Medical bills removed from credit reports could affect your patient collections: Here’s how to prepare

The Consumer Financial Protection Bureau (CFPB) recently announced in a final rule that it would remove medical debt from credit reports and end coercive medical debt collection practices. Originally slated to go into effect on March 17, 2025, a Texas federal court issued a 90-day halt on the final rule to allow new leadership time to review and consider the CFPB’s position on various agency actions. The rule is stayed until June 15, 2025.

This change may lead to the approval of approximately 22,000 additional, affordable mortgages each year and an increase in consumer credit scores by an average of 20 points. However, having medical bills removed from credit reports could also impact private practices’ self-pay collections — potentially leaving providers to absorb unpaid costs.

Here’s what healthcare providers need to know to protect the revenue cycle while maintaining positive patient relationships in this new regulatory environment. 

Those who commented on the CFPB rule expressed concern that the credit reporting change would cause financial harm to providers, as patients might feel less obligated to pay their bills. However, in its final rule, the CFPB stated, “The rule is unlikely to substantially impact aggregate revenue for health care providers, as most health care revenue does not consist of consumers paying their bills after receiving treatment. The vast majority of health care providers’ revenues comes from insurance (e.g., Medicare, Medicaid, private insurance) and other third-party payers.” 

Dr. Stella Bard, practice owner and rheumatologist, shares a best practice around collecting payments: "Patients are already reluctant to pay their obligated copays and deductibles, which is why a good practice is to collect up front, prior to services rendered." She adds: "Billers have contracted rates on file with different insurers and front desk staff should have access to that information for collection prior to visit."

According to the CFPB, the rationale is simple: medical bills are not reliable indicators of a person's ability to repay a loan, and often lead to denied mortgage applications. Additionally, the CFPB notes that consumers frequently receive incorrect bills or charged that should have been covered by insurance companies or financial assistance programs. 

The new regulation aims to shield consumers from potentially inaccurate medical debt and end aggressive medical debt collection practices. Lenders will still be able to use medical information to verify medical-based forbearances, confirm medical expenses requiring a loan, consider certain benefits as income during underwriting, and other legitimate uses.

While legal challenges to the CFPB rule are underway, medical practices can prepare now for potential impact from medical bills removed from credit reports. Consider these 5 strategies:

Track your outstanding self-pay A/R before and after the rule possibly goes into effect. Monitor this rate over time to determine any impact. If you notice changes, investigate whether the CFPB regulation might be the cause or if there are other factors, such as: 

As medical costs reach new highs, strengthen transparency around out-of-pocket costs. Develop workflows that deliver preservice treatment estimates, identify patients who may qualify for financial assistance or charity care, and ask for payment before rendering services. Also ensure medical bills are accurate — patients may be more likely than payers to catch errors, which can lead them to delay or disregard payment.

While some medical practices may hire financial counselors to assist patients, all registration and billing staff should understand patient funding sources (e.g., HSAs, flexible spending accounts, Medicaid eligibility, and flexible payment plans) and communicate with patients empathically.

If hiring a financial counselor isn’t feasible, instruct patients who have benefits through their employment to contact their human resources department or employer to clarify benefits, and patients who do not to contact their insurance provider.

Thoughtful post-service engagements can go a long way in terms of boosting patient collections. Leverage digital statements, mail statements, and text-balance reminders. The goal is to deploy engagement efforts in ways that resonate with patients and incorporate their communication preferences.

If your medical practice doesn’t already have a secure payment system, implement one now. The most successful practices also provide secure, encrypted options for in-person payments and accept Apple Pay, Google Pay, and touchless payment methods.

Remember that failing to secure your portal or payment systems could expose your funds to hackers.

As you prepare for the potential impact of having medical bills removed from credit reports by the CFPB, prioritize the patient’s financial experience at every opportunity. Consider hiring a financial counselor, partnering with a debt collector who shares your values, or investing in patient engagement technology. 

When medical practices make patient-centric decisions that align with values of patient empowerment, they are better positioned to navigate the uncertainty of new credit reporting guidelines while maintaining healthy revenue cycles.