by – Sheri de Grom
Medical debt has no distinction apart from other accounts once they are outsourced to a collection agency.
The face of medical debt has changed drastically within the past five years. Before the U.S. economy fell apart, most doctors, hospitals and other health institutions carried their own debt.
Combine our weakened economy, high unemployment with the reality of Obamacare and fewer individuals have health insurance than before the recession and Obamacare.
Health care providers can no longer afford to carry their patients’ debt. The providers need ready revenue streams to remain operational. To obtain that money they’re forced to sell their debt to a third-party.
Medical debt is different from any other debt the American consumer accumulates. Unlike credit cards, auto loans or home mortgages, Americans don’t fill out credit applications for medical services. (Most hospitals and free-standing out-patient procedure clinics require the patient pay their part before care is provided).
In the recent past, most health-care providers never turned patients over to collections so long as they were making regular payments on their debt.
Today, making payments on a medical bill doesn’t necessarily keep it out of collections. If you’re making small payments, or if you make your payment a few days late when you are under a payment arrangement, you may discover your provider has turned the bill over for collections.
Unfortunately, you may not know there is an unpaid medical bill until you get a call or letter from a collection agency. At this point, it may be too late to avoid damages to your credit. Bills fall through the cracks, are sent to the wrong address, or are sometimes not sent to the patient before they are turned over to collections. This should be illegal, yet it’s not.
The above scenario occurred when my husband received a collection letter from a medical laboratory in Memphis, Tennessee. We’d no idea how the debt had occurred and I called the billing office immediately. My questions: Where was the initial care provided? My husband had never received medical care in Tennessee. I wanted facts. What was the procedure and who’d ordered it? On what date had the procedure been performed? Who had received the results of the procedure and who had authorized the procedure?
I also asked why we hadn’t received notice of the amount before the collection letter—and why hadn’t our insurance companies been billed as we had 100% coverage for the procedure?
Federal law mandates all insurance must be billed and an EoB (Explanation of Benefits) received before an account is turned to a collection agency. Additionally, the patient has thirty days to pay the existing balance after the final EoB has been received by the billing office.
I discovered neither of our insurance companies had been billed for Tom’s lab procedure which had been ordered from his internist office in Little Rock, Arkansas. I was furious! Had the billing office filed with our insurance companies, they would have received payment in full! Instead we were turned to a collection agency and thus the $14.00 amount appeared on our credit report.
I won’t go through the agony or steps I took to remove the account from our credit report. I will say it wasn’t pretty and I used every ounce of my career experience to correct the problem.
Unfortunately, a similar situation occurred two weeks ago when we received a statement that we owed $300.00 for a procedure Tom had at a medical center. Again, I knew the procedure was covered 100% by our insurance but, before I could call the medical center, I needed to pull up Tom’s Medicare Claims Log and research his Blue Cross payments and EoBs. Upon doing so, I discovered both insurance companies paid the appropriate amount and zeroed out the account. The actual problem was that the medical center had billed for the same procedure twice under two different provider names.
I made notes for myself before I called the medical center. Aggravation was certain to appear in my voice. I remembered the individuals who don’t have an intimate knowledge of medical bills and reminded myself if I could help just one person that was my responsibility.
I called the medical center and gave the requisite account number. Before I could say why I was calling, the voice on the other end of the line said, “Oh, yes. We realized the account was submitted twice and we’ve fixed the problem.” There was no mention of, we’re so sorry we caused you anxiety or we’re sorry we didn’t call and let you know we billed you in error or any other warm fuzzy comment. How easy it would have been for them to give me a one sentence thank you?
There’s a myth about medical collection accounts. Consumers believe once the account is paid-in-full, the account will be removed from their credit report. In reality, the truth is you can go ahead and pay those medical collection accounts if you owe them, but there won’t be much change, if any, to your credit score. The medical debt will remain on your report for seven years and then you’ll more than likely have to prove it’s been paid before it’s removed. It’s not automatically removed.
I removed the faulty information from our credit report but, if I hadn’t had my own resources it would have been an up-hill battle and legal resources in the thousands with no guarantee of a positive out-come.
Medical identity theft (future blog pending) is increasing at an alarming rate. If your medical identity has been stolen, you won’t know you have medical debt until the bills arrive. Normally what happens is the thief doesn’t use your address or any of your care providers. The thief ignores the co-payment amounts and finally the account is turned to collection and you’re left responsible for the amount due.
One of your most valuable assets is your health benefits.
Before you pay for any medical service, other than your co-payment at a physician’s office or for ancillary service, ask for an itemized bill. Medical bills have a high percentage of error. Ask questions about anything you don’t understand.
If you believe you’ve been over-charged for a procedure and that there’s a significant difference between what your insurance paid and what is still due from you under the co-payment portion of your medical bill, go to http://FairHealthConsumer.org. This database provides cost estimates for medical services. Of course, you can always fight a steep bill by hiring a medical advocate who will contest the charges (http://billadvodates.com), but bear in mind you’ll pay between $50 to $150 an hour or a percentage of your savings.
Fifty-nine percent or nearly 2/3rd’s of the people who experienced medical debt were assured that they received the care for which they were billed. It may take months before all claims are filed and paid by the insurance company.
It is imperative that you or another responsible individual examine each EOB received for every date of service. I keep a ledger for Tom and myself. I know our insurance covers us 100% but that doesn’t stop every provider from billing us. Medical billing offices are notorious for errors.
Currently Fair Reporting Action allows the consumer reporting agencies to include medical debt on a credit report for up to seven years after the date on which it was reported to be delinquent.
While many attempts have been made to address this legislatively there’s zero relief in sight.
Sadly, Mark Rukavina, executive director of The Access Project asks, “What do you get when you combine a dysfunctional insurance billing system with the flawed scoring algorithms? The answer (could be) $5,000 to $6,000 in additional fees for a home mortgage!”
UNFAIR & SHOCKING NUMBERS
- In 2010, 44 million Americans, nearly one-quarter (24%) of American adults under the age of 65, had medical debt being paid off over time.
- Nearly three-quarters (69%) of those with medical debt were paying off bills totaling less than $4,000.
- Nearly a third (31%) were paying off bills totaling over $4,000 and were insured at the time the care was provided.
We’re in need of a Medical Debt Responsibility Act which would prohibit consumer credit agencies from using paid-off or settled medical debt collections in assessing a consumer’s credit worthiness.
Don’t expect change to come soon. It’s nice to dream but as long as members of Congress can acquire whatever medical care they wish and have all prescriptions along with over the counter medications for free at a military facility, why should members of Congress worry about a Medical Debt Responsibility Act?