Consumer Complaints Rise About Medical Debt Not Owed — But Many Pay the Bills Anyway to Protect Credit

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A rising number of Americans are filing consumer complaints about medical billing and collection, with many saying they are being billed for services they didn’t receive, according to a new report from the Consumer Financial Protection Bureau (CFPB). Even more disturbing: A significant percentage of consumers are paying the bills even though they don’t owe the money.

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The report, released on Wednesday, found that complaints about collection attempts on medical bills that were not owed increased by nearly one-third (31%) between 2018 and 2021. When consumers try to get more details, they have faced “significant difficulties identifying, verifying, or eliminating the bills,” the CFPB.

There also has been a rise in the number of people who only learn about outstanding medical bills after they’ve experienced a drop in their credit scores. In a lot of cases, debt collectors included details that resulted in privacy breaches of sensitive medical information.

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One result is that many people paid medical bills to avoid adverse financial and privacy consequences – even when they did not believe the bills to be valid.

“Many Americans feel forced to pay medical bills that they have already paid or never owed to begin with,” CFPB Director Rohit Chopra said in a press release. “The credit reporting system should not be used as a weapon to coerce patients into paying medical bills they do not owe.”

GOBankingRates reached out to the CFBP to find out how much money is spent each year on medical debt that is not owed, but the organization does not have data tracking the total. It does estimate that a total of $88 billion in medical bills is currently on credit reports.

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One of the key findings from CFBP research is that many consumers either didn’t recognize or didn’t owe alleged medical bills, but continued to be contacted by collectors who didn’t take the time to properly verify the debts.

Another key finding was that “suspect unpaid medical bills are being surreptitiously and unlawfully placed” on the credit reports of certain consumers. Many people submitting complaints about medical bills said they only realized the bills were in collections when they checked their credit reports or applied for loans.

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“This coercive use of the credit reporting system by debt collectors is an illegal but common debt collection tactic, especially for error-prone debts such as medical bills,” the CFBP said.

The CFBP also said that lower credit scores have become “weapons” that debt collectors use to force payments. In some cases, consumers “gave in and paid the debt collector” when they didn’t owe the money because they wanted to improve their credit scores.

About 20% of U.S. households report some form of medical debt. The situation has worsened since the beginning of the COVID-19 pandemic because of costs to cover COVID-19 related testing, hospitalization and related services.

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Another key finding: Past-due medical debt is more prevalent among Blacks (28%) and Hispanics (22%) than whites (17%) and Asians (10%). Medical debt is also more common in the Southeastern and Southwestern sections of the country, partly because states in those regions have not expanded Medicaid coverage.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

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