Tangential but kudos to Rohit Chopra, he has done a stellar job at CFPB, between the credit reporting changes and the elimination of bank fees alone he has had quite the impact. Just a few years it looked more likely that the CFPB would be dissolved.
I agree that Chopra is excellent at his job. Unfortunately, It's still in danger of being dissolved. The Supreme Court is hearing a case in October challenging the legality of the agency's funding mechanism. https://en.wikipedia.org/wiki/Consumer_Financial_Protection_...
>Its structure included a director that could not be fired by the President except for cause, and the ability to request funding from the Federal Reserve rather than the United States Congress
The newest FICO models already exclude this debt, though this is a much more significant step since most lenders and loan types you care about use very old FICO models that do include it and are unlikely to be updated any time soon.
Do you know why lenders still use very old FICO models? Is this just inertia, or are the new models more expensive, or do the old models predict default risk better for those loan types?
The big reason is that the different scores come out of the models. That may seem counter-intuitive, but models tend to be very tied to specific populations in specific ranges, and stability is often as valuable as predictability. Different model behavior - up or down - means that financial institutions have to retest their entire strategy to make sure that it doesn't screw up the segmentation and models that they have layered on top of various credit scores. This is not a trivial or short process - It's pretty common to see 6 month and 12 month champion/challenger tests.
Even then, assuming that there is not a significant lift in predictability (unlikely as the FICO score is good at what it does) or addressability (do people who previously had a thin file now have enough data to make a decision) then you also end up looking and saying that it's not worth the changes to move to a newer score.
Also, scores are incredibly regulated. Proving that the model you layer on top of the FICO score doesn't have a disparate impact (something standing in as a proxy to a protected bit of information such as ethnicity) is expensive.
VantageScore doesn't really change this; it's a copycat of the FICO score that came about because the credit unions don't like having the score aspect out of their control and would rather people just pay them instead of an independent third party instead.
The only thing that really would change the score in any way is additional data - but social media mining for scores is not acceptable outside of China (where their score predicts compliance with government not credit risk).
Consumer credit is heavily regulated. Not only is discriminating based on protected class illegal, the bank has to be able to explain its credit risk model to regulators. They can't use stuff like machine learning because that would be an unexplainable black box.
Credit risk modeling is literally the core of their business. Often banks don't use FICO directly. They run their own model. They want to pick up as many customers who are likely to successfully finish their loan payments without picking up too many customers who are relatively more likely to default if there's a recession. A few basis points here and there is a big deal. There's models for mortgages, car loans, credit cards, boat loans, etc.
The licensing cost of a new model, or just the upgrade costs must be justified by some benefit. Banks are stereo-typically slow moving.
Just a complete guess. Banks and related insurance are using historical data with prediction models to forecast risk. Once the FICO version changes all that data is apples to oranges and the forecasting is less accurate.
Please do upfront pricing. It’s so annoying getting a bill afterwards how the fully covered treatment was actually not covered and multiple thousands. Leading to haggling with the insurance company and hospital.
> Starting in 2022, there are new protections that prevent surprise medical bills. If you have private health insurance, these new protections ban the most common types of surprise bills. If you’re uninsured or you decide not to use your health insurance for a service, under these protections, you can often get a good faith estimate of the cost of your care up front, before your visit. If you disagree with your bill, you may be able to dispute the charges. Here’s what you need to know about your new rights.
A pull back in "credit." This rule is a blunt instrument. It will reduce medical debt stress caused by the way American healthcare is financed. It will also allow more people to default on their medical bills even the ones that are reasonably priced and correctly coded. It's kind of like how the CARES Act for COVID-19 banned reporting mortgage forbearance to credit. Then Chase Bank narrowed new business to 20% down and excellent credit score in response to the future reduced information environment.
Since high deductible health plans become common (with multi-thousand deductibles) some hospitals and doctor's offices have required patient responsibility balances to be paid before the surgery or procedure. Some providers refuse service if you have past due bills with them. Providers in the medical-industrial complex already cherry pick customers by often not accepting Medicaid or Medicare. You may have noticed that doctor's offices are more likely to be opened in affluent areas. In effect your choices for local medical services can be affected by not just your health plan but the average purchasing power of the area!
How about the insurers and providers working together on reasonable billing and not make patients pay random charges over which they had no control and information about cost?
I hope this truly has the effect that it is meant to have. But being the pessimistic type towards US healthcare and insurance and credit agencies, I really expect this to go nowhere, or become so watered down that it is essentially meaningless.
I mean, getting sent to collections sucks regardless of whether it affects your credit score - see, e.g., patio11’s recent blog post[0]. If you don’t pay, chances are you will still regret it.
Only emergency rooms are legally obligated to treat you to the point of stabilization.
As most doctors are now part of hospital ran conglomerates, a failure to pay your bill for an orthopedic consult can still be recorded in the hospitals system and you could be denied an appointment by your OBGYN.
That's true from an EMTALA standpoint. But in certain circumstances once a doctor-patient relationship has been established and a course of treatment has started the doctor may be legally and/or ethically bound to either continue that treatment or pass the patient over to another willing doctor. They aren't necessarily always allowed to immediately drop a patient for failure to pay.
The obvious consequence would be that people go to the emergency room for any kind of healthcare. That’s a much worse outcome for hospitals so I doubt they would deny people primary care.
Medical “debts” are almost always unilateral fees you never agreed to. No provider will state upfront what the fees will be! I got billed after the birth of my first child for services that had not been rendered by a physician who wasn’t even present, which my attorney characterized as “fraud” in a stern letter but that the hospital viewed as “debt”. I prevailed obviously but imagine the range of outcomes.
The other people to contact there are your insurers. Despicable as some of them may be, they too hate provider fraud. Even if they don't appear to do something to censure the provider, it is on their file, and enough complaints will be problematic.
I had a similar situation with a kidney stone. Transferred from my hospital to another by ambulance - I was moved from the ambulance gurney to the surgery bed in the hallway of the ER, and was billed for a ER visit among everything else, though no care had been rendered, no ER staff had been involved (hospital transport techs), it just happened to happen in the ER, and not even in a room.
Why should people pay their medical debt that only exists because Congress refuses to implement a functioning national healthcare delivery system?
If Congress refuses to act, the executive branch can sidestep them providing temporary relief until Congressional reps turn over enough to pass material legislation to fix the system.
My understanding is that medical debt would still be collectible and could be sold to third party debt collectors. It just couldn't hurt your credit report.
Civil action could be started against you in court. If you don’t show up the other party would win a default judgement. If you did you could and likely would still lose and have to pay. At that point your assets could be legally taken from you and wages garnished.
I haven't paid a medical bill under $1k in years ... it never goes into collections and I never hear about it after the 2nd or 3rd letter in the mail. My providers never mention it, my insurance company never mentions it.
One thing’s for sure, the lawyers and finance professionals at the CFPB aren’t going to remove your legal defense fees and delinquent mortgage payments from your credit report, even though being in jail and being homeless also massively increase your mortality.
I’ll repost my comment from a recent thread, but this article is a surprise to me, I thought this had already been the case for years?
Reposted comment —
As far as I can tell, this is the correct way to handle this? I haven’t paid attention to any medical bills sent in the mail since I started working 15 years ago (I generally pay what they ask at the point of service), and I’ve never noticed any consequences (no denial of service anywhere, has never shown up in any way on my credit report, etc) — as far as my experience has shown, any bills sent after the fact are completely optional to pay.
If the hospital/provider sends your bill to a collections agency, then it can definitely show up on your reports. Especially so if you are actually sued for the debt, in which case the judgement is also a public record.
I've had this happen a couple times in the past when I was in treatment for cancer and underemployed. One agency reported the collections action and it went on my credit report (no indication that it's medical debt or anything else, so I imagine it would be up to the consumer to contest these things with the bureau?) Another collector didn't, so I never paid the bill or heard from them again!
>If the hospital/provider sends your bill to a collections agency, then it can definitely show up on your reports.
So I agree this was the impression I got in theory, but in practice I’ve never seen this happen. Why is there this mismatch? I check my credit reports once a year, there’s nothing showing up
My ex had collectors calling her several times a day for months while she was disputing a bill. It probably depends on whether the hospital writes the bill off or sells it to
collectors.
I feel for your ex, I have three (3) in office visits covered by my insurance that are overdue as of August. I’ve had to go back and forth on the phone in a Kafka-hell to get my insurance to cover a covered visit because of some opaque clerical error (and I write medical insurance review software and I’m still confused as to who is to blame…). Insurance issued a payment last month finally, but the doctor has yet to recognize it so I still get reminders on being “late” for a bill I don’t ultimately owe.
I cannot imagine how infuriated I would be if I were being punished on my credit for someone else’s clerical error.
But I guess that’s my whole point is once they sell it to collectors it’s equivalent to the bill not existing? My confusion is around wondering if I’ve somehow fallen through the cracks and got lucky or other people have the same experience.
Why do other people pay bills they receive in the mail?
I stopped getting any care at a large hospital near me's outpatient office because they had a bad habit of just sending bills to collections before my insurance responded to them, and then not updating anything once they did, so I'd get a debt collector notice and call the hospital, and they'd say "oh you paid that in full, you shouldn't be getting a notice" "well you should probably tell that to the debt collector".
Over and over again.
So if those started showing up on my credit report eventually, it'd be a significant impact, even though I was not involved in any failure to pay. Fortunately, they never did, but for many people, that's not true.
What you're probably seeing are the bills that your service provider sends to insurance, and then your insurance sending you a statement of benefits.
If these were real bills, they would keep sending them.
(Sometimes these can be amusing: I had surgery in 2011, and the hospital billed the insurance company $100,000. The insurance company responded that the agreed cost for services should be $20,000. The hospital ended up getting $20,000. IMO, $20,000 was plenty to pay everyone involved.)
Had a echocardiogram that I was told would be covered but insurance didn't pay, and they balance billed me for $5K. I never paid. Got handed to debt collectors. Wrote to them saying it isn't my debt and to cease contacting me.
If they take it to court I'll lawyer up and fight.
In any case, I gave neither debt collectors nor medical office my residential address or mobile number. I suggest you NEVER give your residential address to medical offices either, or they'll happily tell debt collectors where you sleep. Which personally I think should be a HEPA violation but apparently it isn't.
Give them a virtual mailbox or office address where you can receive mail.
I have someone in Las Vegas who stole my identity and is using it for medical services. I get collection notices for these services sent to my house (I'm not near Las Vegas) and I have to dispute every one of them. I've had to file police reports on it, but the Police in Vegas don't really care about helping me.
They are letting the interest build to such a magnitude that they can eventually sue your estate and easily recover the losses and more if you have assets at the time of death.
It would be surprising if this worked, given that a creditor who did not mitigate his damages reasonably and instead lurked, awaiting a windfall is not entitled to damages.
Do you live in California? I know CA has much more consumer-friendly restrictions on sending medical bills to collections. It essentially can’t happen in CA.
Readit News
I mean, that does sound pretty insane
Defunded, not dissolved.
Even then, assuming that there is not a significant lift in predictability (unlikely as the FICO score is good at what it does) or addressability (do people who previously had a thin file now have enough data to make a decision) then you also end up looking and saying that it's not worth the changes to move to a newer score.
Also, scores are incredibly regulated. Proving that the model you layer on top of the FICO score doesn't have a disparate impact (something standing in as a proxy to a protected bit of information such as ethnicity) is expensive.
VantageScore doesn't really change this; it's a copycat of the FICO score that came about because the credit unions don't like having the score aspect out of their control and would rather people just pay them instead of an independent third party instead.
The only thing that really would change the score in any way is additional data - but social media mining for scores is not acceptable outside of China (where their score predicts compliance with government not credit risk).
Credit risk modeling is literally the core of their business. Often banks don't use FICO directly. They run their own model. They want to pick up as many customers who are likely to successfully finish their loan payments without picking up too many customers who are relatively more likely to default if there's a recession. A few basis points here and there is a big deal. There's models for mortgages, car loans, credit cards, boat loans, etc.
The licensing cost of a new model, or just the upgrade costs must be justified by some benefit. Banks are stereo-typically slow moving.
Now I think they can use a new model, but it's probably some inertia on changing.
Are providers going to run credit checks on you before they agree to take you on as a patient?
Require that you sign a document that gives them the right to garnish your wages for non-payment?
Require up-front payment for services?
Increase prices to cover the revenue lost to people that realize how little consequence there is for non-payment?
"Payment is due at the time services are rendered"
So you pay what they say it costs.
Then months later you get a random bill from them for more.
https://www.cms.gov/newsroom/fact-sheets/no-surprises-unders...
https://www.cms.gov/NOSURPRISES
https://www.consumerfinance.gov/about-us/blog/no-surprises-a...
Since high deductible health plans become common (with multi-thousand deductibles) some hospitals and doctor's offices have required patient responsibility balances to be paid before the surgery or procedure. Some providers refuse service if you have past due bills with them. Providers in the medical-industrial complex already cherry pick customers by often not accepting Medicaid or Medicare. You may have noticed that doctor's offices are more likely to be opened in affluent areas. In effect your choices for local medical services can be affected by not just your health plan but the average purchasing power of the area!
So, while price gouging and insurance gouging are a thing, the actual hospitals may be poorly compensated in many places.
That's why rural areas are losing hospitals.
[0] https://www.bitsaboutmoney.com/archive/the-waste-stream-of-c...
As most doctors are now part of hospital ran conglomerates, a failure to pay your bill for an orthopedic consult can still be recorded in the hospitals system and you could be denied an appointment by your OBGYN.
I had a similar situation with a kidney stone. Transferred from my hospital to another by ambulance - I was moved from the ambulance gurney to the surgery bed in the hallway of the ER, and was billed for a ER visit among everything else, though no care had been rendered, no ER staff had been involved (hospital transport techs), it just happened to happen in the ER, and not even in a room.
If Congress refuses to act, the executive branch can sidestep them providing temporary relief until Congressional reps turn over enough to pass material legislation to fix the system.
Presumably an actual legal judgement against you would still go on your credit report, as it does today.
Reposted comment —
As far as I can tell, this is the correct way to handle this? I haven’t paid attention to any medical bills sent in the mail since I started working 15 years ago (I generally pay what they ask at the point of service), and I’ve never noticed any consequences (no denial of service anywhere, has never shown up in any way on my credit report, etc) — as far as my experience has shown, any bills sent after the fact are completely optional to pay.
I've had this happen a couple times in the past when I was in treatment for cancer and underemployed. One agency reported the collections action and it went on my credit report (no indication that it's medical debt or anything else, so I imagine it would be up to the consumer to contest these things with the bureau?) Another collector didn't, so I never paid the bill or heard from them again!
So I agree this was the impression I got in theory, but in practice I’ve never seen this happen. Why is there this mismatch? I check my credit reports once a year, there’s nothing showing up
Deleted Comment
I cannot imagine how infuriated I would be if I were being punished on my credit for someone else’s clerical error.
Why do other people pay bills they receive in the mail?
Over and over again.
So if those started showing up on my credit report eventually, it'd be a significant impact, even though I was not involved in any failure to pay. Fortunately, they never did, but for many people, that's not true.
What you're probably seeing are the bills that your service provider sends to insurance, and then your insurance sending you a statement of benefits.
If these were real bills, they would keep sending them.
(Sometimes these can be amusing: I had surgery in 2011, and the hospital billed the insurance company $100,000. The insurance company responded that the agreed cost for services should be $20,000. The hospital ended up getting $20,000. IMO, $20,000 was plenty to pay everyone involved.)
If they take it to court I'll lawyer up and fight.
In any case, I gave neither debt collectors nor medical office my residential address or mobile number. I suggest you NEVER give your residential address to medical offices either, or they'll happily tell debt collectors where you sleep. Which personally I think should be a HEPA violation but apparently it isn't.
Give them a virtual mailbox or office address where you can receive mail.
Dead Comment