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An Industry Wake-Up Call: The CFPB’s Impact on the Medical Debt Collection Space / Blogs / Perficient


In recent years, the Consumer Financial Protection Bureau (CFPB) has significantly broadened its oversight, extending beyond major banks to address concerns in various industries, such as payday loan providers, credit reporting agencies, and most recently, the medical debt collection sector.

The CFPB’s Dynamic Approach

The CFPB’s modus operandi often involves proactively addressing potential issues through press releases ahead of engaging in enforcement actions. Often when the CFPB issues press releases, the agency has already issued non-public information requests or consent orders in the space. Given that they don’t have enough staff to engage at all eligible institutions, their unique approach serves as a proverbial “shot over the bow” for the industries they are investigating. This prompts the companies involved in that industry to reevaluate and rectify their practices. If the CFPB sees a larger institution engaging in the practice, it often exemplifies them. The objective is clear: encouraging compliance with consumer protection regulations they deem important before punitive measures are implemented broadly.

The Impact on the Medical Collections Sphere

The recent CFPB press release is poised to send ripples throughout the entire medical collections industry. Whether managing medical debt collections in-house or outsourcing to third-party agencies, companies need to exercise vigilance. This focused scrutiny serves as a wake-up call, signaling that industry practices are under intense scrutiny.

Why Companies Need to Review Their Practices

  • Legal Compliance: The rapidly evolving landscape of consumer protection laws demands constant vigilance. Understanding current regulations is crucial to avoid legal repercussions and enforcement actions.
  • Reputation Management: With increased public awareness and scrutiny, maintaining a positive reputation is crucial. Unfair or aggressive debt collection practices can lead to severe reputational damage, impacting trust and customer relationships.
  • Operational Efficiency: An internal review of debt collection practices can uncover significant opportunities for operational improvements. Like “robo-signing” created an enormous regulatory headache for banks in the last decade, similar practices or “robo-billing” and lack of debt validation plague the medical collections space. The CFPB’s article demonstrates that they have observed, designed, and executed operational practices that led to debts being collected that had already been paid, were not owed by the patient or family, were for inaccurate amounts and collections of medical bills began long after services were provided.

Success In Action

Use Case: Regulatory Engagement Success

Perficient staff recently delivered a presentation to various federal bank regulators, leading to a substantial reduction of over 80% in margin requirements for the client. This regulatory success allowed the client to take on more business, thanks to significantly lowered mandatory margin requirements.

Use Case: Optimized Processing Time

In a recent collections engagement, Perficient successfully implemented a Full-Time Equivalent (FTE) reduction initiative, identifying opportunities, streamlining processes, enhancing compliance, and mitigating risks across various business units. These efforts resulted in a significant achievement of $50 million in savings through the reduction of average processing time.

Related: Healthcare Consulting Services

The Perficient Advantage

In the evolving regulatory landscape, companies in the medical collections industry require a steady hand to navigate complexities. At Perficient, we offer a wealth of experience in both first- and third-party collections from complex banks and credit unions globally. Our team of financial services experts positions us as a trusted partner to assist firms in ensuring compliance while effectively managing delinquency and losses.

While supporting the need for compliance, it’s essential to acknowledge the potential challenges of the CFPB’s approach. The regulatory landscape is nuanced, and companies must adapt strategically. We understand the industry’s concerns and aims to provide guidance that ensures compliance while minimizing disruptions.

As the CFPB emphasizes consumer protection in medical debt collection, companies in the industry must take proactive measures. Contact us today to find out how Perficient can provide the necessary guidance and edge to your business practices!





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