Nora Johnson
On The Money
Contributor

Medical Debts and Collection Agencies

Medical debt is overwhelming to begin with, and worsens exponentially when collection agencies start plaguing patients for payments.

A week ago, we profiled Jane, an insured patient whose insurance company denied coverage leaving her with a $43K hospital bill that is now in collections.

Collection agencies also plague the estimated 45 million patients who have no health care insurance, and those untold millions who are 'under' insured.

This is what I know about hospital bills. If you have no insurance, are denied insurance coverage for a hospital stay, or are under-insured, you will be given a bill for “total billed charges.” No one should pay total billed charges because the majority of the health care industry doesn't pay them and for good reason: most are laden with duplicate, unbundled and unconscionable charges.

Collection agencies are making me sicker! What to do?

1. Google “Fair Debt Collections Practices Act” and learn what constitutes legal and illegal policies and harassment from collection agencies. Know your rights!

2. Google HIPAA to learn your HIPAA rights. You’ll learn that under HIPAA law patients have a right to access the following information which also can be used to verify the validity of one's medical debt. Once you learn your rights, send a letter to the hospital and let them know!

Then send by certified mail to the collection agency a request for: UB-04, detailed itemized statement, coding abstract (for hospital debts), or a CMS-1500 detailed statement (for insurance provider debts)

Demand the collector cease and desist further collection actions until they have given you these documents and make it clear that you dispute the bill. Those collection agencies that buy old debts for pennies on the dollar will not be able to secure these documents. These agencies will fade away into the night.

3. Know your state's Statute of Limitations period for medical bills. Again, you can learn this with a simple Google search (there’s not much in life you can’t!). I am not a lawyer, so I can’t give legal advice, but when I contacted a Florida attorney familiar with litigating unreasonable hospital bills, he told me that “A bill that is older than 4 to 7 years, depending on the state, may well have exceeded the statute of limitations. This results in the account being uncollectable, legally, because passage of the Statute of Limitations forecloses the ability to file suit in court. But remember, it is a limitation on bringing a legal action to collect the debt, not a limitation on actually collecting it. This does not mean that your credit report cannot be impacted. The passage of the Statute of Limitations will, however, dramatically increase your bargaining power to say the least.”

The lawyer also said “to avoid arguments that you’ve accepted a full billed amount, and to capitalize on your bargaining potential, know your state’s statute of limitations and don’t make payment on a bill that is past that date unless you’ve received a very deep discount and are paying only a nominal amount for settlement in full.” So, the bottom line is that it's important to contact a lawyer familiar with these things if you need legal advice, and especially if you’ve been sued over a bill. Trust me, the hospitals will have lawyers, so you should too.

4. Notify any collection agency within 30 days of receiving your first notice, in writing and by certified mail, to dispute the validity of the debt until your medical/hospital bill has been audited by an independent third party. Like lawyers, independent bill auditors are professionals that can level the playing field against powerful, over-reaching hospitals.

If you choose to make payments on your bill, make sure you clearly indicate that this bill is under dispute.

Finally, I urge you to research the laws in your state and, again, contact an attorney or consumer rights organization as well as an independent bill auditor to learn about your rights as a medical consumer. Because knowing is half the battle.

Nora Johnson is a medical billing expert and vice president of audits and compliance for TrueFACS, a forensic auditing claims system. She is also a contributor to On The Money.

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