CFPB Takes Aim at Double Billing and Inflated Charges in Medical Debt Collection

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) issued guidance to prevent families from being targeted by illegal medical debt collection tactics. The advisory opinion clarifies that debt collectors, which may include third-party “revenue cycle management” companies, are violating federal law when they collect on inaccurate or legally invalid medical debts. These illegal practices include double-dipping to get paid for services already covered by insurance, hounding consumers to pay fake or exaggerated charges, misrepresenting consumers’ rights to contest bills, and collecting on debts without documentation that the amount is actually owed. The CFPB’s action aims to protect consumers from careless or predatory practices that can lead to inflated healthcare costs.

“Medical billing is often riddled with errors, including inflated or duplicative charges, fees for services the patient never received, or charges already paid,” said CFPB Director Rohit Chopra. “The CFPB is taking action to ensure that Americans are not unfairly chased by debt collectors over unsubstantiated or invalid medical bills.”

About 100 million Americans owe over $220 billion in medical debt, and medical bills are often confusing and filled with errors. T­he CFPB has received complaints from people receiving collections notices for debts they do not owe, that were already paid by the consumer or insurance, or that should have been covered by insurance, government programs, or hospital financial assistance. Hospitals and other healthcare providers in the United States are increasingly outsourcing medical billing and collection activities to third parties, such as “revenue cycle management” firms, who may have legal obligations under the Fair Debt Collection Practices Act.

The advisory opinion details how these companies violate federal law when they collect or attempt to collect on medical bills that are inaccurate, unsubstantiated, or invalid under the law. Specifically, the guidance details illegal practices including:

• Double billing: Companies cannot attempt to collect on medical bills that have already been paid by the consumer, insurance, or a government program such as Medicare or Medicaid. This practice can coerce consumers into paying twice for the same service, causing significant financial harm.
• Exceeding legal limits: Companies must not attempt to collect amounts that surpass federal or state caps, such as those set by the federal No Surprises Act or state laws on “reasonable” rates. These violations can saddle consumers with unjustifiably high medical debts, burdening their finances and deterring them from seeking future care.
• Falsified or fake charges: Debt collectors must not collect on bills that include “upcoded” or exaggerated services, or charges for services the consumer did not receive. This deceptive practice can drastically inflate consumers’ medical debts, potentially leading to long-term financial distress or even bankruptcy.
• Collecting unsubstantiated medical bills: Debt collectors must not attempt to collect medical debts unless they are substantiated, which may include having documentation of payments or financial assistance eligibility. Collecting unsubstantiated bills can result in consumers being harassed for debts they do not owe or for which they qualify for financial assistance.
• Misrepresenting consumers’ rights to contest bills: Companies must not misrepresent to consumers that the amount being collected is fully settled, when the payment obligation may be uncertain. Misrepresenting the status of the amount may pressure consumers into paying disputed or negotiable debts.

The CFPB also published a consumer advisory with practical information about the steps consumers can take if they have received collection notices for medical bills.

The CFPB has taken a range of actions to address unfair and coercive medical debt collection and practices, including proposing a rule to ban medical bills from people’s credit reports. The CFPB and other enforcement agencies will take action against debt collectors that violate the rights of patients.

Read today’s advisory opinion.

Consumers can submit complaints about financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who they believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to whistleblower@cfpb.gov.