10/31/2023 | News release | Distributed by Public on 10/31/2023 14:00
October 30, 2023
The Honorable Rohit Chopra
Consumer Financial Protection Bureau
RE: Small Business Advisory Review Panel for Consumer Reporting Rulemaking: Outline of Proposals and Alternatives Under Consideration
Dear Director Chopra:
On behalf of the American Hospital Association's (AHA) nearly 5,000 member hospitals, health systems and other health care organizations, and our clinician partners - including more than 270,000 affiliated physicians, 2 million nurses and other caregivers - and the 43,000 health care leaders who belong to our professional membership groups, we thank you for the opportunity to provide comments on the Consumer Financial Protection Bureau's (CFPB) proposals related to medical debt reporting.
In the first quarter of 2023, household debt in America rose to $17.05 trillion, representing a precipitous increase over the last decade.1 In part, rising debt can be attributed to cost growth outpacing income growth which requires many Americans to borrow more to pay for housing, higher education and consumer goods. For example, one study found that college costs have increased by almost 170% since 1980, while the average earnings for young adults (aged 22-27) have only increased by 19%.2 Middle class Americans are shouldering much of this debt, and many are living paycheck to paycheck.
Medical debt, a consequence of patients not paying some or all their health care bills, is one type of debt held by many Americans. While health insurance is intended to be the primary mechanism to protect patients from unexpected and unaffordable health care costs, for too many that coverage is either unavailable or falling short.
Trends in health insurance coverage are driving an increase in medical debt: these include inadequate enrollment in comprehensive health care coverage, growth in high-deductible and skinny health plans that intentionally push more costs onto patients, and misleading health plan practices that confuse patients' understanding of their coverage. These gaps in coverage leave individuals financially vulnerable when seeking medical care. We wrote to you at length about these issues in our recent comments for the medical payment products request for information. Therefore, we will only briefly summarize the root causes of medical debt here.
Hospitals and health systems are very concerned about patients' medical debt. Hospitals are the only part of the health care sector that provide services to patients regardless of their ability to pay. In addition, they backstop that commitment by providing financial and other assistance for those who cannot pay - including helping patients qualify for federal and state health care programs, such as Medicaid and the Health Insurance Marketplaces. In doing so, patients can receive regular preventive care, not just episodic care for serious injuries or illness. In addition, hospitals absorb billions of dollars of losses for patients who are unable to pay their bills, mainly due to inadequate commercial insurance coverage; in 2020, the latest figure available, hospitals provided more than $42 billion in uncompensated care.9
This is why hospitals are staunch supporters of ensuring everyone is enrolled in some form of comprehensive coverage. They deeply value and take seriously their duty to care for anyone who comes through their doors regardless of ability to pay and, indeed, are the only part of the health care system with such awesome responsibility.
However, we appreciate that closing the remaining coverage gaps may be a longer-term solution and that more immediate steps can be taken to help prevent medical debt, as well as protect patients from the consequences of medical debt. To that end, the AHA has routinely developed patient billing guidelines to help mitigate patient's risk of medical debt. Our Board of Trustees adopted the most recent set of guidelines in 2020, which reaffirm the hospital field's commitment to:
Notably, several of the guidelines directly address medical debt, including encouraging hospitals to forego adverse credit reporting of medical debt. So far, nearly 2,800 hospitals and health systems have affirmed their commitment to the guidelines, and the AHA revisits them frequently for updating.
The AHA patient billing guidelines, therefore, largely align with the CFPB's proposals to:
Below, we specifically address the questions posed by the agency as requested. We are replying to the Medical Debt Collection Information section, which requires responses to 1-7 (general questions) and 35-38 (medical debt specific questions).
ay impact hospitals as we are unaware of the extent to which hospitals directly offer medical payment products that would require a credit eligibility determination and assume there is variation across hospitals.
These proposals would not generate any costs to the AHA. We do not have information on the extent to which these proposals may create new costs for certain hospitals and health systems; however, we expect costs would vary based on hospitals' role in extending credit to patients to help finance their care.
We do not have a perspective on this question.
We do not have any recommendations on alternative approaches to consider.
It is possible that this proposal could remove an incentive for individuals to get insurance if they believe they can rely on not paying their bills. While hospitals offer financial assistance, such assistance is not a substitute for comprehensive health insurance and, as a result, patients who choose to forego coverage may face a barrier to routine preventative and restorative care. It is also possible that this proposal may incentivize patients to forego paying bills for care that they received and for which they have been determined liable. However, it is not possible to quantify the cost of either of these potential consequences.
We are not aware of any duplicative or overlapping statutes or regulations.
If the CFPB prohibits the sharing of medical debt information with consumer reporting agencies, we would expect debt collectors to comply.
Both alternatives have merit. Only permitting reporting after a certain period has passed could preserve any disincentive for an individual to choose not to pay a medical bill for which they are both liable and able to pay while giving sufficient time to educate the patient on their obligations and provide the opportunity for repayment. Setting a minimum dollar value threshold to unpaid balances that may be subject to collections could prevent small dollar claims from disproportionately impacting an individual's credit score.
Requiring that consumer reporting agencies verify that any disputed medical debt is valid could help both preserve the disincentive to forego paying valid medical bills while preventing individuals from errors that could inappropriately damage their credit.
We appreciate your consideration of our comments. Please contact me if you have questions or feel free to have a member of your team contact Molly Smith, AHA's group vice president for public policy, at [email protected].
Senior Vice President
Public Policy Analysis and Development