By Shawn Gretz
As reported by the Wall Street Journal today, March 18, 2022, there are big changes coming from the three major credit bureaus (TransUnion, Equifax, and Experian) on medical debt reporting. Americollect is throwing our support behind these changes as they will have an impact on so many patients. This change comes not from regulation, but from the credit bureaus self-regulating out of fear of the Consumer Financial Protection Bureau (CFPB) stepping in to regulate. Let’s look at these changes and their impact.
Change #1 – All paid medical debt will be removed from the credit bureau report
This is fantastic news for patients across the country as it means making payments will help them improve their financial well-being! Because of our Ridiculously Nice values, Americollect has already been doing this for over five years by removing paid debts from the patient’s credit bureau report! Normally a debt stays on the credit report for seven years from initiation of that debt. Beginning in July, a reported payment will trigger those accounts to be removed immediately. Americollect reports daily to the credit bureaus, which means patients will experience relief immediately upon payment!
Change #2 – Balances less than $500 will not be allowed on the patient’s credit report
For years the CFPB has said that medical debt is a less predictive indicator of a person’s credit worthiness for loans. According to the CFPB, 62 percent of medical collections were under $490 in 2020. The fragmented nature of medical debt with facility, physician, and family charges causes this to occur. With medical debt being less predictive for a loan, the three major credit bureaus are making the choice to limit the balance threshold later in 2022 or 2023. As the Wall Street Journal article points out, this limit may be increased in the future as well.
Change #3 – All medical debt will not be reported for one year from a term called “date of delinquency”
Currently collection agencies must wait 180 days from the listing of the account to report to the credit bureau. This is being extended to one year. The reporting extension will provide patients with more time to setup payment plans and resolve their medical debt, a win for patients.
What is the impact that you may experience? For organizations that utilize credit bureau reporting, Americollect does believe there will be a slight financial impact felt through decreasing recovery percentages. Even with that reduction in recovery, Americollect is in support of these changes. Our core value of doing the “Right Thing” for all patients guides us in these decisions, as the recovery of medical debt continues to evolve to improve the patient experience!
Learn more on our free webinar
Want to learn more about how these changes came about and the potential impact they may have on your facility? Click Here to view the recorded webinar.
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