Three of the major U.S. consumer reporting agencies, Equifax,

TransUnion and Experian, recently announced a new National Consumer Assistance Plan, which includes changes to reporting consumers’ medical debts. The plan became effective in the state of New York starting March 8 after cooperative discussions and a settlement agreement between the agencies and New York Attorney General Eric Schneiderman. It will eventually be implemented nationwide, according to the attorney general’s office.

Equifax, TransUnion and Experian are consumer reporting agencies that maintain consumer credit reports on approximately 200 million consumers. The CRAs compile credit information via voluntary submissions from data furnishers, such as collection agencies.

According to the Consumer Financial Protection Bureau, 43 million people in the U.S. have medical collections on their consumer credit reports. In December 2014, the bureau also announced it would require reports from the major CRAs on accuracy and how disputes from consumers are being handled.

Medical debt is a huge market in the credit and collection industry. In fact, healthcare-related debt accounted for nearly 38 percent of all debt collected in 2013 and 52 percent of all debt collected

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in 2010, according to surveys by ACA and Ernst and Young.

The new plan for the CRAs aims to enhance their ability to collect complete and accurate consumer information and will provide consumers more transparency and a better experience interacting with credit bureaus about their consumer credit reports.

During discussions in the months leading up to the agreement, the New York attorney general and other state attorneys general allowed the CRAs to collaborate in an unprecedented manner to share industry best practices and develop a plan that will offer consistent and meaningful benefits to consumers.

ACA International, as part of a Medical Debt Collection Task Force led by the Healthcare Financial Management Association, contributed to developing best practices, released just over a year ago, to help make paying medical bills an easier and fairer proposition for consumers. The best practices for healthcare providers and their business partners include following up with CRAs when a consumer’s account is resolved.

The National Consumer Assistance Plan announced by Equifax, TransUnion

and Experian also includes following up with CRAs, and focuses on enhancements in two primary areas: consumer interaction with national CRAs and data accuracy and quality.

The settlement agreement between the New York attorney general and the CRAs that likely resulted in the National Consumer Assistance Plan states, “CRAs shall prevent the reporting and display of medical debt identified and furnished by collection furnishers when the date of the first delinquency is less than 180 days prior to the date that the account is reporting to the CRAs.”

This means medical debts won’t be reported until after a 180-day waiting

Consumer Reporting Agencies Announce Changes to Medical Debt Reporting

Consumer Reporting Agencies Announce Changes continued from page 1

period from the date of delinquency. Date of delinquency, as defined in the Fair Credit Reporting Act, is “the month and year of the commencement of the delinquency on the account that immediately preceded collection activity, charge to provide or loss, or similar action.”

This date needs to be determined by the provider and furnisher based on the underlying financial agreements and the creditor’s policies for when an account becomes “delinquent.”

Typically, the date of delinquency will precede the date of placement with the agency.

The 180-day waiting period for reporting medical debts in the agreement will allow insurance payments to be applied, according to the New York attorney general. The CRAs will also remove previously reported medical collections that have been or are being paid by insurance from consumers’ credit reports.

Debt collection agencies whose healthcare provider clients request that they report consumers’ accounts to the

In response to the increasing consumer demand for informative and clear

price information about their healthcare, the American Hospital Association has developed a new resource for healthcare providers, Achieving Price Transparency for Consumers: A Toolkit for Hospitals.

According to the AHA’s Community Connections blog, the increase in higher-deductible health plans and coinsurance is causing consumers to pay more of their healthcare costs out of pocket.

“This means that consumer demand

for meaningful and transparent price information will only continue to grow,” according to the blog. “To meet this demand, hospitals and health systems must take a critical look at where they currently fall on the price transparency spectrum and take steps to improve how they communicate pricing information with patients and their community.”

The goal of the AHA in developing the toolkit is to prompt conversation and action by allowing hospitals to evaluate their current programs and have access to

examples of what other providers do to ensure price transparency, as well as sample price transparency tools.

In addition to examples of other providers’ price transparency plans, the toolkit has a self-assessment checklist, Web-based tools, and studies on price transparency and guides that have been provided to consumers.

More information: http://bit.ly/1mBC70t

PRICE TRANSPARENCY:

2 I May 2015 Pulse

three CRAs also rely on them to follow up when the account is paid.

Tom McGregor, president and CEO of DataTrac Receivables Recovery in Anderson, S.C., said deleting consumers’ paid medical accounts from their report altogether might not address the issue of improving their credit rating.

“We all understand that typically a medical incident or a bill incurred as a result of medical necessity is not a voluntary purchase, such as going to Best Buy and buying a TV,” McGregor said. “Since we’re negatively impacting their credit file when we place [an] item, why shouldn’t it be positively impacted when we mark it paid?”

McGregor spent 12 years of his career working in credit reporting and, at that time, he thought more data was better. “Then the emphasis switched to accuracy of data—you didn’t want to delete anything unless it was [from] a mistake or error,” he noted.

He said the agreement between the CRAs and attorney general, in terms of deleting consumers’ paid accounts, seems like a quick fix more than a solution.

“The accuracy is critical; there is no doubt about that. If the data is not accurate, it is useless to begin with,” McGregor said. “It looks to me that it could ultimately compound a bad problem rather than resolve it.”

Implementation of the agreement requirements will occur over three years and 90 days from the March 8 effective date and includes three phases. Requirements for medical debt collections, including the delay of sending accounts to CRAs and removing paid medical bills from consumers’ credit reports, are included in phase three. CRAs have until the completion date to meet those requirements.

CRAs have within six months from the effective date to complete phase one and 18 months from the effective date to complete phase two of the implementation plan.

“The implementation date is going to be important on this,” said Mark Rukavina, a principal at Community Health Advisors in Chestnut Hill, Mass.

As more details on the agreement emerge, it is important for agencies

American Hospital Association Issues Price Transparency Toolkit for Providers

FTC Holds Workshop on Examining Healthcare Competition The Federal Trade Commission and U.S. Department of Justice recently held a workshop as part of their Examining Healthcare Competition series. It featured discussions on alternatives to traditional fee-for-service payment models, observations regarding health insurance exchanges and more. A second workshop in the series was held in March. http://1.usa.gov/1BEOQzF

Nearly 11.7 Million Consumers Enroll in Health Insurance Marketplace CoverageFollowing the open enrollment period ending Feb. 15, nearly 11.7 million consumers selected or were automatically re-enrolled in health insurance coverage, according to the U.S. Department of Health and Human Services. Of those, 8.84 million were in states using HealthCare.gov and 2.85 million were in the 14 states using their own platform. http://1.usa.gov/1ERGWsm

Increased Demand for Account-Based Health PlansDemand for account-based health plans is increasing, according to the Acclaris Account-Based Health Plan 2015 Survey. Forty-seven percent of respondents revealed that the plans are “extremely important.” Sixty-two

percent indicated demand will grow in the next year. There are challenges,

including educating consumers and employers and data integration. http://

bit.ly/1B2VKlo

For more healthcare collection news, visit ACA’s Healthcare Collections page at www.acainternational.org/healthcare.

news &NOTES

May 2015 Pulse I 3

working in healthcare collections and their healthcare provider clients to communicate about their expectations and plans going forward.

Healthcare providers that do allow collection agencies they work with to report patients’ unpaid medical accounts to CRAs should contact them to make sure they are working on systems to comply with the agreement.

“A lot of the details aren’t completely clear at this point,” Rukavina said. “It would be prudent for hospitals to be talking to their agencies about this, and it would be prudent for agencies to let their hospitals know that they are fully aware of the agreement.”

501(r) and Medical Debt Credit ReportingThe agreement for the CRAs and

medical debt collections requirements comes not long after the Internal Revenue Service and Department of the Treasury issued final regulations on access to financial assistance policies, billing and collection procedures, as well as creating community health needs assessments for nonprofit hospitals to maintain their tax exempt status. The regulations are part of section 501(r) of the Patient Protection and Affordable Care Act of 2010.

Under the regulations, nonprofit hospital facilities must make reasonable efforts to notify patients about financial assistance policies. Hospitals are required to make reasonable efforts to determine whether an individual is eligible for assistance before engaging in extraordinary collection actions, such as reporting to the credit bureaus. There is a 120-day waiting period, after receipt of the first post-discharge billing statement, before a company may engage in any extraordinary collection actions.

Additionally, patients have up to the 240th day after the first post-discharge billing statement to apply for financial assistance, unless the hospital has adopted a longer application window. If the patient applies within that time, the hospital needs to suspend extraordinary collection actions until it makes a determination whether the individual is eligible for financial assistance.

With the 501(r) requirement and the pending 180-day requirement for reporting medical accounts in the credit reporting agency agreement, Rukavina said this should help reduce consumers’ surprise when a medical bill later paid by insurance appears on their credit report.

“Many people are just waiting to figure out what they owe when they are contacted by a collection agency and then [the bill] is on their credit report,” Rukavina said. “The agreement, I think, is going to be helpful to patients and providers alike. I believe this is going to help improve relations between patients and providers.”

While the agreement could eventually improve the credit reporting process for medical collections, Rukavina said providers may also decide to have their collection agencies stop reporting medical accounts altogether.

Medical bills, unlike bills for a credit card or mortgage, result from an expense that likely wasn’t planned. There is also a longer time frame—due to the insurance claims process—before consumers know what they owe for a medical procedure.

“I think many providers have felt it’s unfair to credit report,” Rukavina said. “I see more and more providers prohibiting agencies from credit reporting.”

According to TransUnion, the National Consumer Assistance Plan will build on other steps the CRAs have made in recent years to attempt to improve consumers’ ability to resolve issues related to consumer credit reports.

ACA is continuing to follow progress on the agreement and its implementation, and will provide reports as updates are available.

is a monthly bulletin that contains information important to healthcare credit and collection personnel. Readers are invited to send comments and contributions to:

Communications Department ACA International P.O. Box 390106 Minneapolis, MN 55439-0106 comm@acainternational.org

Note: Requests for reprints or additional information on material herein must be made through the ACA International member who sponsored your receipt of this publication.

Do we have your correct name, title and address? Please advise your sponsor of any corrections.

This information is not to be construed as legal advice. Legal advice must be tailored to the specific circumstances of each case. Every effort has been made to assure that this information is up to date as of the date of publication. It is not intended to be a full and exhaustive explanation of the law in any area. This information is not intended as legal advice and may not be used as legal advice. It should not be used to replace the advice of your own legal counsel.

© 2015 ACA International. All Rights Reserved.Data Source: Hospital Accounts Receivable Analysis Report on Third Quarter 2014, vol. 28, no. 4.

datawatchU.S. Hospitals Hit Uncollectibles BenchmarkA ccording to the Wolters Kluwer quarterly Hospital Accounts Receivable Analysis

report, “In third quarter 2014, U.S. hospitals achieved what has eluded them for the past five quarterly financial reporting periods: They hit the uncollectibles benchmark. U.S. hospitals reported that 4.71 percent of total third quarter gross revenue was written off as bad debt or charity. The uncollectibles benchmark is to hold charity and bad debt write-offs combined to 5 percent less of total gross revenue. The uncollectibles benchmark has eluded U.S. hospitals since first quarter 2013, when the national uncollectibles average was 4.97 percent of total gross revenue written off as uncollectible.”

4th Qtr. 2013 1st Qtr. 2014 2nd Qtr. 2014 3rd Qtr. 2014

Bad Debt 3.26% 2.72% 3.03% 2.29%

Charity 2.06 2.37 2.90 2.42

Total 5.32 5.09 5.93 4.71