Removing Medical Collections from a Credit Report (with Help from HIPAA)
Due to the complexity of medical billing, human error, and medical ID theft, it is not unusual for “allegedly” unpaid medical bills to appear on a credit report – potentially impacting individuals’ access to credit, employment, and housing. However, recent changes to credit reporting regulations and industry practices have made removing medical collections from a credit report easier – and HIPAA can help with the process.
In 2021, the Consumer Financial Protection Bureau (CFPB) estimated that 43 million Americans had “allegedly” unpaid medical bills on their credit reports – “allegedly” because, according to CFPB Director Rohit Chopra, many people “first learn of an erroneous medical bill in collections when they apply for a mortgage or car loan”. In such circumstances, “people are forced to choose between a protracted fight to fix the mistakes, or paying the bill” – if they can.
There are several potential reasons for erroneous medical bills appearing in credit reports. Payer reimbursement processes, debt collectors’ practices, and the ways in which information about medical collections is communicated to credit reporting agencies can result in mistakes being made. Medical ID theft is also a major contributor to erroneous medical bills appearing in credit reports – reportedly affecting about 1.5 million Americans each year.
Changes to Credit Reporting Regulations and Industry Practices
Since 2021, changes to credit reporting regulations and industry practices have enabled nearly half of people with medical debt to have it removed from their credit histories. In the context of removing medical collections from a credit report, the No Surprises Act (effective January 2022) protects patients from out-of-network charges by limiting the amount patients have to pay for healthcare to what they would pay if the healthcare provider was in-network.
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This measure makes healthcare more affordable and reduces the number of people who get into debt, or takes the amount of debt they acquire below the $500 threshold for being included in Equifax, Experian, and TransUnion credit reports (since April 2023). The three Nationwide Credit Reporting Agencies have also removed historic debts that have since been paid from credit reports, and extended the time before an unpaid medical bill appears on a credit file.
In addition to the above, CFPB recently published a Notice of Proposed Rulemaking that will close a loophole in the Fair Credit Reporting Act (Regulation V) that permits consumers’ medical financial information to be obtained and used by creditors in connection with credit eligibility determinations if certain conditions were met. When finalized, the Rule will further reduce the number of times information about medical collections can appear in a credit report.
Removing Medical Collections from a Credit Report (How To)
Despite the recent developments, there are still $ billions of outstanding and/or erroneous medical bills in collections appearing in credit reports. The advice for removing medical collections from a credit report varies depending on whether an individual finds out about an alleged debt from a healthcare provider, from a medical debt collector, or from reviewing a credit report.
From a Healthcare Provider
If you find out about an unpaid bill from a healthcare provider, it is unlikely to yet appear on a credit report. Nonetheless, if you do not recognize the service allegedly provided for you – or the amount being requested is higher than anticipated – you should request an itemized list of services and providers. It may be the case you are protected by the No Surprises Act, the service should have been covered by insurance, or the debt might not be yours due to an error or medical ID theft.
- If the bill is justified, you can prevent it from being sent to collections and potentially appearing on a credit report by paying the bill or negotiating a payment plan. You may also qualify for financial aid.
- In the event that the bill has already been paid, you will need to send documentation to the healthcare provider (i.e., credit card receipt, bank statement, etc.) to have the debt removed from its records.
- If the bill is incorrect, you can ask the healthcare provider to correct the error. If the healthcare provider is unresponsive or uncooperative, you may need to engage the services of a medical billing advocate (but also see “How HIPAA Can Help” below).
From a Medical Debt Collector
If you are approached by a medical debt collector, the most important things to do are pause and review your rights. Medical debt collectors must comply with the Fail Debt Collection Practices Act and the CFPB’s Debt Collection Rule. These limit the number of times and the ways you can be contacted. They also require medical debt collectors to satisfy the conditions of contact and issue a validation notice before they report the debt to credit reporting agencies.
To prevent qualifying medical collections being added to a credit report (i.e., more than $500 and more than a year old), you should follow the same steps as if you found out about an unpaid bill from a healthcare provider. You should also request a credit report to see if the debt already appears on the credit report. If so, and the bill is paid, incorrect, or doesn’t apply to you, removing medical collections from a credit report involves following the advice in the next section.
From Reviewing a Credit Report
If you find a medical collection under $500, a paid medical collection, a collection less than a year old, or errors on a credit report, fixing the error and removing medical collections from a credit report required contacting both the credit reporting agency and the organization that provided the information. The organization that provided the information is usually the medical debt collector, who it will be possible to contact via the healthcare provider responsible for the original bill.
You can contact the three Nationwide Credit Reporting Agencies online, by mail, or by phone. When reporting an erroneous medical bill, you should refer to your credit report so that you can correctly and fully identify the information that you are disputing. Your report contains a consumer identification or report number that should be included with your dispute to allow the credit reporting company to identify you. There is no charge for making a report, and credit reporting agencies must respond to your report within thirty days.
CFPB has produced a guide to disputing an error on a credit report. The guide includes the contact information for the three Nationwide Credit Reporting Agencies, the information you should provide in your report, and details of how to make a complaint to CFPB if your report is not attended to in a timely manner. Note: If you suspect, or it transpires, that the error on the report is a result of medical ID theft, you can get help reporting and recovering from the theft at IdentityTheft.gov.
How HIPAA Can Help with Removing Medical Collections
The HIPAA Privacy Rule (§164.524) gives patients and plan members a right of access to inspect and obtain copies of their Protected Health Information. Protected Health Information not only includes information about an individual’s health, but also any treatment and payment records. Therefore, the HIPAA right of access allows patients and plan members to request itemized bills containing Current Procedural Terminology (CPT) codes for each service provided.
Individuals – or a medical billing advocate acting on an individual’s behalf – can look up the CPT codes on the CMS website and find the “Relative Value Units” (the Medicare price for every code). The Relative Value Units can help individuals identify if they have been charged for services they did not receive, charged for services covered by their insurer’s Explanation of Benefits, overcharged in error, or have other erroneous charges added to their medical bill.
This should not be a long process because, in order to comply with HIPAA, covered entities must respond to access requests within 30 days of the requests being made. The failure to comply with access requests has, to date, resulted in 48 HIPAA violation fines being issued. With the risk of further regulatory action by CFPB, CMS, and FTC if billing irregularities exist, the healthcare provider may find it more convenient to erase the medical bill, substantially discount it, or agree to a favorable payment plan.
The Reduction of Medical Debt is a Hot Topic
At the beginning of October, the Biden-Harris Administration announced new actions to reduce medical debt and address illegal medical debt collection practices. Noting that medical debt can “stand in the way of someone’s dream to own a car, home, or small business”, Vice President Harris said that American Rescue Plan funds would be leveraged to eliminate an estimated $7 billion in medical debt for up to nearly 3 million Americans by the end of 2026.
The Vice President also provided further information on CFPB’s Notice of Proposed Rulemaking for removing medical collections from a credit report, and on a second Rule proposed by the Department of Defense aimed at providing financial relief for civilians receiving medical care at military medical treatment facilities. A new initiative was also announced which will see HHS collecting evidence to inform future actions to address the burden of medical debt.
