How Does a Medical Revenue Service Debt Collector Collect?

If you’ve ever faced a large medical bill that seemed impossible to pay off, you’re not alone. A survey from The Commonwealth Fund revealed that 41% of working-age Americans, or about 72 million people, are dealing with medical bill problems or still paying off medical debt. 

When you include elderly adults, the total number rises to 79 million Americans grappling with medical expenses. This financial burden can be overwhelming, and for many, it doesn’t stop until the debt is cleared or until a medical revenue services debt collector steps in. 

But how exactly do these debt collectors go about recovering medical debt? In this blog, we’ll explain what Medical Revenue Services are, the role of debt collectors in healthcare, how they collect medical debt, the laws that govern the process, its impact on patients, and tips for managing and avoiding medical debt. 

Let’s explore!

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What is the Medical Revenue Service?

A Medical Revenue Service is a company or organization that helps healthcare providers, like hospitals and doctors’ offices, collect payments for their services. 

• These services are often used when patients are unable to pay their bills immediately or when insurance companies don’t fully cover the costs. 
• The Medical Revenue Service typically works with debt collectors to follow up on unpaid medical debts, ensuring that healthcare providers receive the money they are owed.

For example, if you visit a clinic and your insurance only covers part of the bill, the remaining balance might be sent to a medical revenue service debt collector. 

The company will contact you to arrange payment, either through a payment plan or by negotiating a settlement. These services ensure that both healthcare providers and patients can manage medical bills effectively.

So, with a better understanding of medical revenue services, let’s explore what debt collectors do in the healthcare industry.

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The Role of a Debt Collector in Healthcare

When it comes to healthcare, a medical revenue services debt collector plays a crucial role in ensuring that unpaid bills are addressed. Here is what you need to know about their role:

• Communication with Patients: Debt collectors reach out to patients who have overdue medical bills. They do this through phone calls, letters, and sometimes even emails, aiming to inform the patient of the outstanding debt and arrange for payment.
• Negotiating Payments: Collectors often work with patients to set up payment plans that fit their financial situation. They may offer options like monthly installments or extended timelines for repayment.
• Handling Disputes: If a patient disputes the debt, the debt collector helps facilitate communication between the healthcare provider and the patient to resolve any issues, such as billing errors or insurance concerns.
• Ensuring Compliance: Debt collectors must follow strict regulations when dealing with medical debt. They are required to respect patient rights and adhere to guidelines set by the Fair Debt Collection Practices Act (FDCPA).
• Reporting to Credit Agencies: If the debt remains unpaid, debt collectors may report the outstanding balance to credit bureaus, which could affect the patient’s credit score.

With the role of a debt collector in mind, let’s go over the detailed process involved in collecting medical revenue debt.

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How to Collect Medical Revenue Debt?

Medical revenue service debt collectors are responsible for ensuring healthcare providers are paid for services that have already been rendered. They use a range of methods to collect these debts. Here's how the process works:

1. Analyze Past-Due Accounts

The first step is to review the unpaid bills. The debt collector carefully examines details such as the age of the debt, the amount owed, and whether there were any issues with the initial billing. This helps determine the best course of action moving forward. 

Partnering with a trusted service like South East Client Services (SECS) can make this stage smoother, as they specialize in managing accounts receivable, including delinquency and pre-legal collections.

2. Communication

You’ll likely be contacted by the debt collector either by phone, mail, or sometimes both. They’ll explain the debt you owe and discuss available payment options. You have the right to request written verification of the debt to ensure everything is accurate.

3. Early Out Programs

Some agencies offer "early out" programs where they reach out to you soon after the bill is due. This gives you the chance to pay promptly, often with flexible payment plans. This helps the provider get paid quickly and prevents the bill from escalating into deeper collections.

4. Integrated Collection Services

Technology plays a big role here. Many services integrate directly with healthcare providers’ systems to automate tasks like sending reminders and tracking payments, making the process smoother and more efficient.

Statements

Initially, you may receive at least four billing statements, typically sent out on a 30-day cycle. These serve as a reminder and give you time to settle the bill.

5. Additional Collection Activity

If the bill remains unpaid, the next step involves collection calls. The healthcare provider will contact you via phone or mail to follow up on the outstanding balance.

6. Bad Debt Placement

After a certain period, usually 120 days, the healthcare provider may turn your debt over to a collection agency if it remains unpaid. At this point, the collection efforts become more aggressive.

7. Legal Action

If all previous attempts to collect the debt fail, the collection agency may send legal notices and initiate phone calls. This is a serious step and usually only happens after all other avenues have been exhausted.

8. Payment Methods

Payments can be made in various ways, including cash, checks, credit/debit cards, or online, depending on the provider’s policies.

9. Early Out Vendor

If your account remains unpaid for 60 days, it may be transferred to an Early Out Vendor. This step helps the provider to collect the debt more quickly, often with more lenient terms.

Before moving forward, it's important to understand the regulations that govern medical debt collection.

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Laws and Regulations Governing Medical Debt Collection

When it comes to medical debt collection, both federal and state laws are in place to safeguard you from unfair or abusive practices. Below, you'll find the key rules and protections that govern medical debt collection.

Federal Regulations

• CFPB's Final Rule: Starting in 2025, the Consumer Financial Protection Bureau (CFPB) will prohibit credit reporting agencies from including medical debt on credit reports sent to lenders. 
  
  • This rule also prevents lenders from using medical information when making lending decisions. 
  • The goal is to stop debt collectors from pressuring people to pay bills they may not even owe.
• Fair Credit Reporting Act (FCRA): The CFPB’s new rule amends the FCRA’s Regulation V, which previously allowed creditors to consider medical debts. 
  
  • Now, debt collectors must ensure they have a reasonable basis for claiming the debts are valid and that the amounts are correct.

State Regulations

• Texas: Under Texas' "timely billing" law, healthcare providers must ensure that bills are sent to you by the first day of the 11th month following the provision of services.
  
  • Texas also mandates that healthcare providers send you an itemized bill with "plain language descriptions" before the account is sent to collections.
• California: In California, hospitals are prohibited from reporting negative information to credit agencies or filing civil complaints until 180 days have passed since the initial billing. 
  
  • Debt collectors are required to notify you of this 180-day period in their first written communication.
• Other States: Many states have their own rules for financial assistance and community benefit standards for hospitals. 
  
  • Some states also regulate billing and collections practices, while others limit the legal actions creditors can take.

Additional Protections

• No Surprises Act: Both California and federal laws protect you from surprise medical bills. 
  
  • This means debt collectors are not allowed to collect on debts that fall under these protections.
• Medical Debt Is Different: Medical debt is treated differently from other types of debt in many cases. Consumers have some protections that apply specifically to medical debt.
• Paid Medical Debt: As of July 2022, the three major credit reporting agencies (Equifax (EFX), Experian (EXPGF), and TransUnion (TRU)) have agreed not to include paid medical debt on your credit report.

With the laws in place, let’s see how medical debt impacts your life.

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The Impact of Medical Debt on Patients

Medical debt can have a profound effect on your life, both financially and emotionally. It’s a common issue, with millions of Americans struggling to pay their medical bills.

1. Financial Strain

Medical debt can create serious financial challenges. Here’s how it can affect your finances:

• Damaged Credit: Unpaid medical debt can lower your credit score, making it harder to secure loans for things like a mortgage or car purchase.
• Limited Access to Credit: A poor credit score due to medical debt can prevent you from opening new credit lines when you need them most.
• Difficulty Affording Essentials: Medical debt can make it difficult to cover basic necessities such as food, clothing, or housing.
• Using Savings and Loans: You might have to dip into your savings or take out loans to pay off medical bills. Some even rely on credit cards, which can turn medical debt into financial debt, potentially losing some of the protections medical debt typically offers.
• Unaffordable Bills: Many people struggle with medical bills, which can cause significant financial strain.
• Debt Amount: Data from the 2021 Survey of Income and Program Participation (SIPP) indicates that around 14 million Americans owe more than $1,000 in medical debt, with 3 million owing over $10,000.

 The above bar graph shows the distribution of Americans with Medical Debt: SIPP 2021.

2. Mental and Physical Health

The emotional and physical toll of medical debt can be just as significant as the financial strain. Here's how it impacts your well-being:

• Mental Health Struggles: Medical debt can lead to stress, anxiety, and even feelings of shame or worthlessness.
• Delayed Care: To avoid accumulating more debt, you might skip doctor visits or cut back on necessary prescriptions. This can result in more serious health problems and more expensive treatment in the future.
• Stress and Worry: The constant worry about medical bills can worsen existing health conditions, making it harder for you to focus on your recovery.
• Sacrificing Health Needs: You may find yourself choosing between paying for essential items like gas, utilities, or food, and taking care of your health needs.

With the impact clear, here are 10 tips to manage and avoid medical debt.

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9 Tips for Managing and Avoiding Medical Debt

Dealing with medical bills can be overwhelming, but with the right strategies, you can manage and avoid the burden of excessive debt. Here are some practical tips to help you stay on top of medical expenses:

Tip 1: Plan Ahead When Possible

If you're facing an elective procedure, research doctors and hospitals within your insurance network. Reach out to your benefits coordinator or insurance provider to fully understand your coverage and potential costs.

Tip 2: Review Bills Carefully

Always open and review your bills and statements promptly. Be sure to distinguish between a bill and your insurer's Explanation of Benefits (EOB). Go through itemized statements line by line to ensure all charges are correct, as medical billing errors can happen.

Tip 3: Communicate with Healthcare Providers

If there’s a charge you don’t understand, don’t hesitate to ask questions. Many providers offer assistance with resolving bills, including financial aid and payment plans. 

If you don’t have insurance, try negotiating costs or ask about a lump-sum discount if you can pay the full amount upfront. Also, explore Charity Care programs that offer free or reduced-rate services for low-income patients.

Tip 4: Utilize Savings Options

Consider using a Flexible Spending Account (FSA) or Health Savings Account (HSA) to set aside pre-tax money for medical expenses. This can help you save on healthcare costs throughout the year.

Tip 5: Payment Strategies

Sort your medical bills by due dates to prioritize payments and avoid late fees. If you need more time, setting up a payment plan can help, many providers offer flexible options with little to no interest, so don’t hesitate to ask.

If your account is with SECS, they focus on making the payment process as smooth and fair as possible. Depending on your account, you may be able to pay using Visa or MasterCard (credit/debit), bank transfers, or mailed checks, money orders, and cashier’s checks. 

If mailing a payment, make sure it is payable to South East Client Services Inc. and include your account number, which can be found online, in emails, or in letters sent to you.

Tip 6: Explore Financial Assistance

Check if you qualify for Medicaid in your state, which might cover some of your medical charges. Consider a Debt Management Plan from a credit counseling agency to consolidate your debt and lower interest rates on other debts.

Tip 7: Be Proactive and Organized

Keep a record of all the doctors you visit and the hospital departments you use. Staying organized with your medical bills and documents will help you keep track of everything more effectively.

Tip 8: Check for Additional Coverage

Review your employer benefits to see if you have additional coverage options, such as pet insurance or extra prescription coverage, which could help reduce your out-of-pocket costs.

Tip 9: Manage Existing Debt

If you have existing high-interest debt, such as credit card balances, prioritize paying that down first before or during your medical treatment. This will help you avoid accumulating even more debt.

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Conclusion

As we've discussed throughout this blog, effective medical debt collection plays a critical role in maintaining the financial health of healthcare providers. A well-organized collection strategy helps recover unpaid bills and ensures healthcare providers have the resources to continue offering high-quality care.

Tailored approaches are essential for improving collection success. A medical revenue services debt collector can enhance recovery rates by analyzing individual accounts, customizing communication strategies, and offering flexible payment plans.

If you're looking for a trusted partner to manage your accounts receivable, contact SECS. With over a decade of experience, they use a proven strategy to convert distressed receivables into cash. Their expertise, legal compliance, and client-focused approach make them the ideal choice for your medical revenue services needs. 

Let SECS help you recover medical debt more efficiently!

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