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Financial Services Law Insights and Observations

CFPB holds hearing on medical billing and collections

Federal Issues Agency Rule-Making & Guidance CFPB DHHS Department of Treasury Credit Cards Consumer Finance Medical Debt Installment Loans

Federal Issues

On July 11, CFPB Director Rohit Chopra delivered prepared remarks at a public hearing on medical billing and collections. Chopra commented on the prevalence of medical debt in the country, which affects over 100 million Americans, while $433.2 billion of the national GDP is sourced from consumers’ out-of-pocket expenses. Specifically, the CFPB hearing addressed the effects of medical payment products, including special-purpose credit cards and installment loans used to cover the cost of medical treatment, which Chopra claimed can leave patients “worse off.” The Bureau highlighted the predatory nature of such medical credit cards, which typically have a higher interest rate than other cards and are often presented to consumers by their providers. According to Chopra, the Bureau recently launched a public inquiry (covered by InfoBytes here) to answer questions related to these products.

During the expert panel discussion, multiple panelists raised issues regarding the federal requirements for hospital financial assistance programs that exist in exchange for tax benefits. Panelists criticized the complicated processes patients must follow for such programs and compared it to the simple and fast online application process for medical credit cards. Panelists also highlighted the need to include stronger, clearer federal requirements for hospital financial assistance programs, such as setting standards on income and setting minimums or floors, so consumers can access such services more easily. Panelists commonly noted that state requirements for hospital financial assistance programs are more robust than the federal requirements. In response to Chopra’s question on what the panelists wish to see from the Bureau regarding regulation, one panelist asked for a ban on deferred interest, noting the “special regulatory authority” the Bureau has. Another panelist requested that the agency ban medical credit cards from being offered in a medical setting, citing her communication with clients who claim they feel “pressured” to sign the paperwork in that setting. Additionally, another panelist requested that the Bureau prohibit the reporting of medical debt on credit reports—mentioning Colorado’s headway in being the first state to ban such reporting and noting the Bureau’s potential to ban it at a federal level. The panelists each applauded the agency’s efforts to bolster regulations on medical payment products.