Credit reporting services are cropping up in healthcare for the first time as hospital leaders seek to speed cash flow and improve reimbursements — but are providers certain of their legal liability?
David Esquivel, a lawyer with Nashville, Tenn.-based Bass, Berry & Sims, spoke with Becker's Hospital Review about recent legal and regulatory scrutiny of care providers that use credit reporting services, and what that means for the healthcare industry.
"Providers are entering the consumer financial space for the first time and navigating unfamiliar guidelines amidst intense federal and regulatory scrutiny," says Mr. Esquivel.
The Consumer Financial Protection Bureau, created to promulgate and enforce consumer protection laws, has been very active in the consumer financial space to regulate how companies use credit reporting and collection services.
"Following the 2008 financial crisis and the role mortgages played within it, consumer financial protection became a much more important issue," says Mr. Esquivel.
Simultaneously, healthcare has seen increased financial responsibility for patients. As patients shoulder a greater portion of care costs, providers are turning to prescreening tools — such as credit reports and credit reporting service vendors — to determine a patient's ability to foot the bill.
For industries that routinely interact with consumers for payment — such as retail and utility services — federal credit and debt collection regulations are exceedingly familiar.
"But these [laws] are a new phenomenon for healthcare providers," says Mr. Esquivel. "Historically, provider organizations received reimbursement nearly in full from payers, and had little need to worry about a consumer's ability to pay." As patients with high deductible health plans find it increasingly difficult to afford their medical bills, however, providers are learning to navigate tighter consumer financial regulations under these laws.
"The biggest practical legal problem that comes up [with credit reports in healthcare] is the lack of provider familiarity in contracting under these laws and regulations," says Mr. Esquivel. "Increasingly, providers look to vendors to provide them with credit reports and credit valuation services on the front end, as well as claim collections services on the back end."
But outsourcing credit report and debt collection functions does not absolve providers of legal liability when inquiries arise. "The MN V. Accretive Health case really alerted providers of the need to pay more attention to their outsourcing contracts, contract partners and vendors in debt collection procedures," says Mr. Esquivel.
In 2012, Chicago-based Accretive Health, a medical debt collector and revenue cycle management service, agreed to a $2.5 million settlement to resolve allegations of repeated privacy breaches and unseemly collection tactics in Minnesota hospitals. The company had collection contracts with North Memorial Health Care in Robbinsdale and Fairview Health in Minneapolis.
To avoid stepping on the toes of federal enforcement agencies, "providers must look at the procedures in place for compliance with various laws, be aware of their obligations, and make sure they follow through on those procedures," says Mr. Esquivel.
"When the FTC or Consumer Finance Protection Bureau begin an inquiry, they look to see if providers have seriously considered these compliance laws, understand the necessary statutes and had a serious discussion about best practices," he adds.