Judge Vacates CFPB Medical Debt Credit Reporting Rule: What Does This Reversal Mean For Providers and Patients?

On July 11^th, 2025, a Texas federal judge vacated previous modifications to the Consumer Protection Financial Bureau (CFPB) enacted in January of this year which would have excluded roughly $49 billion in medical debt from impacting patients’ credit reports. For the nearly 15 million Americans carrying medical debt, Judge Sean Jordan’s ruling means providers and agencies servicing past due medical balances may continue to use the credit bureaus to aide in recovery of these outstanding debts.  

In January of this year, when the CFPB ruling came down that medical debt would be removed from credit reports, healthcare providers faced the loss of an important tool helping with recovery of past due balances. Restrictions related to balance size and age of accounts had already limited what medical accounts were eligible to be listed with the credit bureaus. However, this additional step would eliminate medical debt credit reporting altogether. Patients aware of this ruling understood they would now face no financial impact for non-payment of their medical bills. For healthcare providers, outside of upfront payments or those taken on date-of-service, post insurance patient balance recoveries were expected to decrease. As providers look for options to counter a reduction in patient payments received, they may seek to pass additional costs to their patients resulting in an overall increase in consumer healthcare costs.   

While this update does not mandate credit reporting, Judge Jordan’s July ruling does allow providers who wish to utilize credit reporting to continue notifying patients that they are responsible for their balance owed with non-payment potentially resulting in a hit to their credit scores. Most of these same healthcare providers also utilize companies to assist in patient outreach for current and outstanding balances owed. For these service providers, this means plans which were already underway to accommodate the January ruling can now be suspended.  

While only days old, the reception to this ruling is expected to be mixed. Seen as a positive by providers already spending an increasing amount of staff time and expense to recover outstanding balances, consumers are expected to view the news negatively. With this in mind, healthcare providers who view credit reporting as simply an “on/off” switch may continue to struggle recovering balances owed to them.  

At its most effective, credit reporting is part of the holistic financial conversations service providers and their agencies should be having with patients to better understand the debt owed and the payment options available to them. Using Credit Reporting as a threat to incentivize patient payments may suppress effective collections or create reputational damage to providers, so effective communication is key. A patient can easily leave negative online reviews if their accounts are handled callously or without professionalism, and a “robocall” demanding payment at the threat of a negative credit score is still as ineffective as it always has been. Patient billing and collection organizations working for healthcare providers must come from a place of compassion and education. If a patient cannot pay in full now, their circumstances may soon change. A manageable payment arrangement and scheduled check-ins from live agents fluent in healthcare terminology can make all the difference. They can also protect healthcare providers’ revenues and reputation. 

• The choice to credit report or not is at the discretion of the healthcare provider as the creditor. This has not changed.  

• States may choose to step in with their own guidance related to credit reporting and the protection of consumers. States like California, which recently appropriated $50 million for this and other adjacent purposes, as well as Colorado, Connecticut, Illinois, Massachusetts, and New York can be expected to increase their consumer-protection efforts absent a push from Washington. 

• Chance of reversal? As with any legislation, the ruling could be reversed or overridden at some point. Based on early indications, additional changes do not appear to be imminent, but lawsuits or appeals are pending. 

For more than two decades and serving more than 3,000 healthcare providers nationwide, One Mnet Health is an exclusively healthcare focused and US-based organization that specializes in providing patient billing and bad debt collection services, in addition to innovative clinical software solutions. With an expansive nationwide footprint, One Mnet Health may already be working with your patients. Find out today what makes One Mnet Health the trusted partner of management companies and individual healthcare providers alike.