On October 1, 2024, the Consumer Financial Protection Bureau (CFPB) issued an Advisory Opinion on the Deceptive and Unfair Collection of Medical Debt. Though labeled as an “advisory opinion,” this new guidance is legally binding and will take effect on December 3, 2024. This guidance aims to significantly impact medical debt collection under the Fair Debt Collection Practices Act (FDCPA) and Regulation F by requiring agencies to validate and substantiate debts before pursuing collection activity.
Under the new rules, medical debt collectors must ensure that every debt pursued is properly validated, which means confirming the accuracy of debt amounts, ensuring that services billed were actually rendered, and verifying that the amount being collected complies with both federal and state laws. The CFPB’s Advisory Opinion aims to protect consumers from unfair practices, reduce the chances of collecting incorrect debts, and promote transparency in the debt collection process.
So, what does this mean for medical debt collectors?
- Debt Substantiation: Collectors must verify each debt by reviewing records such as payment histories, signed patient agreements, and evidence of compliance with charity care policies. This involves scrutinizing every detail to ensure that the debt is legitimate and properly documented before initiating any collection efforts. Without proper substantiation, collectors may face legal consequences, including fines, lawsuits, and reputational damage. Therefore, substantiation must be a top priority, ensuring all documentation is complete and consistent across all accounts.
- Verification of Debt Amounts: Collectors must confirm that the amount being collected aligns with applicable federal and state laws, including requirements set forth in the No Surprises Act. This ensures that patients are not billed unfairly for services they did not actively choose, particularly those involving out-of-network providers. This verification process involves cross-referencing billed amounts with state and federal guidelines to ensure that they reflect reasonable and legal rates. Collectors need to develop clear protocols to ensure compliance with these requirements and avoid potential legal risks.
- Confirming Services Rendered: Collectors need to confirm that the services billed were actually provided, supported by accurate billing records. This level of verification protects both the consumer and the collection agency. This step is crucial, particularly in the medical field, where billing errors or misunderstandings can easily occur. Collectors must have robust verification procedures that involve not only healthcare providers but also billing experts who understand the intricacies of medical coding and reimbursement.
- Avoiding Collection on Settled Debts: Collectors are prohibited from pursuing debts that have been paid or settled. Robust systems are needed to verify account statuses to prevent any compliance violations. This requires a seamless integration of data between collectors and healthcare providers to ensure real-time updates on the payment status of accounts. Collectors should also establish strong auditing procedures to double-check account statuses before beginning any collection activities.
TSI’s approach ensures our clients stay compliant with these new regulations. We have developed a comprehensive process involving advanced validation technology, collaboration with healthcare providers, and ongoing staff training to ensure that every debt we pursue is thoroughly vetted and meets all regulatory requirements. This enables our clients to stay ahead of compliance issues, avoid costly disputes, and strengthen consumer trust. Our technology integrates directly with client systems to ensure that information is accurate, and our dedicated compliance team conducts regular audits to keep operations on track.
Conclusion
The upcoming CFPB regulatory changes are significant, and preparedness is key. Through this blog series, we aim to educate our clients and prospects about the importance of debt validation and how to navigate these changes smoothly. TSI is committed to staying at the forefront of compliance and helping you adapt, reduce administrative burdens, and continue generating revenue while protecting your reputation.
If you’re seeking a partner with the expertise, tools, and support to meet the new CFPB regulations, TSI is ready to assist. Reach out to learn more about how we can help you achieve compliance and enhance your collection processes. You can contact me at 863-698-9769 or justine.mathews@tsico.com.
