The Consumer Financial Protection Bureau is planning to revoke an advisory opinion warning debt collectors — including third-party revenue cycle management companies — that they are violating federal law when they collect on inaccurate or invalid medical debts.
The CFPB issued the advisory opinion on Oct. 1. The bureau noted that hospitals and other providers are increasingly outsourcing medical billing and collection activities to third parties, such as RCM firms, which may have legal obligations under the Fair Debt Collection Practices Act.
The advisory opinion detailed multiple ways companies are violating federal law when they collect — or attempt to collect — on bills that are inaccurate, unsubstantiated, or invalid under the law. Those practices include double billing, exceeding legal limits, falsified or fake charges, collecting unsubstantiated medical bills, and misrepresenting consumers’ rights to contest bills.
The bureau is facing a pair of lawsuits challenging the advisory opinion, including one filed by the Association of Credit and Collection Professionals. In an April 11 court filing, the CFPB said it intends to revoke the advisory opinion and seeks to pause legal proceedings to allow time to do so. The bureau proposed to provide a status report to the Washington, D.C., federal court by July 14 and “every 30 days thereafter, regarding its progress toward revocation.”
The bureau plans to deprioritize several areas including medical debt, The Wall Street Journal reported April 17. In a memo sent to staff, the agency’s chief legal officer said the CFPB would focus on fraud with “consumer damages as opposed to matters based on the Bureau’s perception that consumers made ‘wrong’ choices.”
The Trump administration is also seeking to eliminate about 1,500 jobs at the agency, but a federal judge temporarily halted the cuts April 18. The CFPB was created after the 2008 financial crisis and had 1,758 employees as of Sept. 30.
