5 questions to consider before sending medical bills to collections
More than 100 million people in America (i.e., 41% of adults) are saddled with medical bills they can’t pay, and 15 million Americans have medical bills on their credit reports even despite recent changes to medical debt collection reporting. The takeaway? Healthcare is expensive, and medical debt is real.
Unpaid patient invoices also affect medical practices, the managers of which are often left with the difficult decision of what to do. How many times do you send an unpaid invoice to a patient? Do you contact the patient directly by phone instead? After a period of time, do you simply write off the balance rather than use resources to keep asking for payment indefinitely?
Medical bills and collection agencies: What you need to know
Some medical practices may also consider one final step: Sending medical bills to collections. It’s not an easy decision to make because it’s one that could affect the doctor-patient relationship. Then again, this is revenue you’ve earned that’s necessary to promote financial sustainability.
Still, the Consumer Financial Protection Bureau (CFPB) has issued stern warnings to healthcare providers and lenders that target patients for medical debt collections. Providers must take a thoughtful approach when sending medical bills to collections.
Here are five questions related to medical bills and collection agencies to help you decide whether a partnership may be worthwhile:
1. What’s your ‘why’? Why are you considering sending medical bills to collections? Lack of internal expertise? Aging patient accounts receivable (A/R) that has taken a toll on your cashflow even despite your best internal efforts to improve it? Trying to enhance operational efficiency? Something else? Examine your goals and try to calculate a return on investment before making the decision. When thinking about medical bills and collection agencies, make sure that a partnership is the ‘fix’ that will give you what you need.
2. What percentage of your medical bills might go to collections? Remember: The collections agency will charge a percentage of the money that it recovers or a flat fee for each account paid. If your aging patient A/R is particularly high (either in terms of volume or dollar amounts), you may want to think twice about sending medical bills to collections because in doing so, you may forfeit a significant amount of money. Can you afford that net loss? Some might argue that some payment is better than none. However, a more worthwhile investment might be to focus on front-end process improvement, such as redesigning your patient billing statement for ease of understanding, collecting up-front payments, promoting price transparency, or offering patient payment plans or loans.
3. Can you find a collection agency for medical providers that will serve an extension of your own medical practice? An agency that mirrors your core values and communication style is paramount. Some agencies may even be willing to use a specific script when contacting patients. On the other hand, an aggressive or disrespectful collections agency may even leave patients with a bad impression causing them not to return to your medical practice. This type of agency could also cause legal problems for the medical practice—especially if it violates the Fair Debt Collection Practices Act (i.e., the federal guideline that prohibits debt collectors from using abusive, unfair, or deceptive practices) or other consumer protections.
4. At what point would you send the bills to collections? Will you wait until 90 or 120 days out, or will you do it sooner (e.g., at 30 or 60 days) when the chances of collecting the balance are higher?
5. Will you use a dollar amount threshold? For small balances, it may not make sense to send medical bills to a collection agency because the amount you’ll ultimately recoup is nominal. On the other hand, small balances add up, so it may ultimately be advantageous not to use a threshold.
Looking ahead
As patients continue to face skyrocketing deductibles and medical bills, having a strategy in your medical practice to address patient A/R is critical. Partnering with a collection agency for medical providers may be one piece of that, but there are countless other potential solutions as well. Learn how edgeMED can help and be sure to check the Healthy Snacks blog for more expert insights, best practices and industry trends.
