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“What do you mean, my account has been referred to collections? I have insurance coverage that should have paid it!” We’re hearing more and more of this complaint as collection activities for medical bills increase due to the economy. Most people don’t realize there is a simple way to keep this mistake from affecting their credit scores…Learn More>>
More Medical Accounts in Collection
Consumers appear to be ignoring late notices from doctors’ offices as they wait for insurance company’s and doctor’s billing departments to work out issues with payments… but with only about a 2O% of insurance denials being reversed, the billing offices are less inclined to figure out the problem. They wait for the patient to resolve the matter or pay the bill. Either way, they get their money. And if they don’t, they send it to collections.
Debt collection is big business, a fact that is especially true when the economy is bad. In 2OO3, the Federal Reserve’s Study of Consumer Debt already showed that 52% of all collections actions were for medical bills and the economy has worsened since then. With fewer patients able to pay their bills on time, medical practices are forced to be more aggressive in their collection activities. And, since the 1996 HIPAA law allows medical bills to be reported to the credit reporting agencies, you could find this little gem affecting your credit worthiness and some employer’s willingness to hire you within a few short months.
So maybe you fell into this catch-22 waiting game or maybe something else happened. Regardless of how you ended up in collections, your first objective is to keep this item from affecting your credit rating. To do that, you have to act immediately. The federal Fair Credit Billing Act (FCBA) provides for 3O-day window to dispute the collection. The clock starts the day you are notified by the collection agency that your account has been turned over to them.
Dispute Medical Collection Accounts
The dispute should be provided in writing and mailed certified mail to the collection agency. [Alternately, you can mail letters to each of the three credit reporting agencies.] The law requires the collection agency to notify the credit bureaus and the original creditor of your dispute. [Or, if you notified the credit reporting agencies, the law requires them to notify the collections agency.] Once the credit bureaus are notified, they are required to:
- indicate the item is in dispute in any credit report generated after that date
- notify you of your rights to include a statement about the details of the dispute,
- remove this item from any credit score calculations.
If you miss this 3O-day window, getting the item removed from your credit report becomes a much more painful, time-consuming and frustrating problem.
Get Collections Removed from Your Credit Report
Once an item has been disputed, you have a grace period that allows you to follow up with actions that resolve the issue with the insurance company and the original creditor. As part of the resolution and prior to making any payment yourself, be sure to obtain a written statement from the original creditor that indicates that all references to this issue will be DELETED from your credit report. Don’t accept wording that states that the account will be shown as “Paid in Full” as this leaves the collection showing on your credit report AND allows it to be included in your credit score calculations. Check your credit report to make sure that it comes off. If it doesn’t, you’ll need that letter to get the credit bureaus to make corrections. Without the letter, getting the provider or collection agency to follow through can be difficult as they already have their money and little incentive to fight through the red tape.
It’s too bad so many consumers are finding themselves in the “Surprise Collection” situation. The good news is that acting quickly and decisively can avert an even more painful experience down the road!
ADDITIONAL RESOURCES
Debt Collection Facts for Consumers
How to Dispute Credit Report Errors
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