Effective November 30, 2021, the Consumer Financial Protection Bureau (CFPB) enacted a new federal debt collection rule known as Regulation F. The recent legislation aligns with the Fair Debt Collection Practices Act (FDCPA), which addresses consumer rights while imposing certain requirements for active debt collectors.
Regulation F consists of two distinct rules. First, the CFPB has established guidelines for approved communications regarding debt collection. Accordingly, the rule defines and prohibits harassment, abuse, false or misleading representations, and other unfair debt collection practices. The second rule focuses on disclosures of bad debt, outlining related requirements and sanctioned timing.
While the directives overtly impact debt collection agencies, Regulation F also requires healthcare providers to update various processes and documentation standards. Under the ruling, providers are expected to have provided all necessary information to their collection agencies prior to November 30, 2021, in order to sidestep any subsequent legal penalties and other ramifications.
The new mandates represent a significant departure from previously acceptable collections practices. Failure to comply can result in regulatory exposure, poor public perception, branding complications, and an onslaught of lawsuits from consumers’ attorneys.
In building a compliant program, many hospitals and health systems have chosen to adopt a Model Validation Notice (MVN). Designed to reduce confusion as well as lawsuits related to pending debt, an MVN is a federally approved bad debt disclosure notice that incorporates Regulation F criteria. This documentation has proven to be critically effective in mitigating potential disputes and promoting smooth collection procedures.
In addition to developing an MVN, healthcare organizations should extensively review their existing practices and discuss any related process changes with collection agencies. Essentially fostering a partnership aimed towards mutual success, hospitals and debt collectors can continue to drive cooperation by training staff to follow suit.