*Garrett Kelly is not licensed to practice law in any jurisdiction; his bar application is pending in Virginia.

On March 1, the Consumer Financial Protection Bureau (CFPB) released its “Medical Debt Burden in the United States” report, which questions whether consumer credit reports should include unpaid medical billing data.

According to the report, the CFPB found that medical debt is the most common debt collection tradeline on credit reports in the U.S., totaling $88 billion in medical bills in 2021.

COVID-19 further increased medical expenses among both insured and uninsured patients, especially in minority communities that were already disproportionately susceptible to medical debt compared to the national average. The CFPB also found that “medical billing data on a credit report is less predictive of future payment than reporting on traditional credit obligations.”

In the press release accompanying the report, the CFPB discussed the “challenging and burdensome nature of the medical system,” and emphasized that the system is supported by a “credit reporting infrastructure where mistakes are common.” In his remarks on the report, CFPB Director Rohit Chopra observed that “it’s hard to call medical debt real debt. Few people choose to take on medical debt, and typically, patients have no idea how much they will be charged for service or a procedure.” Overall, the press release conveys the CFPB’s concern that coercive credit reporting is perpetuating the extraordinary scope of the medical debt burden.

In light of the report, the CFPB intends to prioritize the following steps to curtail coercive credit reporting of medical debt:

  • Closely scrutinize the procedures used by consumer credit reporting agencies to ensure the accuracy of medical billing data and exclude furnishers of inaccurate information from the credit reporting system; and
  • Work with other federal agencies, including the U.S. Department of Health and Human Services and the U.S. Department of Veterans Affairs, to enforce new standards for reporting medical billing data, and to increase access to the financial assistance programs offered by medical providers.

Troutman Pepper will continue to monitor the CFPB activity and other important updates within the consumer financial services industry.