CFPB Highlights Changes in VA Medical Debt Credit Reporting Practices as Precedent for Broader Healthcare Industry

In a blog post, the CFPB reported that the Department of Veterans Affairs (VA) has announced a change to when it will report information on outstanding medical bills to consumer reporting companies.

Under the new VA rule, the VA will only report medical debt that meets all of the following standards:

• The VA has exhausted all other debt collection efforts,

• The VA has determined the individual responsible is not catastrophically disabled or entitled to free medical care from the VA, and

• The outstanding debt is over $25.

The CFPB states in the blog post that “[f]undamentally, the VA’s action decouples the collection of medical bills from coercive credit reporting.  This action by the VA sends a resounding message to the healthcare industry that coercive credit reporting is wrong.”

In a publicly-distributed email about the VA’s action, the CFPB described it as “a clear and important precedent for the health care industry.”  In addition, the VA’s press release about its action contains the following statement by Director Chopra:

This action by the Department of Veterans Affairs sets an important new standard to halt the financial distress many families face when medical debt unfairly hits their credit report.  I expect that many in the health care industry will seek to follow Secretary McDonough’s lead to end the practice of forcing patients to pay up through aggressive credit report coercion.

The CFPB’s characterization of the VA’s action as “precedent for the health care industry” and Director Chopra’s reference to the VA’s action “as an important new standard” suggests that health care providers or their collectors that continue to engage in the practice of reporting medical debt before exhausting collection efforts could be targeted by the CFPB under its UDAAP authority.  Companies outside of the health care industry that use credit reporting only as a debt collection technique should also be mindful of potential risks arising from that practice.