
Posted By: Matt Reiter (Principal, Capitol Associates, Inc.) – Capitol Associates – reiterm@capitolassociates.com
The CFPB finalized its proposed rule that bans the inclusion of medical bills on credit reports used by lenders and prohibits lenders from using medical information in their lending decisions. It takes effect 60 days after the final rule is published in the Federal Register, which should occur in the next week or two.
Link to Final Rule: https://www.consumerfinance.gov/about-us/newsroom/cfpb-finalizes-rule-to-remove-medical-bills-from-credit-reports/
The final rule:
1. Prohibits lenders from considering medical information: The rule ends the special regulatory carveout that previously allowed creditors to use certain medical information in making lending decisions. This means lenders will also be barred from using information about medical devices, such as prosthetic limbs, that could be used to require that the devices serve as collateral for a loan for the purposes of repossession.
2. Bans medical bills on credit reports: The rule bans consumer reporting agencies from including medical debt information on credit reports and credit scores sent to lenders. This will help end the practice of using the credit reporting system to coerce payment of bills regardless of their accuracy. Lenders will continue to be able to consider medical information to verify medical-based forbearances, verify medical expenses that a consumer needs a loan to pay, consider certain benefits as income when underwriting, and other legitimate uses.
HBMA opposed these policies in our comments on the proposed version of the rule because it would leave medical practices with essentially no recourse to collect unpaid debts from patients. It also fails to address the root cause of patient medical debt: unaffordable insurance cost-sharing. We understand the need to help patients who require financial flexibility. However, this rule contains no such nuance.
We will provide a more detailed analysis of the final rule after we finish reviewing it.