No Surprises Act could help limit medical debt reported to credit agencies, consumer watchdog says

The No Surprises Act gives a federal consumer watchdog agency a viable way to limit the amount of medical debt included in consumer credit reports, according to Bloomberg Law.

The Consumer Financial Protection Bureau, responsible for consumer protection in the finance sector, recently said it was looking into whether uncollected medical bills should be included on credit reports at all since medical debt is often inaccurate and not always a reflection of creditworthiness.

While a full outright ban of medical debt on credit reports would likely result in litigation from the big consumer credit reporting companies, the No Surprises Act would help the watchdog reduce the amount of medical debt reported.

The federal ban on surprise billing, which took effect in January, allows the consumer watchdog to supervise credit bureaus for compliance with the law and bring enforcement action for reporting errors on credit reports. 

The law requires credit-reporting companies to determine that the information they get from providers is accurate and doesn't contain surprise bills. If this is not done the protection bureau would be able to bring enforcement action against the credit-reporting agency.

"The CFPB could certainly do things that are short of banning medical debt in credit reports by making it harder to report medical debt," Chi Chi Wu, an attorney with the National Consumer Law Center, told Bloomberg Law

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