Internal Collections Are First Step
Medical offices routinely bill clients and expect prompt payment, but are equipped to handle mild delinquencies with their own internal collections department. Because external collections agencies often require a substantial portion of the amount collected, medical offices will first attempt to collect the debt themselves. This collection procedure may consist of letters, telephone calls, emails or (depending on the facilities available to the medical office) personal discussions at the medical office. The duration of the collection effort varies depending on the office's policies, available resources and the amount of debt, but the efforts may continue for six to twelve months.
External Collectors May Become Aggressive
Once the medical office has exhausted its resources in attempting to collect the debt, it may choose to either employ a collection agency (compensating them with a portion of the amount collected) or sell the debt to a professional collector at a significant discount. If the debt is sold, the medical office simply writes off the debt as a loss and the collector assumes ownership of the debt. If the medical office employs a collector, the collector will continue collection efforts at a more aggressive pace and remit a percentage of the collected amount--if any--to the medical service provider. In either case, the collector notifies the debtor of the collection intent and allows a 15-day response period (as required by law in some state). Collection tactics vary from collector to collector, but usual collection procedures involve multiple telephone calls, letters and bills. Collection agencies also routinely report collection status updates to major credit bureaus, further damaging the debtor's credit. Collectors may generally execute the collection process any way they see fit, but some activities deemed abusive or harassing are regulated by the Fair Debt Collection Practices Act.
Medical Debts May Be Sold and Resold
If the collection agency is unable to collect the debt, it may choose to sell the collection account to another collection agency. Each time the debt account is sold, the new collection agency renews collection efforts in an attempt to recover their investment; these efforts may include renewed letters and telephone calls, and, though the Fair Debt Collection Practices Act expressly prohibits the practice, reporting the debt to credit bureaus as a new debt in a practice known as "re-aging."
Some Collectors Sue
Depending on the amount of the debt, the collection agency may also choose to pursue legal action against the debtor in an effort to force the patient to pay. This action is generally reserved for debts of a large amount, as legal costs can quickly add up in a legal suit. If the debtor is sued by the collector, the debtor will be served papers explaining the basis of the case and be required to appear in court.
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