As healthcare evolves, so too does the financial landscape affecting both providers and patients. Recent changes to credit reporting laws are reshaping how medical debts influence credit scores, ushering in a crucial moment for healthcare providers to reassess their patient pay strategies.
Rethinking Patient Pay Solutions and Processes: How Tides Turned in 2022
In July 2022, the major U.S. credit reporting agencies—Equifax, Experian, and TransUnion—banned the inclusion of paid-off delinquent medical bills on credit reports. In other words, if a person had past due unpaid medical bills but eventually paid them, they would no longer appear on the credit report. Previously, these debts could remain on credit reports for up to seven years, lowering credit scores and adversely affecting consumers’ ability to secure loans for major purchases like homes and cars.
Additionally, the timeframe for unpaid medical debt to impact credit reports was extended from six months to one year, providing patients additional time to settle bills without affecting their credit scores. As of 2023, unpaid medical bills less than $500 no longer appear on credit reports.1
These reforms have generally improved credit scores, benefiting consumers. However, they have also compelled healthcare providers to seek new incentives for timely patient payments as traditional threats of bad debt and credit damage were no longer an incentive (and never really worked that well from the start).
How 2025 Brought Another Significant Medical Billing Change
In 2024, the Consumer Financial Protection Bureau (CFPB) took a dramatic step by proposing rules to completely exclude medical debt from credit reports.2 This rule became effective on January 7, 2025. The previous allowance for medical debt to appear after 12 months was abolished. This significant regulation removed approximately $49 billion in medical debts from the credit histories of about 15 million Americans and prohibited the consideration of medical debt in lending decisions. This policy adjustment also raised average credit scores by about 20 points.3
Motivation to Stay the Course And Tools to Stay on Track
With the 2023 and 2025 regulatory changes removing the threat of credit damage for unpaid medical bills, progressive healthcare providers are future-proofing their payment models. These developments necessitate innovative strategies to encourage timely patient payments. This new landscape requires a proactive, adaptable approach to patient billing, positioning patients not merely as care recipients but as engaged partners in the financial aspects of their healthcare.
- Initiate clear financial communication: Start the patient-provider interaction with clear, transparent discussions about financial responsibilities. Proactive communication helps set realistic expectations and reduces surprises, ensuring patients understand their payment options and obligations from the outset.
- Offer payment plans: Introduce flexible payment options early in the patient-provider relationship to inform patients about manageable ways to settle their accounts before balances become overwhelming. Tailoring payment plans to the diverse financial circumstances of your patients enhances the likelihood of full, timely payments.
- Enhance patient engagement: Partner with professionals trained in how to best engage patients in financially sensitive conversations, from creating comforting environments to leveraging omnichannel communications tools to ensure convenient payment access.
- Utilize advanced reporting tools: Modern AI and comprehensive reporting tools provide actionable insights into patient interactions and overall practice trends. Use these insights to improve patient satisfaction when it comes to payment collection.
- Ensure compliance: Practices should adjust collection practices accordingly to ensure compliance with the new rule, such as eliminating any previous processes around reporting medical debt to credit bureaus and revising billing and collections policies to reflect that credit reporting is no longer an option.
Adopting a patient-centered billing approach is crucial in today’s healthcare environment, where traditional leverage like credit impact is fading. From a full engagement solution to world-class technology and tools to support your billing office team, PatientFocus enhances patient pay processes effectively. Discover how integrating our solutions can streamline your billing operations and positively affect your bottom line. Connect with us to learn more about our suite of patient pay management solutions.
Sources
- Consumer Financial Protection Bureau. (2023, May 8). Have medical debt? Anything already paid or under $500 should no longer be on your credit report. Consumer Financial Protection Bureau. https://www.consumerfinance.gov/about-us/blog/medical-debt-anything-already-paid-or-under-500-should-no-longer-be-on-your-credit-report/
- Consumer Financial Protection Bureau. (2024, June 11). CFPB proposes to ban medical bills from credit reports. Consumer Financial Protection Bureau. https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-to-ban-medical-bills-from-credit-reports/
- Consumer Financial Protection Bureau. (2025, January 7). CFPB finalizes rule to remove medical bills from credit reports. Consumer Financial Protection Bureau. https://www.consumerfinance.gov/about-us/newsroom/cfpb-finalizes-rule-to-remove-medical-bills-from-credit-reports/