Rule would keep medical debt off credit

Doctors say it would hurt them financially

By: Ken Alltucker
USA Today

..... When Cheryl Montgomery awoke in the hospital after a medical emergency, the last thing on her mind was the coming billing headache.
..... Even with robust health insurance, Montgomery owed $25,000 to an ambulance company an out-of-network hospital, an anesthesiologist, a lab and various doctors. She hired a consumer advocate who negotiated the bills to a reduced amount, which she paid.
..... She assumed her medical financial crisis was over. Not even close. A year and a half later, a collection agency representing a doctor she couldn't recall ever meeting billed her $1,700. The collection agency reported the debt to credit rating agencies hat lower her credit score the same month she was trying to lease a new vehicle.
..... Montgomery filed a complaint with the consumer protection bureau and demonstrated that the doctor had never billed her or her insurance company. Instead, the doctor's practice sent the debt to a collection agency. The bureau sided with her.
..... But she still had to pay in a different way: Her care payment increased by subcaste of her lower credit score. The damage "Was actually tangible," Montgomery said. "It wasn't just anxiety."
..... Montgomery;s experience is all too common in a nation where 1 in 5 adults have some medical debt. Bill ling errors and disputes over insurance payments can result in credit reporting agencies sharing inaccurate and often harmful informaition. Such reports not only damage a person's ability to borrow money of a car or home - they can scuttle job prospects, apartment rentals and utility hookups.
..... Medical bills account for 58% of debt collection on consumers' credit records, according to a 2022 report from the Consumer Financial Protection Bureau.
..... After that report, the three largest credit reporting companies - Equifax, Experian and TransUnion - agreed to remove several forms of debt from credit reports: paid medial debts, unpaid medical debts less than a year old and medical debt less than $500.
..... Now the bureau wants to eliminate all medical debt from credit reports. The federal agency proposed the rule last June, [2024] collected extensive public comments and is working toward finalizing a rule that would take effect in 2025, spokesperson said.
..... But with former President Donald Trump returning to office, it's unclear what will happen with this proposal or what steps the new administration might take to protect consumers from medical debt.

Advocates urge patient protection

..... Eli mating medical bills from credit reports is something patients desperately need, said Carie Joy Grimes, founder and CEO of WorkMoney, a nonprofit consumer organization.
..... "Medical emergences can happen to anybody at any time and can cause significant debt no matter how well insured or how well prepared somebody is," Griomes said. "And that is why medical debt should not be reflected in credit reports. We know that having medical debt is not a good predictor of whether someone can pay their bills or is responsible with their money."
..... Patricia Kelmar agreed. She's senior director of health care campaigns at U.S. PIRG Education Fund. "there debts are on reports that are being used to determine whether you should trust this person is making valid financial decisions - that's want a credit report is," Kelmar said. "But medical debt sits totally outside of that type of individual decision-making."
..... Unlike consumer who run up credit card debt to finance a trip tor buy luxury goods, people who incurs medical debt often do so under emergency circumstances, Kelar said.
..... George Curlee, 50, recently had his toe amputated because of complications from diabetes he spent two weeks in the hospital recovering, which left him with more than $20,000 in medical bills. Curlee has resumed his job at Walgreens and is truing to pay back everything his Affordable care Act insurance plan did not cover.
..... He had been trying to rebuild his credit score so he could have access to a cerise card and was well on his way before the surgery. He had recovers medically, but his credit score took a big hit.
..... "I do as much as I can., but it;s still got thousands of dollars that you've got to pay back," Curlee said.
..... Cancer patients in particular face extreme financial pressure while tabling illness, according to a study from Beth Israel Deaconess Medical Center and Harvard Medical School released last month. [10/2024] Researchers found cancer patients were nearly five times more likely to face bankruptcy than patients who didn't have cancer. Average credit scores for cancer patients were almost 80 points lower than for patient without cancer. Some people with bladder, liver, lung and colorrectal cancers reported their lower credit scores lasted nearly 10 years after their diagnosis.

Collectors: 'Economic gut punch'

..... Doctors and collection agencies have pushed back against additional protections. Many of the more than 74,000 comments submitted in response to the Consumer Financial Protection Bureau's prosed rule describe how t would harm hospitals, doctors, dentists, therapists and collection agencies.
..... Scott Purcell, CEO of ACA International, a trade group representing collection agencies, law firms, asset-buying companies and creditors, said in a submitted comment that the rule would result in more consumers being sued and higher borrowing and medical costs.
..... Some doctors said they would be forced to collect payments up front, which could reduce access to care for some patients. Others said it could possibly cause practices to close in rural communities where patients already have limited options.
..... Brad Klein says his company, Paid in Full Incorporated, severs small medical and dental practices, many of which have been financially harmed by the federal prohibition on credit reports for bills under $500. Patients" would say to my collectors: ' I don't have to pay this. You're not going to be on my credit, so I'm not going to pay it,' " Kline said.

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