If you’re a doctor, you know that the world of medical billing is complicated. It’s hard enough to keep track of all the details of your patients’ insurance coverage, but now there are also new rules about how medical debt shows up on credit reports.
What does this mean for your practice? Let’s find out.
Credit Reporting for Medical Debt Is Undergoing an Overhaul
According to a recent Consumer Financial Protection Bureau report, medical debt affects every one in five Americans. But medical debt doesn’t just stop at creating financial difficulties. It is found to harm the physical and mental well-being of the individuals — going as far as to affect their ability to fulfill their basic necessities like food, housing and education.
With such immense consequences, the government has taken steps to change the way medical debt is perceived.
As a healthcare practitioner, it’s important to understand how these changes will affect how you operate and get back the debt owed.
- Paid medical debt will no longer negatively impact the credit report.
The biggest change is that the paid medical debt will no longer be included in the calculation of a person’s credit score. This means that paid medical bills will no longer affect a person’s ability to get loans or rent an apartment.
Previously, the medical debt would be on record for 7 years even if it was fully paid. But with the new regulation effective July 1, 2022, the paid medical debt wouldn’t affect the ability of Americans to obtain housing loans, car loans, etc. Those with medical debt can also apply for rural housing service loans and the repayment abilities of the borrower will not include the recurring medical debts.
- Medical debt under $500 won’t be included in reports from the three main credit bureaus.
If the total medical debt owed is less than $500, it wouldn’t be considered by the three of the largest credit bureaus — Equifax, Experian, and Transunion — from the first half of 2023. This will cover all Americans with both paid and unpaid under $500.
This decision is expected to remove around 70% of the medical collection debt from the credit reports.
These changes in the credit reporting are part of an ongoing effort to make sure that patients aren’t penalized financially for receiving the medical care they need but can’t afford at the moment.
- Unpaid medical debt is recorded in the credit report only after a year of being in collections.
Another significant change involves how quickly the collections agencies report unpaid medical bills to credit bureaus.
Under current regulations, any unpaid medical bills must be reflected on their credit report within 6 months of being due. That’s no longer required starting from July 1, 2022. The unpaid bills are only reflected in the credit reports after a year (as long as they exceed $500). This gives borrowers more time to get their finances in order and pay their medical bills before it affects their credit score.
This update also means that if people are struggling with medical bills and can’t pay them off in full, they won’t show up on their credit report until a year. And if they manage to pay it off within a year, it won’t affect the credit history at all.
What Does This Mean for Medical Practitioners?
Medical practitioners can go through their usual debt collection channels, all the while being compliant with the new regulations surrounding medical debt reporting. With such allowance for the consumers concerning the medical debt, how can you ensure that your debt is paid back?
Have a Clear Collection Process
To start with, you need a streamlined collection, billing & coding process free from errors. 80% of medical bills contain errors leading to several rounds of submission, editing and approval, dragging on for weeks. But with an error-free process, you can save a lot of time and focus on collecting your debt rather than correcting the codes or obtaining additional patient information.
Educate Your Staff
You should educate the staff about the new billing regulations like the recent ‘No Surprise Act.’
According to the ‘No Surprises Act’ effective January 1, 2022, patients cannot receive surprise bills for obtaining emergency services from a facility or doctor that they didn’t know was out-of-network. Also, healthcare facilities & practitioners should provide a ‘good faith’ estimate to those who don’t have health insurance or don’t pay with health insurance. And in case the final billed amount is $400 more than that estimate, the patient can dispute those charges.
So making sure that your new billing practices comply with such regulations is essential. You can create robust systems and educate your team to double-check and follow these regulations to the letter so that there aren’t any violations in your practice.
Hire a Dependable Debt Collection Agency
Finally, you can get help from a reliable debt collection agency that adheres to the Fair Debt Collection Practices Act (FDCPA). The FDCPA has stringent regulations about the frequency at which debt collectors can contact the borrowers.
So choose an agency that complies with FDCPA regulations but is effective enough to recover a high amount of your debt.
From helping you with payment monitoring and HIPAA compliance to managing insurance denials and debt recovery, our team at Capital Recovery can help through various aspects of medical billing and collections. We have one of the highest recovery rates in the industry, around 20%, that speaks to the effectiveness of your collection process.
Contact our team to discuss the next steps and how we can help you.