Healthcare providers who offer extended payment terms to help patients meet rapidly increasing financial liabilities are exposing their organizations to a series of complex consumer credit compliance obligations due to increased regulations by federal and state agencies.
The increased regulations and possible penalties to healthcare organizations are highlighted in a new free white paper offered by CarePayment, a company that helps patients pay their bills over terms of up to 25 months with zero percent APR. The white paper, called "Consumer Credit Compliance for Healthcare Providers," provides an overview of seven consumer finance regulations and provides a checklist to help hospital executives determine if changes are necessary for them to become compliant with an increasingly complex set of regulations.
According to the white paper, a new federal agency, the Consumer Financial Protection Bureau (CFPB), has been charged with the mission "to make markets for consumer financial products and services work for Americans – whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products."
"Hospitals may not realize that this new agency also has the authority to pursue healthcare providers for compliance violations related to medical services payment plans," according to the white paper.
"What we've found is that the regulatory environment is really much stricter – the scrutiny with healthcare organizations has increased," said Michelle Druce, senior compliance counsel for Carepayment. "Many healthcare providers are not aware of all the requirements that apply when it comes to unpaid medical expenses."
According to the white paper, while consumer finance lawsuits against healthcare providers are less common than those against credit card companies and banks, they do occur. Unlike medical malpractice claims, plaintiffs' lawyers do not have to demonstrate actual harm to the consumer; a simple infraction or violation of certain federal regulations is sufficient to trigger financial penalties.
"For providers of healthcare services, new compliance requirements place the organization and its leadership at substantial risk," notes the white paper. "For example, most providers do not dedicate internal resources to monitor consumer credit compliance, and expose themselves to risks for non-compliance. Implementing and maintaining compliance with each of the applicable federal and state laws requires a daunting level of training for employees and vendors, providing patient disclosures, implementing operational processes, creating and providing compliant patient communications, and keeping up-to-date on complex, changing requirements."
"I think hospitals should be prepared that they will be scrutinized," said Druce. "Attorney generals have found bad practices by vendors. If hospitals hire a vender, they need to make sure they understand all the compliance issues. It's important because not only are there potential financial penalties, but a regulatory agency or plaintiff lawyer can pursue these loyalties. There are also many reputational risks."
The white paper is available to download on the Carepayment website.