The healthcare financial landscape is poised for a seismic shift with the Consumer Financial Protection Bureau's (CFPB) proposed rule on medical debt.

This proposal aims to remove medical debt from credit reports and restrict certain collection practices, forcing healthcare providers, Revenue Cycle Management (RCM) companies, and medical debt collection agencies to reimagine their strategies.

Recent developments in medical debt reporting

1. As of today, the three nationwide credit reporting companies (Equifax, Experian, and TransUnion) have already taken significant steps:
   • Removed all paid medical debts from consumer credit reports
   • Eliminated medical debts less than a year old
   • Cleared all medical collections under $500
2. The CFPB has now proposed a rule to ban medical bills from credit reports entirely.
3. Credit reporting companies now observe a one-year waiting period after a patient’s date of care before allowing any related debt to appear on credit reports.

Key challenges for healthcare financial stakeholders

1. Increased difficulty in collecting, especially on smaller balances
2. More negotiation attempts from patients
3. Reduced perceived consequences for non-payment

In light of these challenges, both early-stage and late-stage collection stakeholders must adapt their approaches. Let's explore some strategies that focus on personalized engagement and practical solutions.

Preventing delinquencies before they occur

By implementing proactive measures and engaging patients early in their financial journey, providers and their RCM partners can significantly reduce the likelihood of bills becoming delinquent.  Here's how to minimize the risk of patients becoming delinquent:

1. Predictive Analytics: Employ models to identify patient accounts at risk of non-payment and prioritize them accordingly.‍
2. Improve Patient Communication and Education:
   • Create easy-to-understand billing statements with visual aids
   • Develop multi-channel communication strategies (email, text, phone) with tailored messaging‍
3. Leverage Hyper-Personalization: Utilize Prodigal's hyper-personalization suite to deliver the right message through the right channel at the right time, including personalized payment offers.

Strategies for managing bad debt

With tightening margins in bad debt operations, efficiency is key. The proposed bill is likely to increase the number of attempts required to secure payments, making it crucial to use resources wisely. Efficiency is no longer just beneficial—it's essential for survival and success in this evolving landscape.

1. Optimize channel strategy: Use self-serve and digital channels at scale to improve margins and recovery rates.
2. Data-driven communication: Analyze patient preferences to determine the most effective communication channels for each individual.
3. Enhance Patient Service Representatives' (PSRs) efficiency: PSRs’ time is invaluable, and enhancing their efficiency can significantly impact recovery rates. Check if you can:
   • Automate workflows like note-taking to maximize in-call time
   • Utilize real-time agent assistance to improve conversation quality
   • Employ AI to field inbounds, reducing slippage and improving patient experience
4. Refine negotiation techniques:
   • Train staff in empathy-led negotiation skills and emotional intelligence
   • Encourage connecting with patients through shared experiences

Personalized engagement is crucial

With credit reporting no longer available as leverage, the focus shifts to building stronger, more personalized relationships with patients:

1. Empathy-First Approach: Train staff to prioritize understanding and addressing patient concerns.
2. Flexible Payment Options: Offer a variety of payment plans tailored to individual financial situations.
3. Financial Counseling: Provide resources and guidance to help patients navigate their medical expenses.
4. Transparent Communication: Keep patients informed throughout the billing process, reducing surprises and building trust.

Conclusion: Embracing change for long-term success

The proposed CFPB rule on medical debt presents startling challenges but also opportunities for innovation and evolution. By focusing on personalized engagement, leveraging technology, and maintaining ethical practices, organizations will have a better chance of navigating this new landscape successfully.

The key lies in proactive adaptation and a commitment to treating patients as partners in the financial process. As the healthcare financial ecosystem evolves, those who embrace these changes and prioritize patient-centric approaches will be best positioned for long-term success.