Consumer Protection for Medical Bills

According to the Consumer Financial Protection Bureau (CFPB), a federal government consumer watchdog, medical debt is one of the most common types of debt on credit reports. The CFPB has recently made addressing medical debt a central focus.

If you’re facing medical debt collection, there is help. State and federal laws offer consumer protections. Government agencies can also help. If you need legal advice and guidance, you can also talk to a consumer protection lawyer.

The Role of Insurance in Medical Billing

Medical care can be expensive. Health insurance helps to manage medical expenses and reduce medical costs. If you’re insured, you pay out-of-pocket expenses such as copayments, deductibles, and coinsurance. Your health insurer compensates your healthcare provider for your care, including emergency care. If you’re uninsured, medical billers send bills directly to you for payment.

Even with health insurance, medical bills can add up. In such instances, the debt can go unpaid and end up on your credit report. This will lower your credit score and reduce your credit opportunities.

Key Laws Protecting Consumers From Medical Bills

Medical debt accounted for 58% of all third-party debt collection on consumer credit reports in 2020. If medical debt collectors contact you, several state and federal laws provide essential consumer protections.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) protects you against abusive debt collection practices and unlawful credit reporting. There are limits on when and how debt collectors can contact you. They can’t call you around the clock. They can’t call you too often and must stop contacting you if you ask them to do so.

Under the FDCPA, the debt collector must deal with your attorney if you’ve hired a lawyer to handle the matter.

Many states have their own fair debt collection practice laws that could offer even more help.

The No Surprises Act

The No Surprises Act is a federal law that protects you against unexpected medical bills. Surprise medical bills often occur when you receive health care from out-of-network providers. This can happen when you need emergency services. It may also occur at in-network hospitals where some providers, such as air ambulance service providers, anesthesiologists, or radiologists, might be out-of-network.

You can get a good faith estimate of the cost of your care upfront, especially if you’re uninsured. If your bill exceeds the estimate, you can use the law’s dispute resolution process for payment disputes.

Some states also have a “no surprise medical bill” law. California has had such a law since 2017.

Nursing Home Reform Act

The Nursing Home Reform Act limits collection activities for medical debt. Non-profit hospitals can lose their non-profit tax status if they fail to evaluate patients’ eligibility for financial assistance before collecting a debt. Nursing care facilities also can’t collect debt from third parties.

Statute of Limitations

Debt collectors can’t collect debts that are several years old. Most states have a three to six-year statute of limitations. A consumer protection lawyer can advise you on the time limitations in your state.

Bankruptcy

While bankruptcy is a last resort, many have used it to discharge medical debt. You can do this with a Chapter 7 bankruptcy or put medical debt under a payment plan with a Chapter 13 debt reorganization.

Medical Debt Reporting on Credit Reports

Debt collection agencies must wait at least 12 months to report an unpaid medical bill to the major credit bureaus. Once reported, unpaid medical debt can remain on your credit report for up to 7 years.

Medical debts under $500 no longer show up on your credit report. In 2023, credit bureaus stopped adding medical debt that’s less than $500 to credit reports. Credit bureaus also dropped paid medical debt from credit reports.

The CFPB wants to eliminate medical debt credit reporting altogether. In June 2024, the federal agency proposed a rule that would remove medical bills from most credit reports.

Disputing Incorrect Medical Charges

It’s probably no surprise that medical providers and medical billers sometimes make mistakes when billing.

An issue in medical debt collections is when debt collectors attempt to collect medical debts without adequate proof, as said by the CFPB. The FDCPA requires that debt collectors verify the debts they’re trying to collect upon consumer request. If you dispute the debt or part of it, the collection agent must obtain verification of the debt.

The CFPB has received many consumer complaints from people who didn’t get verification of medical debts from debt collectors. It has brought enforcement actions against debt collectors in these cases.

To prevent this, request a list of detailed charges. Ask your healthcare provider for a “superbill.” A superbill is a list of itemized charges. A superbill shows each medical procedure billing code, the amount paid by insurance, and the amount you owe.

Also, look for upcoding, which is illegal. This occurs when your bill has billing codes representing a higher level of care than you received or reflecting a more complex procedure than they provided. The superbill makes it easier to see whether the charges are accurate.

Tips for Negotiating Medical Bills

There are actions you can take to reduce your bill.

You can negotiate the amount you owe. Medical charges can be negotiated, according to the CFPB. First, ask the healthcare provider for reductions. Then, ask the debt collector to lower the amount you owe.

You can also ask for a payment plan. Federal rules don’t require that hospitals offer payment plans. However, a few states require hospitals to provide payment plans for low-income and uninsured patients.

Non-profit hospitals must offer financial assistance to offset healthcare costs for low-income patients to maintain their tax-exempt status. They must also offer “charity care” for some patients. Each hospital should post its financial assistance policy and application on its website in an easily visible location.

Also, you can talk to a patient advocate. Patient advocates can help you understand the details of your medical charges and your bill request. They can also help you apply for financial help. Check your healthcare provider’s website or hospital to find a patient advocate who can work with you.

When To Seek Legal Assistance

You can sue debt collectors when they violate state and federal law. Talk to a lawyer with experience in medical debt collection for more information about your rights. If you think a medical charge is illegal or believe a medical debt collector is breaking the law, talk to a debt collection lawyer near you.