CFPB Issues Warning to Medical Debt Collectors

The Consumer Financial Protection Bureau (CFPB) has started crafting a bill that would bar the reporting of medical debt on consumer credit reports, part of a broader push by the agency against medical debt. The CFPB has warned medical debt collectors in a recent advisory opinion that pursuing inflated medical charges that violate state and federal cost caps, as well as seeking payment for charges already covered by insurance, is violating federal law.

“Medical billing is often riddled with errors, including inflated or duplicative charges, fees for services the patient never received, or charges already paid,” said CFPB Director Rohit Chopra, according to Bloomberg Law. The advisory opinion is meant to ensure that consumers aren’t “unfairly chased by debt collectors over unsubstantiated or invalid medical bills.”

The advisory opinion stated that debt collectors are required to validate outstanding medical debt before contacting consumers, as well as provide accurate information regarding consumers’ ability to contest an alleged debt. Collectors are also prohibited from pursuing bills that have been “upcoded,” or exaggerated to increase the fee paid for a service.

Upcoding resulted in yearly overcharges of $656 million for Medicare Part A, $2.38 billion for Medicare Part B, and $10 billion to $15 billion for Medicare Part C between 2010 and 2019, according to a 2024 study by University of Arizona researchers and the Rensselaer Polytechnic Institute.

Additionally, debt collectors are prohibited from going after debts that surpass limits set by the 2020 No Surprises Act. Collectors would be violating federal law if they pursue consumers for medical debts above state caps, too.

Under the advisory opinion, medical debt collectors will also have to make sure they don’t collect on a double-billed debt that either a patient or insurer has already covered.