New statement warns healthcare providers, Medicare Advantage plans, and debt collectors about improper billing and collections

Today, the Consumer Financial Protection Bureau (CFPB) and the Centers for Medicare & Medicaid Services (CMS) issued a joint statement  to protect millions of people with Medicare living at or below the poverty line from unlawful medical bills. These people in the Qualified Medicare Beneficiary group represent about one in eight Medicare recipients nationwide. Federal law generally prohibits healthcare providers who accept Medicare from billing these people – referred to as “QMBs” – for cost-sharing, such as co-pays or deductibles.

“Medical bills are a major contributor to bankruptcy and financial collapse for a family,” said CFPB Director Rohit Chopra. “The CFPB and CMS are working to ensure that Medicare beneficiaries are not subjected to illegal debt collection on improper medical bills.”

“The Biden-Harris Administration's efforts to make health care more affordable are life-changing for millions of Americans,” said CMS Administrator Chiquita Brooks-LaSure. “This guidance is part of our ongoing commitment to ensure people have access to health care without fear of receiving bills that they should not have to pay. No one should go bankrupt from getting the health care they need.”

The agencies' joint statement emphasizes that Traditional Medicare providers and suppliers, Medicare Advantage providers and suppliers, and debt collectors can be sanctioned by CMS or be liable under federal law for improperly billing these recipients. CMS is also releasing new resources clarifying that healthcare providers must refund any improper charges, regardless of whether they received incorrect information about a recipient's QMB status from Medicare Advantage plans.

The scope of improper billing affects millions of vulnerable Americans, despite existing legal protections. In 2021, about 1 in 8 Medicare beneficiaries – 8.7 million people – were enrolled in the QMB eligibility group. There is evidence that some Medicare providers and suppliers improperly seek payment from this population – including when Medicare Advantage plans give healthcare providers incorrect information. These improper bills can cascade into debt collection actions and negative credit reports, creating lasting financial harm for protected beneficiaries and contributing to a medical billing system rife with inaccuracies.

Many Medicare beneficiaries with low income struggle with medical costs:

• About 17% of the thousands of Medicare-related complaints that the CFPB has received over the past several years specifically reference QMB status, and most of these complaints (about 11% of all CFPB Medicare-related complaints) include a report that a healthcare provider or debt collector attempted to collect debts not owed. These improper bills appear on people's credit reports and impact their access to housing, utilities, and other forms of insurance.
• The risk of improper billing is particularly high for about 1.5 million QMBs who are in Medicare Advantage plans that are not specifically designed for low-income beneficiaries.

The joint statement describes the guidance that CMS is releasing today and explains how the laws that the CFPB administers and enforces apply to improper debt collection of QMBs. Specifically, the statement explains:

• Debt collectors may not collect on improper and inaccurate bills targeting Medicare beneficiaries. The Fair Debt Collection Practices Act prohibits collecting bills that are not actually owed or are in the wrong amount.
• Debt collectors may not tarnish credit reports with improper and inaccurate bills. Furnishing inaccurate information may violate the Fair Credit Reporting Act, and may also demonstrate that furnishers do not verify the accuracy of information they furnish.

The new CMS resources outline how providers should verify QMB status and require refunds of any improper payments collected. Providers who bill QMBs for improper charges are violating federal Medicare requirements or their obligations under Medicare Part C and may risk CMS sanctions.

Today's actions build upon the Biden-Harris Administration's call on states, local governments, and health care providers to take comprehensive action to reduce the burden of medical debt. The CFPB has taken a range of actions to address unfair and coercive medical debt collection and practices, including issuing guidance to prevent families from being targeted by illegal medical debt collection tactics and proposing a rule to ban medical bills from people's credit reports. The CFPB and other enforcement agencies will take action against debt collectors that violate the rights of patients.

Read today's joint statement.

Consumers can submit complaints about their debt collection issues by visiting the CFPB's website or by calling (855) 411-CFPB (2372).

QMBs whose providers will not stop billing them for items and services Medicare covers can contact 1-800 MEDICARE (TTY users can call 1-877-486-2048). CMS can advise the provider to stop billing them and to refund any payments they've made. Find this and other tips for QMBs on Medicare's website.