this policy change should have gone through Congress.

Q: Why will it be harder to collect those funds?

A: Most consumers will pay debts when they land on their credit reports. And when they do, consumers contact us to help them get the debts removed. If debts aren’t listed on credit reports, people may have either no idea or no incentive to pay, leaving someone else to cover the cost. Most of the time, it’s the medical practitioner who provided the services in the first place.

Q: Why is it a problem for medical providers to absorb these costs?

A: Large healthcare systems often have the capital to absorb these costs, but small, independent health providers do not. These medical providers often operate in small towns and rural areas where large health systems aren’t present. If small-scale medical providers must write off too many unpaid bills, they may be forced to increase the cost of services or ultimately go out of business.

Q: Does this regulation help consumers with unexpected medical costs?

A: No, because medical debt under $500 is usually associated with planned services. This debt is usually related to a co-pay or deductible, which the patient agreed to pay when they accepted health insurance from a particular company. Any medical debt over that amount is usually due to an unplanned surgery or illness.

Q: Could this affect the whole economy?

A: Yes! Rising costs in one industry, such as healthcare, undoubtedly affect prices in others. Inflation is the highest it’s been in 40 years. To keep costs down, it’s important to accurately report medical debt to increase the chances medical practitioners can collect on the services they provide, either from the insurance companies or the consumers.

Q: What can we do about this? What is AMR doing about it?

A: Contact your representatives in the U.S. House and U.S. Senate, urging them to pay attention to the new CFPB ruling and push for legislative action. AMR is a member of ACA International, which has responded to the policy change by urging the CRAs to activate their lobbyists to fight this regulation. In the meantime, we encourage medical providers to alert their colleagues and educate patients to avoid delayed payment and financial burden.