ADA urges caution on credit reporting proposal that would exclude medical debt

Federal rule could impact debt collection practices

The ADA expressed concern about a federal proposal that would prohibit credit reporting agencies from including medical debt when running credit checks, according to an Aug. 9 letter to the Consumer Financial Protection Bureau.

The ADA is urging the Consumer Financial Protection Bureau to consider multiple recommendations to mitigate adverse impacts on dental practices.

“We look forward to working with the [Consumer Financial Protection Bureau] to develop a rule that balances consumer protection with the financial sustainability of health care providers,” the letter reads.  

“The proposed rule may inadvertently reduce the incentive for patients to prioritize the payment of their dental bills, knowing that nonpayment will not affect their credit scores,” wrote ADA President Linda J. Edgar, D.D.S., and Executive Director Raymond A. Cohlmia, D.D.S. 

The Consumer Financial Protection Bureau is also proposing to prohibit credit reporting companies from sharing medical debt information with prospective lenders to ensure sensitive health information remains protected, but the ADA says the rule would compromise the bargaining position of creditors attempting to collect legitimate medical debt. 

“Dental offices would typically sell any outstanding debt to a collection agency,” the letter reads. “Sensitive health information is not part of that transaction.”   

Sharing necessary information with debt collectors is permitted under the Health Insurance Portability and Accountability Act. 

The ADA said the bureau’s proposed rule relies heavily on various studies that lack representative data and “have methodological limitations that raise concerns about their applicability for broad regulatory changes.” 

The preamble in the proposed rule acknowledged the Consumer Financial Protection Bureau does not have data to estimate the increased costs to health care providers of collecting medical debt themselves or writing off the debt should debt buyers become less willing to pay for medical debt. 

To mitigate adverse impacts on dental practices, the ADA recommended implementing a phase-in period to allow dental practices to adjust their billing systems; making threshold adjustments for medical debt reporting that exempt smaller debts; engaging in stakeholder collaboration to gather data on the practical implications of the rule; and providing financial education to consumers.