Claire Dawson
Hospitals can and do send patients to collections for unpaid medical debt. Medical debt is a debt that arises from a visit or interaction with a healthcare provider, such as a hospital, clinic, doctor, or nurse. Two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an acute medical need. Unlike many other consumer debts, people rarely plan to take on medical debt. The high cost of healthcare, especially hospital care, leaves millions of Americans with medical debt, even when they have insurance. Hospitals have several tactics to get patients to pay their bills, including reporting the debt to a credit rating agency. However, federal law neither limits when a hospital can send a bill to collections nor requires hospitals to oversee the debt collectors they use. Most states also do not regulate when a hospital can send a bill to collections, although some states have developed more protective approaches. Patients have certain rights when it comes to medical bills and collections, such as the right to ask a debt collector to verify the debt and provide information about the bill being collected.
| Characteristics | Values |
|---|---|
| Hospitals sending bills to collections | Hospitals can send bills to collections if patients do not meet the agreed-upon terms. |
| Debt collectors | Debt collectors can only contact individuals about valid debts. They are required to verify the debt and cannot report a medical bill to a credit reporting company without first attempting to collect the debt. |
| Medical debt | Medical debt arises from a visit or interaction with a healthcare provider, such as a hospital, clinic, doctor, or nurse. Two-thirds of medical debts are the result of a one-time or short-term medical expense. |
| Patient protections | Non-profit hospitals are required by law to offer financial assistance programs. The No Surprises Act protects patients from unexpected bills for emergency services from out-of-network providers. Patients can dispute charges through a patient-provider dispute resolution process. |
| State protections | Some states have developed protective approaches, such as prohibiting hospitals from sending bills of low-income patients to collections or requiring hospitals to offer reasonable payment plans. |
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What You'll Learn
- Hospitals can send fully paid bills to collections
- Hospitals must provide an itemized bill before sending to collections
- Hospitals may be required to provide financial assistance before sending to collections
- Hospitals can report debt to credit rating agencies
- Hospitals may sell old unpaid debt to third-party debt buyers
Hospitals can send fully paid bills to collections
In the case of a patient paying less than the agreed monthly payment, a hospital representative may threaten to send the bill to collections. This is because paying less than the agreed amount is considered an unofficial setup. Hospitals have the discretion to send bills to collections if patients take longer than three months to pay individual claims. Some hospitals are more aggressive in this practice than others.
It is important to note that debt collectors can only contact patients about valid debts that they owe. Patients have the right to ask debt collectors to verify the debt and provide information about the collector and the bill. If patients find discrepancies in their medical bills, they can dispute the charges through the patient-provider dispute resolution process. Nonprofit hospitals are required by law to offer financial assistance programs, and many other providers are willing to negotiate payment plans.
To avoid issues with medical debt, patients should closely examine their medical bills to ensure accuracy and that they received the listed treatments. Patients should also be aware of their rights under the No Surprises Act, which offers protections against unexpected bills for out-of-network emergency services. As of July 2022, paid medical debts are no longer included on credit reports, and patients can dispute the reporting of unpaid medical debts under a certain dollar threshold.
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Hospitals must provide an itemized bill before sending to collections
Hospitals can send unpaid accounts to third-party collections, and they can decide whether to send a bill to collections or not. However, there are laws and policies that give patients time before their bill goes to collections. Hospitals are required to provide specific notices before transferring a hospital debt to a debt collector. This notice includes a copy of an application for free or reduced care under the hospital's policy.
If you receive a collection call and have no documentation to defend your case, you can ask the debt collector to verify the debt and provide information about the collector and the bill. They must also comply with the laws that apply to debt collection, such as avoiding harassing or abusive calls and following requirements when reporting the debt to consumer reporting companies. Debt collectors can only contact you about valid debts that you owe. They cannot contact you about debt that isn't yours or that you don't owe.
To avoid this situation, it is essential to obtain an itemized bill from the hospital, which is crucial for negotiating your hospital bill. While hospitals may not send an itemized bill unless requested, they are legally required to do so within 30 days of the request. This document contains procedure identifiers called CPT or HCPCS codes, enabling you to identify duplicate charges and cross-check prices.
Additionally, if you don't have health insurance or choose not to use it, your healthcare provider must give you a "good faith" estimate of the treatment cost before receiving care. If the billed amount exceeds the estimate by $400 or more, you may dispute the charges through a patient-provider dispute resolution process. Nonprofit hospitals are mandated by law to offer financial assistance programs, and many providers are willing to arrange payment plans.
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Hospitals may be required to provide financial assistance before sending to collections
Hospitals and the billing process can be intimidating, especially when it comes to medical debt. Medical debt is unique in that consumers rarely plan to take it on. It usually arises from a one-time or short-term medical need, such as a car accident or an emergency room visit.
When it comes to medical bills, patients can find themselves navigating a confusing and unclear space between medical providers and insurance companies. This can be further complicated when receiving medical care from multiple providers. It is important to closely examine medical bills to ensure accuracy and that the treatments listed were received. Patients should also ensure that the bill contains their correct name, insurance information, and billing address.
In the case of medical debt, hospitals and medical providers often send unpaid accounts to third-party debt collection agencies. These agencies may engage in aggressive collection efforts, creating stress for patients. Both hospitals and debt collectors have won judgments against patients, allowing wage garnishment or liens on property.
However, patients do have rights and protections when it comes to medical debt and collections. Debt collectors can only contact individuals about valid debts that they owe. They must comply with laws governing debt collection, such as avoiding harassing or abusive calls and following specific requirements when reporting the debt to consumer reporting companies. Patients have the right to ask debt collectors to verify the debt and provide information about the collection agency and the bill.
Additionally, hospitals may be required to provide financial assistance before sending medical debt to collections. Nonprofit hospitals are mandated by law to offer financial assistance programs, and many other providers are willing to work out payment arrangements. Patients can also contact their state or local social services to explore additional financial assistance options.
It is important to note that medical debt protections and standards vary across states, with some states taking proactive measures to fill gaps in federal standards. While federal law mandates nonprofit hospitals to establish written financial assistance policies, these standards do not apply to for-profit hospitals. As primary regulators of hospitals, states have the authority to require hospitals to provide financial assistance to low-income residents.
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Hospitals can report debt to credit rating agencies
Hospitals can and do report debt to credit rating agencies. Medical debt is unique in that consumers rarely plan to take it on; it arises from a one-time or short-term medical need, such as a car accident. Two-thirds of people with medical debt are in this position.
The high cost of healthcare, especially hospital care, means that millions of Americans are left with medical debt, even when they have insurance. The people most vulnerable to accumulating medical debt are those who lack health insurance and those who are underinsured. An estimated 25 million Americans do not have health insurance.
Hospitals have been known to use aggressive tactics to get patients to pay their bills, such as reporting the debt to a credit rating agency. According to a Commonwealth Fund survey, 42% of people with unpaid medical bills from a hospital visit said their debt was reported to a credit rating agency, and 32% reported that this affected their credit rating.
There are some protections in place for patients. As of July 2022, the three major credit reporting agencies agreed not to include paid medical debt on consumers' credit reports. From March 30, 2023, they also agreed not to report medical debts under $500, even if they are unpaid. Hospitals are required to provide patients with a specific notice before transferring a hospital debt to a debt collector, and debt collectors must also send a copy of this notice.
In addition, some states have developed protective approaches. For example, Connecticut prohibits hospitals from sending the bills of certain low-income patients to collections, and Illinois requires hospitals to offer a reasonable payment plan first. Five states require hospitals to oversee their debt collectors. Nonprofit hospitals are required by law to offer financial assistance programs, and many other providers are willing to work out payment plans.
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Hospitals may sell old unpaid debt to third-party debt buyers
In the United States, the high cost of healthcare, especially hospital care, leaves millions of Americans with medical debt, even when they have insurance. Two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an acute medical need. For example, a person may get into a car accident and end up in the emergency room. They leave without paying the bill, perhaps because they never receive it, and then later, they receive a collections call with no documentation to defend their case.
Medical billing and collections practices can be confusing and difficult to navigate. After billing, providers often send unpaid accounts to third-party collections. Debt collectors can be aggressive in their efforts to collect. They may sue to recover the money and, if they win, garnish wages or place a lien on a home. However, they must comply with the laws that apply to debt collection, such as avoiding harassing or abusive calls and following requirements when reporting the debt to consumer reporting companies.
To avoid this, patients can ask debt collectors to verify the debt and provide information about the collector and the bill being collected. Patients can also look at their medical bills closely to ensure the items listed are accurate and that they received the listed treatments. Additionally, as of July 2022, the three major credit reporting agencies have agreed not to include paid medical debt on consumers' credit reports. Starting March 30, 2023, these agencies also agreed to stop reporting medical debts under a certain dollar threshold (at least $500) on credit reports, even if the debt is unpaid and in collection.
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Frequently asked questions
Medical debt is a debt that arises from a visit or interaction with a healthcare provider, such as a hospital, clinic, doctor, or nurse. Two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an acute medical need.
Yes, hospitals can send your bill to collections if you do not pay the full amount or meet the agreed-upon terms. However, there are some protections in place. For example, as of July 2022, the three major credit reporting agencies agreed not to include paid medical debt on consumers' credit reports. Hospitals are also required to provide you with a specific notice before transferring a hospital debt to a debt collector.
If you cannot afford your medical bill, you should first talk to your healthcare provider. Non-profit hospitals are required by law to offer financial assistance programs, and many other providers are willing to work out payment plans. You can also look into third-party payment plans, such as ClearBalance, which buys the debt from the hospital and then negotiates a reasonable payment plan with you.
You have the right to ask debt collectors to verify the debt and provide information about the collector and the bill. Debt collectors can only contact you about valid debts that you owe and must comply with laws that apply to debt collection, such as avoiding harassing or abusive calls. You also have the right to dispute the information in your medical bill.
If you believe that a hospital or debt collector is violating your rights, you can take action to enforce your rights. You can also contact the Consumer Financial Protection Bureau, which provides information on your rights and protections when it comes to medical bills and collections. Additionally, if you have a question about the No Surprises Act, you can contact the Centers for Medicare & Medicaid Services No Surprises Help Desk at (800) 985-3059.
