Medical Debt Collection: The Definitive Guide
This resource is updated frequently with quick tips or “takeaways” for our medical debt collection users which include medical billing services, physicians and billing managers.
What is Medical Debt Collection?
Medical debt collection is the process of pursing payments of debt owed by patients for healthcare related services that are not covered by insurance carriers.
It is no surprise the need for medical debt collection continues to rise nationwide. With higher deductibles the healthcare industry constitutes the lion’s share of all outstanding national debt, and medical debt collection is a growing multi-billion dollar industry.
Unless you have closely followed the collection industry in last couple years, you may not know that the rules of engagement have changed. Here are a few critical takeaways you need to know to protect you and your clients interests beyond your scope of service.
Collection Agency Due Diligence
In the past there has been no way of guaranteeing the success or legality of outsourcing your collections since collection agencies were, in most cases, un-vetted. Stories abound of unscrupulous collection agencies that have soiled the reputation of the providers that engaged them, has previously deterred other providers. Many in the healthcare industry are under the belief that “writing off” their unpaid balances is the only way to avoid risk, but the collections space and the new tools you can use to navigate it has made it worth a second look.
Your New Best Friend…The CFPB
The Consumer Financial Protection Bureau (CFPB) is a federally regulated organization that oversees how all financial institutions, including collection agencies, communicate with non-paying customers. Their database allows you to search for your current or a prospective debt collector and see a list of complaints. While finding a verification service will save you time if you or your client prefer anonymity, a quick check could put your mind at ease. Consider running your own complaint check on the (CFPB) database. Best of all this database is completely free and public.
Furthermore, technology companies like Recoverity have now entered the space by providing verification solutions that automate the necessary due diligence step for providers. These solutions utilize the same CFPB database in smarter ways by weighing the number and severity of complaints by how many collectors each collection agency employs. However, many un-verified collectors still remain in business as some providers still rely on word of mouth recommendations from other providers instead of doing their own research, utilizing publicly available data, or using a verification service.
Key Takeaway
The CFPB can be a powerful due diligence tool to research medical debt collection agencies.
In 2015 and continuing into 2016 the Federal Communications Commission (FCC) in coordination with the CFPB took additional steps to protect non-paying patients with new rules of engagement for debt collectors. Contacting cell phones and using automated dialers come with new rules, and failure to comply comes with serious consequences to collectors and the providers that use them.
Start Using A Verified Collector
Revisit The Patient Enrollment Contract
Whether you or your provider decide to outsource their collection services or you choose to not get involved, their patient contract terms could significantly reduce the potential amount that can be collected later on by a third party collector. Debt collectors are only as good as the information that they are provided.
With the new TCPA (Telephone Consumer Protection Act) regulations (2015) you need to get “prior expressed consent” from your customers to contact them on their cell phone before their debt is placed into collections to contact them on their cell phone. This is only for medical debt collection agencies that use “auto-dialers” but these days most collectors utilize this technology. With the rising prevalence of mobile phones this is a crucial step to implement to stay in compliance. Cell phones are the fastest and easiest way for a debt collector to reach your patient and this quick step will maximize and safeguard your collections efforts.
The statute of limitations period for TCPA claims is four years, so you must ensure your providers are keeping their contracts for at least four years
You should also consider adding a clause that allows a future collector to add the collection fees to their patient balance should the account get placed and the balance collected. If the contract is properly written then you can pass these fees and even interest on to the patient in the event you would need to send their receivables to collections.
Key Takeaway
Seek consent to use a patient’s cell phone and add the collection fee on the enrollment contract.
Critical Elements During Your Search For Debt Collectors
For timely, efficient medical debt collections, matching the collections volume with the services provided by the right collections agency is key. The first, and most important step to finding the right collections solution is to have an accurate picture of your unsettled accounts. This information can be used to figure out whether to search locally for a smaller local provider, or search for a larger national or regional service. Many providers focus solely on finding a local debt collector without considering if their volume may exceed the capabilities of a local collector.
The Two Key Variables
As a start, think about your unsettled accounts in broad strokes. Reduce your issues to these two key variables: The total number of claims that need attention, and how large each individual claim is.
Local collections agencies are often less equipped to take on massive contracts efficiently. If you are looking at settling claims in the thousands, a local collection agency might not have the resources or manpower to handle your volume.
The size of your claims is also a factor, and on this level, it could be counter-intuitive. Small claims can often be solved efficiently; national collectors are often best-equipped to handle your medical debt collection, so even moderate total unsettled accounts could be better serviced by a national agency. Conversely, even just a few large claims might be handled best by a smaller agency. Their staffs are usually more hands-on, and this could in turn save you time if you are dealing with same representatives for all your collections needs.
Find a locally licensed collector
Key Takeaway
Understand your bad debt before you start your search. Know the number of claims, average size and frequency of your potential placements.
Benefits Of Local Collections
The main appeal of working with a local collector is being able to meet face-to-face and to keep your funds within your community. When you support local businesses you improve your community, build relationships, and improve your networking reach.
Things To Look Out For With Local Collectors
Many local collectors may say they can handle your volume and then after they have a contract in place they may broker an agreement with another larger collector to service your claims. The result: Less control and fewer safeguards on how patients are being treated.
Benefits of a Large (Regional or National) Collector
In contrast, when you select a national collector, a collector who is certified, licensed and bonded in more than one state, your peace of mind increases since these companies have taken the steps to be compliant. These nationwide collectors typically undergo increased scrutiny from their large nationwide clients. A national collector should be able to effortlessly handle your claims based on their extensive experience and manpower.
In addition, since national collectors are larger than local collectors, they have the latest technology to support their efforts. While most collectors utilize some sort of skip tracing technology larger collectors can afford data scrub software. Data scrubbing tells collectors which claims are more collectible and possibly which accounts are simply delayed by an insurance carrier. This help them prioritize their efforts which results in more money back.
Things to Look Out For With Large Collectors
In some cases nationwide collectors have a greater understanding of whether they will be successful in recovering your money and will refrain from taking business they are unable to collect. Large collectors may have a monthly or annual minimum placement requirement.
Don’t assume that a local collector is always better. Consider your volume and the experience of the collector first.
New Trends In Collections Outsourcing
Soft Collections…The Perfect Match
In the past, debt collectors were either too aggressive and effective, or not firm enough and non-effective, leaving providers and billers feeling like “goldilocks”. Due to rising accountability of debt collectors, a new type of boutique debt collection service has emerged, the soft collection service. This type of collection style is perfect healthcare providers looking to grow and placing a high importance on patient retention.
Here is what to look for:
A true soft collection style collector will have few or no complaints on the CFPB database, a high liquidation percentage (dollars recovered), a plethora of testimonials, and non-aggressive sample scripts ready for your review. Their testimonials will highlight their level of customer satisfaction and proven results. Gone are the days where debt collectors needs to be forceful. If patient retention is your provider’s goal then this a strong alternative to writing off the balance.
Your clients have more consumer-friendly collections options than in years past.
Billing Services Have All The Power
If you are a billing service take a moment to feel out all of your clients as to their thoughts on collections before you start your search. Once you have an approximate dollar figure on how much each of your interested providers has to place with a potential medical debt collection agency, the next step is to present them as a group, not as individuals. Grouping your placements allows you to leverage a lower fee from your prospective collection agency for your providers. From the perspective of a medical debt collection agency, billing services provide access to on-going bad debt and placements with verified balances. Access to on-going placements and verified balances is a more powerful commodity than some billers realize. Additionally, it is common for a your debt collector to refer business back to you in exchange for their relationship with your providers. Many of the clients that source collection services are excellent candidates for a new billing service as high collection numbers can be an indication of internal billing issues.
You may be able to bundle the claims of your clients to secure them better pricing.
Ways For Small Providers To Get More Leverage
Providers with a small collections need may find themselves in a tough spot if they need a debt collection agency. Many debt collectors have monthly or yearly minimums and many sole practitioners may not have that great of a need. Online debt marketplaces, like Recoverity, now provide an alternative that aggregates these providers together to provide access and pricing previous unavailable to smaller providers.
Online debt marketplaces and verification services make short work of collections outsourcing placements of all sizes.
RFI or RFP Solutions
Larger entities have relied on Request For Proposals (RFP) or Request For Information (RFI) queries to discover, research and select new collections agencies. Placing the majority of the work on the provider to do the search and research. New technology, like Recoverity in the healthcare sector now curates the same information typically requested in these RFP and RFI queries giving providers quick access to this data. The results are lower operational strain, higher levels of due diligence, and access to providers of all sizes.
The Golden Rule In Medical Debt Collection Outsourcing
A collections service is only as good as the information provided but an even a more important aspect is when you place your claims. Delaying the placement of a claim any longer than 90 days, by even a month, dramatically lowers your chance of receiving a full payment. To understand why you must consider that if your non-paying patient is not paying your invoice, he/she is probably not paying other invoices as well. A collection agencies’ role, beyond being persistent with your patients, is to make your invoice a priority to the non-paying patient and bump your invoice to the top of the patient’s stack of priorities.
Key Takeaway
Don’t procrastinate the placing your claims with a collection agency.
About The Author
Miguel Leman is the Founder of Recoverity.com, a tech company based out of Washington, DC. Recoverity, specializes in matching healthcare providers to reputable and experienced medical debt collection agencies, for free. The Recoverity debt marketplace works solely with verified collection agencies and leverages its relationship with its collection partners to provide competitive pricing and transparency to it’s users.
Recoverity was born from the pain Miguel felt as a credit manager at a large energy supplier, where he spent weeks locating and vetting debt recovery agencies only to discover that most were unqualified, non-compliant or untrustworthy. Upon realizing his frustrations were shared by many, Miguel discovered many businesses were too afraid to pursue their unpaid invoices due to the threat of underhanded business practices or generally poor results. The Recoverity platform now specializes in the healthcare industry and works with healthcare providers of all sizes billing services, and healthcare vendors in ARM space.
Comments or questions 844.234.6324 [email protected]
How To Best Prepare Your Clients For Collections.
Key Takeaways On How To Best Prepare Your Clients For Collections.
It is no surprise the need for healthcare debt collection continues to rise nationwide. With higher deductibles the healthcare industry constitutes the lion’s share of all outstanding national debt, and is a growing multi-billion dollar industry.
Unless you have closely followed the collection industry in last couple years, you may not know that the rules of engagement have changed. Here are a few critical takeaways you need to know to protect you and your clients interests beyond your scope of service.
Collection Agency Due Diligence
In the past there has been no way of guaranteeing the success or legality of outsourcing your collections since collection agencies were, in most cases, un-vetted. Stories abound of unscrupulous collection agencies that have soiled the reputation of the providers that engaged them has previously deterred providers. Many in the healthcare are under the belief that “writing off” their unpaid balances is the only way to avoid risk, but the collections space and the new tools you can use to navigate it has made it worth a second look.
The Consumer Financial Protection Bureau (CFPB) is a federally regulated organization that oversees how all financial institutions, including collection agencies, communicate with non-paying customers. Their database allows you to search for your current or a prospective debt collector and see a list of complaints. While finding a verification service will save you time if you or your client prefer anonymity, a quick check could put your mind at ease. Consider running your own complaint check on the (CFPB) database. Best of all this database is completely free and public.
Furthermore, technology companies have now entered the space by providing verification solutions that automate the necessary due diligence step for providers. These solutions utilize the same CFPB database in smarter ways by weighing the number and severity of complaints by how many collectors each collection agency employs. However, many un-verified collectors still remain in business as some providers still rely on word of mouth recommendations from other providers instead of doing their own research, utilizing publicly available data, or using a verification service.
Key Takeaway
The CFPB can be a powerful due diligence tool.
In 2015 and continuing into 2016 the Federal Communications Commission (FCC) in coordination with the CFPB took additional steps to protect non-paying patients with new rules of engagement for debt collectors. Contacting cell phones and using automated dialers come with new rules, and failure to comply comes with serious consequences to collectors and the providers that use them.
Recommend Revisiting Their Patient Contract
Whether you help your provider outsource their collection services or you choose to not get involved with their bad debt, their patient contract terms could significantly reduce the potential amount that can be collected later on by a third party collector. Debt collectors are only as good as the information that they are provided.
With the new TCPA (Telephone Consumer Protection Act) regulations (2015) you need to get “prior expressed consent” from your customers to contact them on their cell phone before their debt is placed into collections to contact them on their cell phone. This is only for collection agencies that use “auto-dialers” but these days most collectors utilize this technology. With the rising prevalence of mobile phones this is a crucial step to implement to stay in compliance. Cell phones are the fastest and easiest way for a debt collector to reach your patient and this quick step will maximize and safeguard your collections efforts.
The statute of limitations period for TCPA claims is four years, so you must ensure your providers are keeping their contracts for at least four years
Your provider should consider adding a clause that allows them to add the collection fees to their patient balance should the account get placed with a debt collector and the balance collected. If the contract is properly written then you can pass these fees and even interest on to the customer in the event you would need to send their receivables to collections.
Key Takeaway
Recommend that your provider seek consent to use a patient’s cell phone and add the collection fee on their enrollment contract.
Critical Elements During Your Search For Debt Collectors
For timely, efficient collections, matching the volume from your providers with the services provided by the right collections agency is key. The first, and most important step to finding the right collections solution is to have an accurate picture of your unsettled accounts. This information can be used to figure out whether to search locally for a smaller local provider, or search for a larger national or regional service. Many providers focus solely on finding a local debt collector without considering if their volume may exceed the capabilities of a local collector.
The Two Key Variables
As a start, think about your unsettled accounts in broad strokes. Reduce your issues to these two key variables: The total number of claims that need attention, and how large each individual claim is.
Local collections agencies are often less equipped to take on massive contracts efficiently. If you are looking at settling claims in the thousands, a local collection agency might not have the resources or manpower to handle your volume.
The size of your claims is also a factor, and on this level, it could be counter-intuitive. Small claims can often be solved efficiently; national collectors are often best-equipped to handle your debt collection, so even moderate total unsettled accounts could be better serviced by a national agency. Conversely, even just a few large claims might be handled best by a smaller agency. Their staffs are usually more hands-on, and this could in turn save you time if you are dealing with same representatives for all your collections needs.
Key Takeaway
Understand your bad debt before you start your search. Know the number of claims, average size and frequency of your potential placements.
Benefits Of Local Collections
The main appeal of working with a local collector is being able to meet face-to-face and to keep your funds within your community. When you support local businesses you improve your community, build relationships, and improve your networking reach.
Things To Look Out For With Local Collectors
Many local collectors may say they can handle your volume and then after they have a contract in place they may broker an agreement with another larger collector to service your claims. The result: Less control and fewer safeguards on how your providers patients are being treated.
Benefits of a Large (Regional or National) Collector
In contrast, when you select a national collector, a collector who is certified, licensed and bonded in more than one state, your peace of mind increases since these companies have taken the steps to be compliant. These nationwide collectors typically undergo increased scrutiny from their large nationwide clients. A national collector should be able to effortlessly handle your claims based on their extensive experience and manpower.
In addition, since national collectors are larger than local collectors, they have the latest technology to support their efforts. While most collectors utilize some sort of skip tracing technology larger collectors can afford data scrub software. Data scrubbing tells collectors which claims are more collectible and possibly which accounts are simply delayed by an insurance carrier. This help them prioritize their efforts which results in more money back.
Things to Look Out For With Large Collectors
In some cases nationwide collectors have a greater understanding of whether they will be successful in recovering your money and will refrain from taking business they are unable to collect. Large collectors may have a monthly or annual minimum placement requirement.
Don’t assume that a local collector is always better. Consider your volume and the experience of the collector first.
New Trends In Collections Outsourcing
Soft Collections…The Perfect Match
In the past, debt collectors were either too aggressive and effective, or not firm enough and non-effective, leaving providers and billers feeling like “goldilocks”. Due to rising accountability of debt collectors, a new type of boutique debt collection service has emerged, the soft collection service. This type of collection style is perfect healthcare providers looking to grow and placing a high importance on patient retention.
Here is what to look for:
A true soft collection style collector will have few or no complaints on the CFPB database, a high liquidation percentage (dollars recovered), a plethora of testimonials, and non-aggressive sample scripts ready for your review. Their testimonials will highlight their level of customer satisfaction and proven results. Gone are the days where debt collectors needs to be forceful. If patient retention is your provider’s goal then this a strong alternative to writing off the balance.
Key Takeaway
Your clients have more consumer-friendly collections options than in years past.
Billing Services Have All The Power
Take a moment to feel out all of your clients as to their thoughts on collections before you start your search. Once you have an approximate dollar figure on how much each of your interested providers has to place with a potential collector, the next step is to present them as a group, not as individuals. Grouping your placements allows you to leverage a lower fee from your prospective collection agency for your providers. From the perspective of a collection agency, billing services provide access to on-going bad debt and placements with verified balances. Access to on-going placements and verified balances is a more powerful commodity than some billers realize. Additionally, it is common for a your debt collector to refer business back to you in exchange for their relationship with your providers. Many of the clients that source collection services are excellent candidates for a new billing service as high collection numbers can be an indication of internal billing issues.
Key Takeaway
You may be able to bundle the claims of your clients to secure them better pricing.
Ways For Small Providers To Get More Leverage
Providers with a small collections need may find themselves in a tough spot if they need a debt collection agency. Many debt collectors have monthly or yearly minimums and many sole practitioners may not have that great of a need. Online debt marketplaces now provide an alternative that aggregates these providers together to provide access and pricing previous unavailable to smaller providers.
Key Takeaway
Online debt marketplaces and verification services make short work of collections outsourcing placements of all sizes.
RFI or RFP Solutions
Larger entities have relied on Request For Proposals (RFP) or Request For Information (RFI) queries to discover, research and select new collections agencies. Placing the majority of the work on the provider to do the search and research. New technology in the healthcare sector now curates the same information typically requested in these RFP and RFI queries giving providers quick access to this data. The results are lower operational strain, higher levels of due diligence, and access to providers of all sizes.
The Golden Rule In Collections Outsourcing
A collections service is only as good as the information provided but an even a more important aspect is when you place your claims. Delaying the placement of a claim any longer than 120 days, by even a month, dramatically lowers your chance of receiving a full payment. To understand why you must consider that if your non-paying patient is not paying your invoice, he/she is probably not paying other invoices as well. A collection agencies’ role, beyond being persistent with your patients, is to make your invoice a priority to the non-paying patient and bump your invoice to the top of the stack.
Key Takeaway
Don’t procrastinate the placing your claims with a collection agency.
About The Author
Miguel Leman is the Founder of Recoverity.com, a tech company based out of Washington, DC. Recoverity, specializes in matching healthcare providers to reputable and experienced debt collectors, for free. The Recoverity debt marketplace works solely with verified collection agencies and leverages its relationship with its collection partners to provide competitive pricing and transparency to it’s users.
Recoverity was born from the pain Miguel felt as a credit manager at a large energy supplier, where he spent weeks locating and vetting debt recovery agencies only to discover that most were unqualified, non-compliant or untrustworthy. Upon realizing his frustrations were shared by many, Miguel discovered many businesses were too afraid to pursue their unpaid invoices due to the threat of underhanded business practices or generally poor results. The Recoverity platform now specializes in the healthcare industry and works with healthcare providers of all sizes billing services, and healthcare vendors in ARM space.
Comments or questions\ 844.234.6324 [email protected]
Disrupting The Collections RFP With Tech
“Disruptive innovation has two sides to it. On one hand, you’re making a whole bunch of people very happy, on the other hand, people who are very invested in the status quo lash out and fight back against you.” – Matt Mickiewicz @ 99 Designs (Graphic Design Marketplace)
99 Designs isn’t alone, it is common for disruptive ideas to get push back from the industry they are hoping to impact.
Tech like Uber and Airbnb have also felt the industry and regulatory wrath from going against the grain. Backlash may be a signal in your space that processes are inherently broken and frustrating for your clients. Focusing your company on solving that problem and you become an irreplaceable solution.
We felt the heat a year ago.
Before our service entered the market businesses with unpaid invoices would have to call multiple collection agencies on their own. Next, they would begin an exhausting and inefficient quoting process called “RFP” or request for proposal.
Manual Collections RFP’s can sometimes lead to lower recovery. Most times the bids are managed without an educational component causing business owners to choose a less experienced agency on fee’s alone.
Enter our solution Recoverity, a single Collections RFP shared digitally with multiple agencies at once and then compiled for the user. Streamlining this decision gave us extra time to showcase industry experience, functionality, and recovery rate that enabled customers to get more money back in the long run. We added improved safeguards with background check information, debtor complaints, and compliance illustrations.
When we pitched some agencies on this idea we got responses like “we have been doing Collections RFP’s in house for 35 years, what makes you think you can change that?”
At the time we were in a panic when we thought this model may not fit this industry. We should have realized immediately that this pushback was a huge clue that we were on the right track. Our solution wasn’t going to be a good fit for every agency, but the firms that placed an importance on sharing their strengths came forward.
What opportunities/problems exist in your industry? What do your users want and how can you deliver? What changes can you make to your business model to solve these problems?
Our Top Rated Collection Agencies of 2016
Happy customers are our business.
The Top Rated Collection Agencies of 2016
Energy
As credit and collections director at a national retail energy supplier, I worked closely with APR. Their closure rate on debt was considerably higher than other 3rd party’s we used and there was always an open line of communication. Their online portal was easy to use and together with our IT dept and theirs we were able to link our systems which provided for seamless passing of accounts and reporting on collectibles. I can confidently recommend APR to any business, but especially to firms that appreciate integrated systems and have a large portfolio of debt to manage.
Medical
How does your collection agency stack up?
Software Development
Banking
Quick Debt Recovery Due Diligence Tips
The collections space is no stranger to change and recently these changes are reforming this industry into a unrecognizable landscape for many collectors and business owners.
Choosing your local agency based on a referral used to be a safe bet, but in today’s climate you could run into issues sooner than you think.
The regulatory technology and compliance shifts that are taking place are forcing agencies to do more with less while implementing further safeguards for non-paying consumers. This is great news for non-payers, but not necessarily great news for your business.
So what does this shift mean for your receivables?
In short, the agency that you have been with for years could be great at collecting but they could be refusing to abide by the new laws.
These regulations impact small and large agencies alike, therefore everyone is scrambling to make adjustments.
With the number of CFPB crackdowns on collectors on the rise this is the time to make sure your business is protected. The only way to know is to do the due diligence.
Here are a few quick debt recovery due diligence tips to get started on your own:
•Learn from your customer complaints and ask about the tactics used to reach your client. Contact us at 844.234.6324 if you have questions.
•Ask your agency about the safeguards they have in place to protect your confidential data.
•Track the agencies recovery rate percentages from their reporting. If you are not receiving monthly breakdowns from your agency or if your recovery rate is declining this a red flag.
Recoverity offers an independent agency background check and a performance analysis to our users.
•Cost free.
•Confidential. (Non-disclosure available)
•Secure.