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| Topics and Issues | Medical debt (39) |
In February 2022, the Department of Veterans Affairs issued a press release noting that it has “published a final rule in the Federal Register…for amending VA’s procedures for reporting debt to consumer reporting agencies.” According to the press release, the “new changes will result in a 99% reduction in unfavorable debt reported to consumer reporting agencies, thus reducing financial distress for Veterans. Previously, roughly 530,000 allowable VA debts were reported annually to CRAs resulting in approximately 60,000 delinquent VA debts being referred to credit reporting agencies each year.”
The Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020 (Pub. L. 116-315, Sec. 2007) provides the Secretary authority to prescribe regulations that establish the minimum amount of benefits or medical debt that the Secretary will report to the CRA. This change will establish the methodology for determining a minimum threshold for debts reported to CRA. 38 U.S. Code § 5320.
CFPB Director Chopra was quoted in the VA press release. The CPFB issued a blog on the subject, New VA rule relieves financial distress for thousands of veterans with medical bills. The CFPB blog notes that “[a]ggressive debt collection and coercive credit reporting can make matters worse by pressuring families to pay medical bills.” (emphasis added). Pointing back to a 2014 CFPB study, CFPB Study Finds Medical Debt Overly Penalizes Consumer Credit Scores, the Bureau noted today that its
research shows that, generally, the existence of medical debt on a credit report has not been a good predictor of whether or not people will pay future credit. Medical debt is generally not debt that families can avoid taking on or can shop around for. In many circumstances, patients and families confronting a medical bill are caught in a doom loop between the insurer and the medical provider. Patients and their families looking at a bill for medical services can have trouble identifying whether the billed services were actually received and whether the correct amount was billed. Using the credit reporting companies to force payment of bills that may not even be owed hurts families and generally does not provide useful information to users of credit reports.
The new rules are summarized in the Federal Register where the
VA will only report those debts that meet the following standards:
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- The debt is classified as currently not collectible. For purposes of this paragraph, the debt is currently not collectible if VA has exhausted available collection efforts, including, as appropriate, referrals for administrative offset and enforced collection;
- The debt is not owed by an individual who is determined by VA to be catastrophically disabled or has reported to VA a gross household income below the applicable geographically adjusted income limits that would entitle a VA beneficiary to cost-free health care, medications and/ or beneficiary travel; and
- The outstanding debt amount is over $25, or such higher amount VA may from time to time prescribe, in accordance with § 1.921 of the part. • The minimum threshold set forth in the paragraph will not apply if there is an indication of fraud, misrepresentation, or bad faith on the part of the individual in connection with the debt.