Increased Regulation is on the Horizon for Healthcare Collections

Healthcare collections account for an estimated $4-5.5 billion annually for ARM. At this level, it’s the second largest source of collection industry revenue. Given growth rates, policy that limits discharging medical debt through bankruptcy, and the highly fragmented market, ARM and RCM companies should view healthcare as a stable growth area.

Until recently, the CFPB remained relatively uninvolved with medical debt collection. Instead, it primarily researched consumer loans like credit card, mortgage, and automobile. The FTC did not pay special attention to medical debt collections either, with its main focus simply on enforcing the Federal Debt Collection Practices Act (FDCPA).

Now, recent events indicate increased scrutiny by both for healthcare collections agencies by the end of 2015 or early 2016. Consider the following:

• On Dec. 11, 2014, the CFPB conducted a field hearing in Oklahoma City on medical debt collection practices, and the relationship between medical debt collection practices and overall consumer credit reporting.
• A White House press release from The White House Conference on Aging specifically tasks the CFPB with “protecting the older Americans from financial exploitation and elder abuse,” and it’s expected to release an advisory report by the end of 2015 to help financial institutions prevent, recognize, and report just that.
• Also in December 2014, Edith Ramirez, the current chairwoman of the FTC, announced that the FTC’s focus for 2015 would be on mergers between hospitals and physicians practices. The agency is concerned consolidation could eliminate competition and increase prices for consumers.

The FTC’s new strategy bodes well for ARM and RCM companies because it will slow down the rate of medical service provider mergers, acquisitions, or divestitures for the time being. However, this means more in-depth and rigorous regulations for medical debt collection will be coming soon. With that in mind, ARM and RCM companies should evaluate their current investments in compliance management.

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