In this episode we unpack the chaos surrounding medical debt rules and credit reporting in 2025. After the CFPB’s sweeping rule to ban medical debt from credit reports was struck down by a federal judge, providers and patients were left wondering—what rules actually apply now?

They break down the current landscape: voluntary credit bureau policies that still block debts under $500 and require a one-year waiting period, plus the strict verification standards that make reporting medical debt a high-stakes move. The hosts explore how healthcare providers can stay compliant while maintaining control of their collections, using integrated systems that balance revenue recovery with patient trust.

Tune in to understand where compliance ends, strategy begins, and how smart billing practices can help your organization get paid—without damaging your reputation.

Transcript

Narrator: 00:00

Welcome to the Billing Blueprint Podcast, your go to resource for innovative medical billing solutions. Each episode we explore the latest industry trends and share proven strategies to help your practice streamline operations and get paid faster. Now here are your hosts, Brad and Sarah.

 Brad: 00:20

 Okay, so if you're trying to figure out the rules around medical debt and credit reports right now you probably feel like you've been caught in some kind of legal riptide.

Sarah: 00:31

 Absolutely. It's been chaotic.

Brad: 00:33

 Yeah. Since early 2025. We saw this, like, huge consumer protection rule from the CFPB get finalized, and then, bam, just months later, a federal judge wipes it completely off the books. Well, it's been really confusing.

Sarah: 00:47

 Understatement of the year, maybe.

Brad: 00:49

 Right. So today we're doing a deep dive into this regulatory whiplash. Our mission really is to cut through all that noise.

Sarah: 00:57

 Yeah. Get some clarity.

Brad: 00:58

 Exactly. Provide clarity on what the actual rules are. Right now we need to understand, okay, when can medical debt hit your credit report? But also, crucially, what can healthcare providers actually do and maybe not do to get paid while staying compliant?

Sarah: 01:13

 And the timing for this is just. Well, it's spot on because this isn't just some abstract legal puzzle for providers. It's a huge operational thing, a financial challenge. We have to remember the context here. You know, high deductible health plans, rising out of pocket costs. I mean, patients are shouldering a massive amount of the financial burden now.

Brad: 01:33

 Yeah. Much more than before, for sure.

Sarah: 01:34

 And it puts providers on this, like, incredibly thin tightrope. They need to recover revenue, obviously, that they're owed, but they have to do it without damaging that patient relationship. That trust is paramount.

Brad: 01:47

 Okay, so let's start with the big attempt to fix this whole mess. That initial push from the Consumer Financial Protection Bureau, the cfpb. They proposed these major changes to Regulation V. That was back in June 2024. And Reg V, that's the rule that enforces the Fair Credit Reporting act, the fcra.

Sarah: 02:05

 Right.

Brad: 02:06

 So this was clearly them trying to limit how much medical debt was, well, wrecking people's finances.

Sarah: 02:11

 That's exactly the foundation. And all those efforts led to January 7, 2025. That's when the final rule dropped.

Brad: 02:16

 And it wasn't small potatoes.

Sarah: 02:18

 Oh, no, this wasn't just tweaking around the edges. It was meant to be a total ban. The rule would have stopped credit bureaus, you know, the big three, from putting medical bills on credit reports at all.

Brad: 02:29

 At all. Wow.

Sarah: 02:30

 Yeah. And it would have severely restricted lenders from even using that kind of data.

Brad: 02:35

 And the cfpb, they had numbers to back this up, right? They thought this would be massive for folks struggling with medical debt.

Sarah: 02:42

 Oh, absolutely. The potential impact they projected was huge. A real game changer, they thought.

Brad: 02:48

 Like what?

Sarah: 02:49

 Well, the agency estimated this rule would have wiped something like $49 billion in medical debt off credit reports.

Brad: 02:55

 49 billion, trillion.

Sarah: 02:57

 Yeah. For nearly 15 million Americans. And think about the ripple effect on consumers.

Brad: 03:02

 Right.

Sarah: 03:02

 They predicted average credit scores might jump 20 points.

Brad: 03:05

 Wow.

Sarah: 03:06

 Which could lead to maybe 22,000 more mortgage approvals every year.

Brad: 03:11

 That's significant.

Sarah: 03:11

 It is. And the director back then, Rohit Chopra, he put it pretty bluntly. He. He said medical bills on credit reports too often are inaccurate and have little to no predictive value when it comes to, you know, predicting if someone will repay other loans.

Brad: 03:25

 Okay, but obviously that's not where the story ended. The industry pushed back hard.

Sarah: 03:30

 They did. Legal challenges popped up almost immediately from.

Brad: 03:32

 Industry groups, and that led to the big reversal.

Sarah: 03:35

 That's right. Fast forward just six months to July 11, 2025. A U.S. district Judge in Texas, Eastern District of Texas, vacated the rule.

Brad: 03:45

 Completely vacated means just gone. Thrown out.

Sarah: 03:49

 Thrown out entirely. The judge basically ruled the CFPB went too far, that it exceeded its authority under the fcra. The finding was that every major substantive provision of the medical debt roll overstepped the agency's legal powers.

Brad: 04:02

 Okay, so if that big federal ban attempt failed, what's the bottom line for someone listening right now? Like, what's the actual situation today?

Sarah: 04:11

 It's really twofold. First, and most importantly for consumers, medical debt can still be reported to credit bureaus. The question is how and when, which we need to dig into.

Brad: 04:22

 Okay.

Sarah: 04:22

 Second, and this is maybe more for policymakers, the ruling made it clear that the federal law, the fcra, it preempts state laws that try to do the same thing, these blanket bans on reporting medical debt.

Brad: 04:35

 Ah, so states can regulate debt collection, but they can't just forbid credit reporting entirely if it clashes with federal law?

Sarah: 04:42

 That seems to be the takeaway. Yes, they can regulate collection practices, but a total ban on reporting is likely off the table at the state level if it conflicts with the FCRA framework.

Brad: 04:51

 Okay, let's unpack this. More. Especially for the providers listening, the federal ban is gone, so maybe they feel like they're back in the driver's seat a bit.

Sarah: 04:59

 Perhaps.

Brad: 04:59

 But you mentioned rules about waiting a full year before reporting. Yeah, that sounds like a huge hit to cash flow, especially for smaller practices. So if the CFTB rule is gone, what rules are still Making them wait that year.

Sarah: 05:13

 Right, and this is super important. Providers aren't just operating in a free for all. Now, even though that federal rule was struck down, the day to day reality is still heavily shaped by policies the credit bureaus themselves adopted. You know, Equifax, Experian, TransUnion.

Brad: 05:28

 The bureaus themselves have rule.

Sarah: 05:30

 Exactly. They voluntarily put these in place starting back in 2022. And those are effectively the main rules of engagement right now.

Brad: 05:37

 Interesting. So what are they?

Sarah: 05:38

 Well, the first big one is about small balances since 2023. Unpaid medical bills under $500, they just don't get reported. Period.

Brad: 05:47

 Under $500, nothing shows up.

Sarah: 05:49

 Correct. And also any medical collection account that gets paid off, it gets removed from the credit report. So that $500 floor protects people from, you know, a small copay or a minor bill messing up their credit.

Brad: 06:00

 Okay, so that's a key point. It's voluntary industry standards, not just government rules that are keeping those small debts off reports. What about the timing thing?

Sarah: 06:09

 That one year wait, that's the second really critical piece. Delayed reporting providers or their collection agencies, they must wait at least one full year after a debt becomes delinquent before they can report it.

Brad: 06:20

 365 days.

Sarah: 06:22

 Minimum, minimum, non negotiable under the bureau policies. And it's designed specifically for what you mentioned earlier. Giving time to sort out insurance glitches, fix billing errors, maybe work out a payment plan with the patient before their credit gets hit.

Brad: 06:37

 Makes sense. Beyond the amount and the timing, what about accuracy? Does federal law treat reporting medical debt differently than say, reporting an overdue Visa bill? Is the bar higher?

Sarah: 06:48

 Oh, it absolutely does. Federal law actually labels reporting medical debt as an extraordinary collection action.

Brad: 06:54

 Extraordinary? What does that mean? Practically?

Sarah: 06:56

 It means stricter rules for notice and timing. And under the fcra, plus existing CFPB guidance that wasn't struck down, the demands for documentation and accuracy are really high. Yeah, the debt has to be thoroughly verified. It has to be accurate before it's reported. And look, if a consumer disputes it, the burden of proof is on the entity that reported it. Given how complicated medical bills and insurance explanations can be, well, proving accuracy can be a real challenge.

Brad: 07:22

 Sounds like a minefield. So let's translate this for a healthcare practice just trying to collect what they're legitimately owed. What does this mean day to day? Can we clearly lay out the do's and don'ts right now?

Sarah: 07:32

 Yeah, let's try. The do's are pretty narrow but clear. Providers can report medical debts over $500.

Brad: 07:39

 Okay, over the threshold.

Sarah: 07:40

 Right, but only after strictly following that one year waiting period. And they need complete, verifiable documentation plus proper notification to the patient. They can definitely use professional collection agencies too. As long as those agencies play by all the rules, state, federal FDCPA and treat patients respectfully.

Brad: 07:59

 Got it. And the absolute don'ts. The things they just cannot do.

Sarah: 08:03

 Okay, Absolutely. Cannot report any medical debt that's already been paid. Cannot report debts under $500. Cannot report any unpaid debt. That one year waiting period is up.

Brad: 08:12

 No exceptions on the timing.

Sarah: 08:14

 No exceptions. And of course, they can't use aggressive or harassing tactics that violate the Fair Debt Collection Practices act, the fdcpa. That's the federal law about how collectors can behave. And frankly, smart practices should also have internal policies against reporting accounts that are, say, currently being reviewed by insurance or actively disputed by the patient. That just avoids headaches.

Brad: 08:36

 That brings us right to the strategy part, doesn't it? Compliance isn't just about avoiding fines. It's about not wrecking your practice's reputation and your relationship with patients. Where are the tricky gray areas providers need to watch out for?

Sarah: 08:49

 Yeah, this is where it gets nuanced. A big one is patient outreach. What if an account goes delinquent but there's no clear record the practice actually tried to reach the patient? Or explain financial aid options? If you haven't clearly sent bills or offered payment plans, then rushing to report that debt is really risky. It opens you up to compliance problems, disputes. Basically, the practice needs to show it tried to work with the patient first. Clear billing, transparency about options. That has to come before reporting.

Brad: 09:20

 So the big takeaway here isn't just about ticking compliance boxes. It's really about strategy and control. Since the ban was struck down, the power to decide whether to report is back with the provider. Why is having that choice, that case by case decision making ability, so, so critical now?

Sarah: 09:37

 Oh, it's fundamental. It's the difference really between just being a bill collector and being a trusted healthcare provider. If you just automatically report every overdue debt over $500 after a year, without looking at the specifics, you risk destroying patient trust. You damage your reputation in the community.

Brad: 09:54

 Right, like reporting someone who was actually trying to pay, maybe just needed a bit more time.

Sarah: 09:58

 Exactly. Or worse, you might violate those strict FCRA accuracy rules because maybe the patient's insurance company was just really slow processing the claim. An automatic approach doesn't account for that nuance.

Brad: 10:11

 So a strategic approach lets them weigh different things.

Sarah: 10:14

 Precisely. They can look at the patient's history with the practice, the legitimacy of the charge itself, signs of real financial hardship, even the actual likelihood of recovering the money. It becomes a conscious decision point. The numbers bear this out. Only about 15% of hospitals have policies that outright ban reporting medical debt.

Brad: 10:34

 Meaning 85% still want that option.

Sarah: 10:37

 It suggests 85% still see value in having the strategic ability to report. Even if they use it carefully and selectively, they want to keep that tool in their toolbox.

Brad: 10:46

 Okay, but having that ability to pause, assess and make a smart choice, that needs the right tools, the right workflow. Right. We heard about main optometry boosting collections by 10k. 15, 10k a month. How does something like an integrated collections model actually give providers that control?

Sarah: 11:02

 Right. It's about moving away from just blindly outsourcing everything. These integrated models allow the provider to set their own rules for collections, often right within their existing practice management software.

Brad: 11:12

 How does that work?

Sarah: 11:12

 Well, think about it like this. Instead of just exporting a list of everyone overdue to some third party agency, the system might flag accounts based on criteria the practice sets. Maybe it only flags accounts over $750, not just $500. Or maybe only after, say, five billing statements have gone unanswered.

Brad: 11:31

 So the practice defines the trigger point exactly.

Sarah: 11:34

 But here's the key the system recommends. It doesn't automatically act. The provider or their staff reviews that list. They approve only the specific accounts they choose to move into active collections. And crucially, they usually have a big red button to pull an account back out at any time, say, if the patient calls and sets up a plan.

Brad: 11:55

 Ah, so it's provider controlled workflow that avoids the risks we talked about. Inaccuracy, damaging relationships.

Sarah: 12:01

 Precisely. It's designed for that control.

Brad: 12:02

 What about seeing what's happening and getting the money quickly? Because if you're keeping control, you want to see results and make sure you're getting paid efficiently.

Sarah: 12:11

 Absolutely. Transparency and speed are major advantages, and they definitely fuel those kinds of success stories. You mention, with an integrated system, the provider typically gets fully full, real time visibility. They can see every contact, attempt every note from the collection process.

Brad: 12:28

 All within their system.

Sarah: 12:29

 Often, yes. And they usually have to review and approve any proposals to write off a debt. So they maintain financial control. And here's a big one. Financially, when payments are recovered, they often get deposited directly into the practice's bank account first.

Brad: 12:44

 Oh, instead of going to the agency first.

Sarah: 12:46

 Right. Which speeds up cash flow significantly and ensures the provider gets their revenue before any collection fees are taken out.

Brad: 12:53

 So that may not optometry example they use this kind of control.

Sarah: 12:56

 It sounds exactly like it. By using technology paired with that strategic oversight, they could be, let's say, more persistent with accounts that truly seemed unresponsive while simultaneously protecting patients who just needed a bit of help or a payment arrangement. That $10,000 to $15,000 monthly increase they reported, that really shows the power of combining smart tech with strategic patient aware financial decisions.

Brad: 13:24

 Okay, let's wrap this up then. We've covered a lot of ground. The regulatory scene is definitely still uncertain because that big CFPB ban got vacated.

Sarah: 13:32

 Yeah, that threw a wrench in things.

Brad: 13:33

 But the patient isn't totally unprotected. Those voluntary rules the credit bureaus adopted, they're still very much in play.

Sarah: 13:40

 Critically important. Yes.

Brad: 13:41

 So that $500 floor for reporting and the mandatory one year waiting period, those are still the guardrails. Plus, the FCRA still demands high accuracy and verification for any medical debt that is reported.

Sarah: 13:53

 Right. So connecting this back to the big picture, for providers, they really need to see the decision to report medical debt not as just, you know, step seven in the billing cycle.

Brad: 14:02

 It's not automatic.

Sarah: 14:03

 Not automatic at all. It has to be viewed as a strategic decision, one that impacts the patient experience deeply. It demands careful, measured control and absolute commitment to compliance. Both to protect revenue. Yes, but just as importantly, to protect their reputation and patient trust.

Brad: 14:20

 So automating this decision is risky, Very.

Sarah: 14:23

 Risky, both for compliance and reputation. Providers who maintain strategic control, they keep leverage, but they do it while putting their patients first.

Brad: 14:32

 That balance, getting paid versus keeping trust, that's the entire ball game, isn't it?

Sarah: 14:36

 It really is.

Brad: 14:37

 Okay, leaves us with something for you, our listeners, to think about. Now that the federal attempt at a full ban has been pushed back, how long before we see industry groups maybe pressure the credit bureaus to relax those voluntary rules like the $500 floor or that one year grace period? And if they do, what does that mean for the future of patient provider financial relationships?

Narrator: 15:45

Thanks for tuning into the Billing Blueprint podcast. For more insights or to dive deeper dive deeper into today's topics. Head over to billflash.com. Don't forget to subscribe and we'll catch you next week with more strategies to keep your practice running smoothly and getting paid faster

Sources:

Medical Debt Collection: Understanding the CFPB Ruling and Provider Control