TL/DR –
The Biden-Harris administration has announced a series of actions aimed at combating medical debt and addressing illegal practices by third-party debt collectors, which could significantly impact North Carolina where about three million people are affected by medical debt. The Consumer Financial Protection Bureau (CFPB) has released an advisory to prevent families from being targeted by illegal medical debt collection tactics, which include collecting on debts without substantiation, double-billing, charging for services already covered by insurance, and misrepresenting consumers’ rights to dispute bills. The CFPB is also working to protect consumers from unfair billing issues, such as those occurring when non-profit hospitals fail to provide financial assistance to eligible patients, and is committed to cracking down on debt collectors who attempt to collect debt not owed by patients.
Advisories Issued to Curtail Illegal Medical Debt Collection Practices in North Carolina
Vice President Kamala Harris announced actions on Tuesday to combat medical debt and prevent unlawful practices by debt collectors. These measures may aid up to three million North Carolinians with medical debt.
Actions include stopping debt collectors from targeting families with illegal debt collection tactics, enforcement on certain collectors and gathering evidence and data on US medical debt.
On Tuesday, the Consumer Financial Protection Bureau (CFPB) released an advisory to protect families from illegal medical debt collection.
The advisory emphasizes the obligation of debt collectors to ensure debts are accurate and substantiated before collecting. It warns that collecting inaccurate or invalid medical debts violates federal law.
The CFPB’s action, according to a press release from the bureau, aims to protect consumers from negligent or predatory practices leading to inflated health care costs.
CFPB Director Rohit Chopra stressed the need for this advisory to protect Americans from unfair collection practices.
The CFPB also released a consumer advisory on steps to take when facing unwarranted billing or illegal collection actions.
The agency has pledged to “crack down” on debt collectors collecting unowed debt, highlighting the common issue of non-profit hospitals failing to provide eligible patients with financial assistance.
In North Carolina, approximately three million adults likely carry medical debt, with about 8% of residents having medical debt in collections, as per an Urban Institute analysis.
Potential relief for civilians receiving care at military treatment facilities is also on the horizon, with a proposed new rule from the Department of Defense aiming to implement certain fee reductions and catastrophic cap waivers.
Together, these actions could significantly alleviate the burden of medical debt in North Carolina.
Progress on Medical Debt Crisis
About 100 million Americans owe over $220 billion in medical debt, making it the largest overall source of debt in collections, according to the CFPB.
Vice President Harris and President Biden have frequently addressed the negative impacts of medical debt and proposed solutions.
Therefore, barring medical bills from appearing on credit reports would improve the financial situation of millions of Americans with medical debt, allowing them better opportunities to secure jobs, rent homes, and get loans.
In North Carolina, Gov. Roy Cooper announced that nearly 100 state hospitals agreed to join the Medical Debt Relief Incentive Program, which is poised to eliminate $4 billion in medical debt for two million North Carolinians over the next two years.
Participating hospitals will forgive all medical debts for eligible patients, offer discounts on medical bills based on income, and prevent the sale of medical debt to collectors for those below 300% of the federal poverty level.
Experts suggest this program might become a national blueprint to address medical debt, which Vice President Harris might implement if elected in November.
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