Hospitals and Debt Collectors – Two Extremes

Two articles (in a series of three articles) by Doc Gurley over at SFGate have now appeared. They are an expose into the world of hospitals and debt collection policies. Medical debt collection is a nasty underbelly of hospital practices in the U.S. – and, for those without government-sponsored healthcare (such as Medicare and Medicaid) completely unregulated. Here are the full results of only TWO of the eleven Bay Area hospitals that would answer a simple questionnaire about debt

collection policies. They are a study in extremes, and transparency. The first, John Muir, answers were sent by email. The second, Oakland Children’s, were from phone interviews with both a billing representative and a supervisor.

John Muir

1) Do you send unpaid hospital debts to debt collectors? Yes or no

Yes

2) How low will you go? In other words, Is there a lower dollar limit amount below which you will NOT send an account to collections? No limit  or Limit and amount = _______

We consider whether an outstanding balance is higher than the cost to pursue the collection, but there is no specific amount.

3) How many people are sent to collections? Feel free to answer this in whatever data unit you already use – but please specify if it is per month? Per year? A percentage? ________ patient accounts sent to collections

Every month, approximately 3% of outstanding payments get sent to an outside agency for collection.

4) Who decides when to turn over an account over to debt collectors? Auto-process based on electronic system or an individual account manager or supervisor

Before submitting one’s balance to an outside debt collector, we take their balance through a multi-layered review process to ensure accurate and fair assessment of the bill.

The initial selection is automatic, determined by the parameters set up in the electronic system.  After the initial report is generated, an account representative reviews the entire report.  The cases then are reviewed by six levels of management up to the Chief Financial Officer, depending on the outstanding balance on the account.

5) Do you notify people explicitly prior to sending them to collections? Yes  or no

To make sure our patients are aware of the next potential steps in regards to their payment, we notify them about the outstanding balance being sent to a collector prior to submitting their case to an outside agency.

6) What is the overdue (from date of service) limit on payment prior to sending to collections? 30 days or 60 days or 90 days or no set time frame

The overdue limits on payments vary widely, due to the extensive review process and the circumstances of the account.  Although there is no set time frame, the average is running between 150 days to 180 days.

7) Must the total amount be paid in the time frame after notification to stop collections? Yes or no; Are patients notified of ways to avoid the collections process? Yes or no; If yes, how?

No, the entire balance does not have to be paid in full to stop collections.

Yes, to help patients avoid the collection process, we provide comprehensive information on payment plans, patient assistance and other programs, clearly printed on the bill.  We also follow up by phone to make sure they are aware of the extended payment plans and patient assistance program.  The emergency patients are also given a brochure describing the way they can pay or get help to pay their hospital bills.

8) When there is a billing dispute, does that remove someone from the collections process? Yes or no

It will suspend the collection process until the dispute has a final response from the hospital.

9) Is there a process for removing an account from collections once it has begun? Yes or no; If yes, under what conditions does that happen?

Yes.  If the patient applies for the Patient Assistance (charity care) program, has a billing dispute which indicates it should be removed from collections, or contacts the business office with other relevant issues which indicate the account should be removed from collections.

Oakland Children’s Hospital

1) Do you send unpaid hospital debts to debt collectors? Yes or no

Yes

2) How low will you go? In other words, Is there a lower dollar limit amount below which you will NOT send an account to collections? No limit  or Limit and amount = _______

$20.

3) How many people are sent to collections? Feel free to answer this in whatever data unit you already use – but please specify if it is per month? Per year? A percentage? ________ patient accounts sent to collections

Refuse to answer this question without clearing it with the CFO.

4) Who decides when to turn over an account over to debt collectors? Auto-process based on electronic system or an individual account manager or supervisor

Auto-generated. How? “It’s complicated.” Depending on the billing cycle, the system auto-generates statements, sometimes every 2 weeks, sometimes every 30 days. When the insurance company decides the account is “clean” in other words, that they have paid their amount, the system sends a bill saying that if the patient does not respond in 15 days, the account will be sent to collections. However, there is another (unknown to the patient) 30 days of grace period AFTER it is sent to collections on D15 before the collections process actually begins. No second notice is sent, either at the 15 or the next 30 mark. When asked when this billing cycle begins – On the fifth day after service, that account is billed that day to insurance – when an account “drops” means there is enough information to bill that account to the insurance. At this point, there has been no movement of balance to the guarantor. The time it gets moved to the guarantor is not necessarily the date of payment. [Representative stated three times “the insurance company decides“]. In other words, there is no way to know when/how you might get a first bill.

5) Do you notify people explicitly prior to sending them to collections? Yes  or no

No, except as above – first statement occurs “when the insurance company decides,” second statement occurs depending on billing cycles (time-frame varies widely), “courtesy letter” sent afterward.

6) What is the overdue (from date of service) limit on payment prior to sending to collections? 30 days or 60 days or 90 days or no set time frame

No set time frame – see above, again, the answer was when the insurance company decides the account is “clean.” The patient is responsible. And the hospital is doing a courtesy billing of insurance. Once the insurance pays, the average time is 67 days – all payers – from the time of billing to the time of payment. Once the insurance pays, it gets moved to patient responsibility, two statements are generated, then a final, after the final, the total time is 90 days for that process.

7) Must the total amount be paid in the time frame after notification to stop collections? Yes or no; Are patients notified of ways to avoid the collections process? Yes or no; If yes, how?

No, you must call in to ask for a “small payment process” although patients and families are not notified how to do this. Billing statement, as mandated by law, says that those without insurance can call to see if assistance is available – no information given about options/assistance for the insured/underinsured or those with disputes.

8) When there is a billing dispute, does that remove someone from the collections process? Yes or no

No. At six months, if there is still a dispute, the patient can be sent to collections, even with outstanding insurance payments pending (“if the insurance company is dragging its feet”). IF a family knows and calls in and sets up a small payments process, then the money (when/if the insurance company eventually pays) will be refunded to the patient.

9) Is there a process for removing an account from collections once it has begun? Yes or no; If yes, under what conditions does that happen?

No. Only if you can prove the billing department is in error (“prove we made a mistake”).