Medical debt collection

Helene Mueller
eCollect support team

Medical debt collection is the process of recovering overdue medical bills and bad debts from former or present patients; the same process serves medical institutions and private health professionals. Nowadays medical debts become a serious problem referring to health insurance or medical bills, which patients find difficult to afford. Such debts differ from the others, as they are usually a result of faultless accidents like injuries or illnesses. Medical debt often occurs when a patient has issues affording health care. He may be health insured, but still in debt, as the medical insurance rarely covers the bills on 100%. Medical debt collection is law-regulated like the standard customer or corporate recovery (e.g. FDCPA- Fair Debt Collection Practices Act), but in this case there are also laws protecting patients and their rights (e.g. in some states of USA, the Protections for People with Medical Debt Act is valid).

Medical debt collection usage & commitment

Usually large health institutions deal internally with medical debt recovery, as they have their own collection agents to recover the amounts due. However, some hospitals prefer to use the professional services of DCAs (Debt collection agencies). The process of medical default collection is used only after it is clear for the creditor that all other billing and recovery approaches have been unsuccessful.

When a medical debt collection agency is involved, the same usually tries to negotiate with the patient in debt and settle a convenient payment plan in order to recover the full amount of the unpaid medical bill. Such collection agencies are hired to retrieve medical debt amounts and to settle the debts on behalf of a health institution or a private medical professional.

Medical debt recovery agencies also commit to customers’ reputation protection. Their main aim together with collecting debts is to preserve the good name of the creditor, along with his business relationship with the debtor; as such relations are vital for the reputation of every hospital. Medical default collection agencies use special, non-harassment methods for debt collection with the same purpose of not breaking the relation between medical institutions and patients.

Emergence and cause of medical debts

By far medical debts are the considered to be the worst type of bad debts, as the most closely concerned people affected by medical debts are either uninsured, in great need; suffering from severe incurable or chronic diseases. In such cases unpaid medical bills and debts will only exacerbate debtor’s financial condition. Patients in debt also express strong willingness to settle the outstanding amount but some cannot financially afford it and they feel regret, even shame, of not being able to cover the total debt sum.

A medical debt occurs mostly when the subject of debt does not have health care coverage; when a sudden health accident occurs and the person cannot afford to pay for medical expenditures; or when he cannot take care of his financial matters because of his condition. Therefore such debts can emerge either when burdensome medical bills become bad debts, or when the patient can afford to pay but simply forgot to do so. Incidence of medical debt depends on patients’ employment and health insurance status, savings and even income (whether the patient has low income, or a decrease of income due to illness); it depends even on family size and age of the patient. Consequently, medical debts can affect anyone.

Very often debtors even declare bankruptcy because of bad medical debts (e.g. in countries, which don’t provide government healthcare; or even in US, where 40% of the American citizens have problems with paying their medical bills. Source:
). In some countries it is possible that the medical debtors can search for special Medicaid programs, which help people with low income to deal with their health expenses. According to law, such people cannot be contacted for medical debts by the creditor or by medical debt collection agencies, as they are in the lowest income bracket and are protected by the government.

The usage of debt recovery agencies in cases of executing medical debt collection is a good option not only for health institutions, which are creditors, but also for the debtors. The reason is that the recovery agents are tolerant with such debtors, understand the delicate condition of the patients and always try to reach an agreement, which is convenient for the debtors.

Used literature & external links