Prerequisites
- Your internal collection process exhausted: statements, contact, payment plan offered
- A financial policy the patient signed
- A hardship or charity care assessment, if you offer one
- Counsel review of the agency agreement
Think about it first
Medical debt collection is not like other collections. Patients did not choose to need care, often did not know the price, and frequently do not understand the bill. The reputational consequences — online reviews, community standing, referral patterns — are real and durable, and in a practice whose growth depends on local reputation they can exceed the recovery. Also note that the regulatory environment for medical debt credit reporting has been in flux, with federal and state action on whether and how medical debt appears on consumer credit reports. Verify the current rules before relying on credit reporting as leverage. Do not assume the position from a year ago still holds. Before sending an account, ask:- Is the balance large enough to justify the recovery and the cost?
- Was the patient offered a payment plan, and did they decline?
- Was hardship assessed?
- Is the balance genuinely correct, or is this actually a billing error the patient has been trying to tell you about?
- Would we be comfortable if this appeared in a local news story?
Selecting an agency
Ask for references from healthcare clients and, if you can, listen to a recorded call.
HIPAA and what you send
Collection is a payment activity under HIPAA, so disclosure to an agency is permitted, subject to a BAA and to minimum necessary.
Send the minimum necessary to collect the debt. An agency does not need to know why the patient was seen. Sending diagnostic or clinical detail is an over-disclosure, and it is the kind that surfaces in complaints.
Special caution for behavioral health and substance use disorder balances: 42 C.F.R. Part 2 imposes stricter confidentiality on SUD treatment records than HIPAA. The fact of treatment at an identifiable SUD program can itself be protected. See Behavioral health.
Steps
1
Define the placement policy in writing
Minimum balance, minimum age, required prior contact attempts, hardship screening, and exclusions, for example, accounts in active dispute or with a pending appeal.
2
Execute a BAA before sending any data
3
Scrub the placement file before it goes
Remove accounts with: a pending insurance appeal, an active payment plan, a credit balance, an open card dispute, a documented dispute, or a hardship application in process.Cross-check against open chargebacks and credit balances. Sending an account to collections while you owe the patient a refund, or while they have an open card dispute, is the fact pattern that produces complaints and regulatory attention.
4
Send the minimum necessary data set
5
Handle recalls promptly
If a patient disputes the balance, insurance reprocesses, or the balance turns out to be wrong, recall the account immediately. Keep the recall process fast and unambiguous, because slow recalls are what turn errors into complaints.
6
Monitor complaints and outcomes
Track recovery rate, complaint rate, and recall rate. A high complaint rate is a signal about the agency or about your placement policy.
7
Review the agency annually
Including a sample of their communications with your patients.
Alternatives worth exhausting first
MSO-PC notes
Collections management is an MSO function; the debt belongs to the PC and recovered funds are the PC’s revenue, landing in the PC’s account. The PC should approve the collection policy, because it affects the patient relationship and, at the margin, access to care, even though the MSO executes it. See What an MSO can and can’t do.Verify it worked
- Written placement policy with minimum balance, age, and prior contact requirements
- BAA executed before any data was sent
- Placement file scrubbed for appeals, plans, credit balances, and disputes
- Minimum necessary data only
- Recall process fast and documented
- Complaint and recall rates tracked
- Agency reviewed annually, including sample communications
- Current medical-debt credit reporting rules verified
- PC approved the policy