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Permissible Purpose is Inherent in the Patient/Provider Relationship
By Bruce Nelson, Vice President, SearchAmerica®, A part of Experian
Every week millions of consumers walk into hospitals nationwide and entrust their care to medical professionals. This same trust also should extend to their financial relationship with the hospital. Unfortunately, consumers are increasingly wary of providing access to their credit reports.
Hospitals need to reassure patients that while they have a right to access the information, they will use this information appropriately and in ways that may provide patients with financial assistance, if they qualify.
Hospitals have permissible purpose,
according to the FTC
The Fair Credit Reporting Act (FCRA) and its Fair and Accurate Credit
Transactions Act of 2003 (FACTA) restrict access to consumer credit or
demographic information, including credit scores, from national credit
reporting agencies to only those with permissible purpose or a legitimate
business purpose.
According to the FCRA, a permissible purpose exists where the person obtaining a credit report intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer or otherwise has a legitimate business need for the information: (i) in connection with a business transaction that is initiated by the consumer; or (ii) to review an account to determine whether the consumer continues to meet the terms of the account (and in other circumstances defined in the FCRA).
Hospitals meet both requirements for permissible purpose:
1. Consumer-initiated relationship: The business relationship and transactions between the hospital and the patient are all initiated by the consumer, regardless of whether they are routine procedures or related to an emergency or accident. Medical services are rendered at the request or need of the patient, who comes to the hospital for care.
2. Review an account: Hospitals extend credit to virtually every patient who enters their care. It is rare for all fees to be fully covered up front by the patient. Thus, because hospitals provide services that are billed at a later date, they take on a liability for a patient’s account. The hospital must know if the patient can meet its terms and financial obligations.
The American Hospital Association (AHA) confirmed this stance in its March 2009 report, which stated:
“The Federal Trade Commission has commented that when a patient owes money for services rendered, the hospital is authorized to access his or her credit report. Accessing a credit report before offering a patient credit or deferred payment options also would be permissible under the FCRA, provided the hospital has pre-determined criteria and extends such credit if the patient meets those criteria.”
Hospitals respect confidentiality
While the relationship between the patient and the hospital demonstrates the
right of a hospital to access consumer demographic and financial
information, hospitals need to ensure that this information is used only for
the intended purpose. As with medical records, hospitals know that
confidentiality is a top concern and direct their staff with policies and
procedures accordingly.
For example, the hospital must use credit information for business purposes only and will not access credit information of or for any nonpatients.
If the health care network uses a third-party service for its address verification and/or financial screenings, these service providers should require a site visit and documented adherence to use any consumer information responsibly, as required by federal and state government mandates.
Credit reports facilitate charity care
screening
Many consumers are unaware of the financial assistance programs that are
designed to help them in times of need. These programs may include a
hospital’s charity care program, Medicaid, and many others that provide
billions of dollars every year to minimize or eliminate qualified patients’
financial responsibility. To enroll in these programs, most require that
patients demonstrate a financial need.
Based on their permissible purpose, hospitals can use a patient’s financial information, such as a credit report, to automatically determine whether a patient’s financial situation qualifies him or her for these programs. Charity care patient accounts no longer are placed into collections, saving the hospital and the patient time and money.
Consumer reports usually contain all of the needed information and can eliminate much of the paperwork typically associated with enrolling patients in financial assistance programs. Using this data, hospitals can reduce their charity care enrollment process from days to minutes, enabling the entire process to be completed while the patient is present at the first visit.
Hospitals care about their patients and demonstrate this commitment to serve every day. By using consumer information responsibly, hospitals reinforce this commitment through their business relationships and their medical staff. Hospitals understand that they have a right or permissible purpose to consumer information, and they apply a respectful nature to use this information appropriately and for the benefit of all.
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