Obtaining Security Clearance

Changes Coming for Medical Bills on Credit Reports

Historically, the credit bureaus have always included medical billing debts reported by creditors as being delinquent. These are usually reflected as a medical bill collection by whichever company the medical services use for their collection efforts. Oftentimes, the person for whom the credit report was run on is not even aware that they have a medical bill collection being reported because they are left out of the loop on the back and forth between insurance companies and medical billing departments. Claims get rejected because of wrong billing codes or the amounts are not fully covered under the policy. How does this affect a clearance applicant or holder? Here is a frequent scenario:

You fill out the SF-86 and answer “no” to the questions asked in the financial section about having any delinquent debts in the last seven years. The background investigation is initiated, and a credit bureau report is run. On it are four or five open collections for medical billing debt. You get interviewed by a background investigator and while going over your answers on the form, he asks if you have any delinquent accounts. Of course, you say no, thinking you don’t have any. Then he points out the collections on your credit report and starts grilling you about them and why you didn’t list them. So, now you are on the defensive because your honesty has been called into question and you have to provide information about how the debts occurred and what you are going to do about them.

Because of this type of scenario, the Consumer Financial Protection Bureau (CFPB) recently announced an effort to remove medical bills from credit reports to protect consumers from the coercive tactics used by collection agencies to get them to pay bills that they may not even owe. Research by the CFPB showed that mistakes and inaccuracies in medical billing are common because of problems such as disputes over insurance payments or complex billing practices. Once this process change is implemented, the above scenario will hopefully be a thing of the past.

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