Federal regulations around consumer finance apply to medical debt. Beyond the Equal Credit Opportunity Act (ECOA), medical debt is subject to regulation under the Federal Debt Collection Practices Act (FDCPA). These regulations are often overlooked when planning collection strategies, which can have serious financial implications.
Over the last five years, the Consumer Financial Protection Bureau (CFPB) has increased enforcement around medical debt collections. In 2014, a CFPB medical study found that 52% of debt in collection on credit reports is from medical expenses. This spurred the CFPB increasing monitoring and actions against medical debt collectors. There are penalties for every phone call made that violates regulations. Revenue cycle managers need to understand current regulations and be aware of upcoming changes.
The FDCPA was introduced in 1977 to end abusive debt collection practices. FDCPA outlines rules for when and how a debtor may be contacted. For example, under the FDCPA, debt collectors cannot make repeated calls, call before 8am or after 9pm, call on a Sunday, use abusive or obscene language or mislead debtors. FDCPA regulation applies to third-party debt collectors and represents best practices for first-party collectors. View details on FDCPA on the FTC's website.
Proposed FDCPA Regulation
This May, the CFPB announced proposed additions to the FDCPA. Additions will further limit when, how and in what ways debt collectors can communicate with consumers. New regulations will introduce restrictions around content, cadence and communication mediums. The new proposal includes the following:
- Limits on call attempts and telephone conversations. Collectors may call to debtors no more than seven times in seven days. They may also not call seven days after a conversation.
- Introduction of "limited-content message", restricting what a debt collector can include in any message.
- Rules for new methods of communication. New regulations will allow collectors to communicate with patients through email and text messages, as long as they offer an opt-out option.
- Disclosure requirements, ensuring debt collectors provide specific information about the debt and about consumer protection.
You can read the full proposal, here.
Current rules and proposed regulations are important to consider in any patient payments strategy. It's an art to balance technology that increases payments while compiling with regulations. Sift's models cover both -- using data science to determine the best route to drive payment, but without sidestepping regulations.