What Healthcare Providers Should Know About Medical Debt Collection Agencies

 

 

Trying to collect medical debts from your patients (clients) without success? Well, this is a struggle we are all too familiar with. According to a Medical Bills survey carried out by the Kaiser Family Foundation in 2016, people from all walks of life experience difficulty in paying their medical bills.

The survey indicated that adults in the United States aged between 18 and 64 admitted that at least one person in their household had issues with paying medical bills in the last year. 

This summarizes the ever-increasing problem of medical debt. The flip side of this is that healthcare providers feel the effect. Years ago, healthcare providers could afford to look the other way when a patient failed to pay their medical bills. 

However, this is not the case anymore nowadays since healthcare providers now depend heavily on patients fulfilling their financial responsibilities to receive compensation. Collection approaches so far haven’t been incredibly effective. So, what is the solution then?

Causes of Medical Debts

Medical debts are considered one of the worst types of bad debts. Many patients with medical deficits are mostly uninsured or suffering from chronic diseases, often unexpected. In these cases, medical bills and debts continue to rise as they cripple the debtor’s financial situation.

Highlighted here are the major causes of medical debts:

  • Sudden health accident resulting in the patient being unable to pay for medical expenditures
  • Lack of health care coverage
  • Inadequate savings and health insurance status
  • Large family size and age of the patient

In retrospect, this means that medical debts can affect anyone. Before accepting a patient and providing a medical service, healthcare providers should obtain detailed information on their patients.

This includes social security number, patient’s full name, name of a relative, any insurance coverage the patient may have, home address, as well as their work address and phone numbers. 

Sometimes patients may be confused about their obligations regarding insurance coverage, co-payments, and deductible amounts, therefore, resulting in a lack of payment.

Make it common practice to be clear about your payment policies from the beginning before any services are provided to ensure that the patient knows what their payment obligations are. This will avoid misunderstandings later.

As with any debt for services rendered, overdue medical bills become less important to the patient once the treatment is completed and the patient feels better. Other bills, such as credit cards, car payments, or mortgage, may have priority over an overdue medical bill. 

By creating clear and consistent policies, such as sending timely account statements and making the necessary phone calls, you will distinguish patients who are willing to pay their bills from “problematic” patients. 

Patients who communicate with their office and demonstrate a sincere desire to pay their bills despite the financial difficulties they may be experiencing should be treated differently from those who ignore their communications or refuse to make any payment arrangements. 

If a patient has not paid their medical debt when they have agreed to a payment plan within ninety (90) days after their treatment, the case should be referred to a medical collection agency or law firm as soon as possible for better recovery success.

Seeing that a significant percentage of Americans have issues with paying their medical bills, healthcare providers need to embrace an alternative method of debt collection, which will be more effective than those used so far. 

A welcome approach is the use of medical debt collection agencies. Using these agencies in recovering medical debt from patients is a good option for health institutions as it relieves healthcare providers of this burden and helps them stay financially afloat. Most patients will likely not return if their account has been handed over to a collection agency or a lawyer. 

What are Medical Debt Collection Agencies?

Medical debt collection agencies are in charge of pursuing payments for debt from patients for healthcare services, covering those that do not possess health insurance. Over the years, this debt collection industry has significantly improved as there are updated rules of engagement.

Previously, collection agencies were largely unvetted but have since become regulated. The Consumer Financial Protection Bureau (CFPB) is an organization regulated by the Federal Government that oversees how collection agencies communicate with debtors.

Many in the healthcare industry, erroneously think that the only way to avoid risk is to write off unpaid balances. This has drastic consequences in the long run. 

However, there are new tools available that you can use to navigate the unfamiliar territory of debt collection. As a healthcare provider, you can use the CFPB database to search for a current or prospective debt collector to put the mind at ease. Best of all this database is entirely free and public.

 

Regardless, it is much better to leave this task to trusted debt collection agencies, a wide range of benefits to healthcare providers. How do you find trusted debt collection agencies?

What to Look for In Debt Collection Agencies

  • First, and most importantly, look for certified and experienced medical collection companies, not general collection agencies. This is not revolutionary advice; The mistake many healthcare providers make is to stop here believing that if they have a medical collection service, it is good enough.

To maximize payments on your overdue accounts, as well as to maintain a good doctor-patient relationship, you must go one step further.

  • The second key element to keep in mind is that medical debt collection services understand and have been charged for their speciality. It may take a little longer to find an experienced agency, but the results will be worthwhile and may even affect your patient’s health.
  • Consider your specialty. Many psychiatric patients are dealing with problems that affect their emotional well-being, some to the extent that additional stress from the collections could be detrimental to their health.

A general industry billing agent may not have the requisite experience in sensitively dealing with psychiatric patients.

The use of hardball collections tactics could have severe consequences for a patient who, for example, avoided committing suicide a few months ago. However, a collection agent who has experience in this field will not only work to collect overdue bills but will do so in a way that is sensitive to the patient’s situation.

  • A collection agency that specializes in persecuting parents who do not pay their child support is probably not a good option for patients who are recovering from major surgery.

Choosing credit collection services with specific experience in your field will maximize the results while benefiting your patients as well.

  • Be sceptical of flat-rate collections. While the fixed collection approach is usually cheaper at first, you should ask yourself how motivated the medical collection agencies will be to collect your money when they have already been paid in advance.

Most collection agencies work on a percentage and are not paid unless you are paid.

  • Make sure they are licensed. If the medical debt collection agency is not licensed, you are responsible if they violate the collection laws. Therefore, ensure that they comply with the Fair Debt Collection Practices Act (FDCPA), which issues specific guidelines on collection practices.
  • Make sure they are insured and linked. This guarantees that, in case of a lawsuit, the company will have the financial resources to pay the related legal fees.
  • Insist on a Hold Harmless agreement. This written agreement will protect you from any legal liability if the agency violates collection laws or practices. If you do not get this agreement in writing, you may be responsible for your collection practices since you hired them to handle your collections.
  • Determine the success rate of the medical debt collection agency. Obviously, the higher the success rate, the better, but keep in mind that the percentage they charge will also be higher.
  • Check if they make use of Skip-Tracing. It can be challenging to locate patients who moved away and did not leave a forwarding address, whether they deliberately skipped the city due to debt or forgot to contact your office.

The use of medical service for the collection of bad debts that uses this technique can increase your collection rate.

Types of Services Provided By Medical Debt Collection Agencies

The following are services that medical debt collection agencies can offer healthcare providers:

  • First Party Collections

First-party collections involve speaking to clients on behalf of your healthcare company. First-party collections have a higher chance of being collected quickly, and the success of this is dependent on the medical debt collection agency being able to understand how to effectively speak to people.

  • Third-Party Collections

Third-party collections deal with medical debt that is far past due. Unlike first-party collections that can be collected quickly, other techniques need to be employed to ensure the success of third-party collections. A medical debt collection agency that specializes in hard-to-handle debts can handle this effectively.

  • Billing Services

Billing solutions have been known to improve medical debt accuracy and a medical debt collection agency that understands this can employ it properly. An increase in efficiency translates to a higher chance of the recovery of medical debts.

5 Benefits of Medical Debt Collection Agencies

Struggling with medical debts? Well, you don’t have to anymore as medical debt collection agencies have been shown to significantly relieve healthcare providers of this burden. Here are some benefits of using collection agencies:

  • Frees your time and resources

Debt collection is a slow process. Getting in touch with slow payers means sending letters, making phone calls, and sending emails. Instead of requesting payment, staff members could focus on other vital areas of the business.

The incorporation of a medical collection agency lightens the workload of your employees, which reduces the likelihood of burnout, and increases labour productivity. This way, you can focus on patient care and the management of your facilities.

  • Accelerate the collection rate

Hiring a medical collection agency improves your chances of receiving payment. Patients may not respond to your collection efforts, only to pay immediately after receiving communication from a collection agency.

Receiving a call or a letter from a collection agency creates fear in patients, while a reminder from your healthcare centre may be considered a nuisance. A professional debt collector generally uses more consistent and assertive methods to recover delinquent debt, which leads to a higher success rate.

  • Utilizing the help of experts

Agencies hire professionals with experience in collecting late payments. Their expertise and training generally exceed the qualifications of the members of your existing staff.

These professionals use proven techniques to maximize the collection process, offering you a better opportunity to collect most, if not all, of your outstanding balances.

  • Detailed documentation of processes

Regardless of whether an agency is successful in collecting payments or not, they ensure that all documentation processes are handled effectively. Such records include email, records of phone calls, keeping tabs on amounts received, and the amounts due.

This documentation will be useful if your company decides to take the matter to court. It will help you present your case and determine whether the amount owed is worth the time and expenses of a lawsuit.

  • Taking advantage of advanced technology

Medical collection agencies use advanced technology and tools that your healthcare facility may not have access to. Experienced debt collectors will use tools to facilitate communication with debtors, including new technology that gives them access to debtor information.

With the onset of advanced technology, medical debt collection agencies can continuously stay updated through proper communication with delinquent patients. There are several options open to them, including using email and phone calls to stay on track. Therefore, healthcare staff can spend their time on worthwhile activities instead of spending so much time collecting payments from debtors.

No doubt, healthcare providers need a more comprehensive approach towards collecting medical debts from patients and using collection agencies is a step in the right direction. With this, you can forestall negative financial consequences. The end result is an increase in the number of debts recovered from patients since these agencies have a better success rate.