Healthcare Compliance with Credit Reporting

January 16, 2016
  The use of credit rating agencies is becoming more prevalent in healthcare. Hospitals need to increase revenue and improve cash flow, so they are pulling out all the stops. The question now becomes… Are healthcare providers subject to legal liability of their vendors? No doubt, there has been an increase in legal and regulatory scrutiny of healthcare providers using credit reporting agencies.  The primary source of scrutiny is coming from the relatively new Consumer Financial Protection Bureau (CFPB) which now creates and enforces various consumer protection regulations related to the use of credit and collection services.   cfpb-logo Obviously, this means increased compliance precautions need to be taken by healthcare providers, but, unfortunately, many are unfamiliar with the applicable guidelines. One source of the problem comes from the increased financial responsibility pushed on to the patients in recent years.  In the past, healthcare providers received most reimbursement from third party payers and not the patient.  Thus, they didn’t need to worry as much about the patient’s capability to pay. Now, patients are saddled with high deductible health plans and find it increasingly difficult to afford their medical bills.  As patients bear a higher percentage of their healthcare costs, providers are having to “screen” patients to insure these responsibilities can be met. Thus, healthcare providers are having to learn the applicable consumer financial regulations. Many use tools such as credit reports and/or related vendors to help gauge a patient’s ability to pay their bill.  Of course, industries that rely on consumers for payment already know the applicable credit and collection regulations.  However, for healthcare providers, this area can be foreign. and require increased compliance research along with applicable changes to policies and procedures. One of the most significant issues relates to setting up proper contracts with service providers under these laws and regulations.  More and more providers want to use third party vendors to supply them with credit reports and credit scores prior to incurring costs, as well as bad debt collection services on the back-end. Unfortunately, outsourcing credit reports and bad debt services will not automatically remove legal liability from healthcare providers.  All outsourcing contracts must be evaluated thoroughly to ensure compliance with applicable laws and regulations, as well as including hold-harmless clauses for errors may by third party service providers. The industry has already seen significant violations and fines/penalties.  For example, in 2012, Accretive Health in Chicago, a collection agency and revenue cycle administration service, decided to pay $2.5 million as a settlement for repeated privacy violations and unethical collection practices. The firm performed credit collection services for North Memorial Health Care in Robbinsdale and Fairview Health in Minneapolis, Minnesota. To prevent drawing the attention of regulatory agencies providers need to evaluate the measures in place for compliance with all applicable laws and regulations.  They must also be familiar with their responsibilities and ensure they follow through on their commitments and guidelines.  
Whenever the FTC or CFPB kicks off an investigation, they research the institution to determine if the provider has earnestly thought-about the applicable compliance laws, understood the required regulations as well as performed serious discussions about proper procedures.
If your institution is having difficulty navigating the draconian consumer protection regulations, it’s imperative that you hire a medical debt collection firm that specializes in these laws and has a 100% clean resume for compliance. Alacrity fulfills that requirement and would love to help you sleep better at night as well as deliver superior results on your patients’ receivables.