> ## Documentation Index > Fetch the complete documentation index at: https://mso.getlemma.com/llms.txt > Use this file to discover all available pages before exploring further. # Use collections agencies (carefully) > Selecting an agency, HIPAA-compliant data sharing, what to send and what never to send, recall rights, and the reputational calculus of medical debt collection. Sending patient balances to collections recovers a modest fraction of what is owed and carries real reputational cost. This guide covers doing it properly when you do it, and thinking clearly about whether to. ## 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? That last question filters more accounts than any policy. ## Selecting an agency | Criterion | What to look for | | ------------------------------ | ------------------------------------------------------------------------- | | **Healthcare specialization** | They understand EOBs, insurance timing, and why a balance exists | | **Compliance posture** | FDCPA training, complaint handling, call recording, documented procedures | | **Willingness to sign a BAA** | Non-negotiable, they are a business associate | | **Recall rights** | You can pull an account back at any time, for any reason | | **Fee structure** | Contingency percentage, typically substantial; know it | | **Reporting** | Account-level status you can actually see | | **Complaint escalation** | How disputes reach you, and how fast | | **Credit reporting practices** | What they do, and whether it matches your policy and current law | 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**. | Generally appropriate | Generally not | | --------------------------------------------- | ----------------------------------------------- | | Patient name and contact information | Diagnoses | | Account number | Clinical notes | | Dates of service | Treatment details | | Balance owed | Procedure descriptions beyond what's needed | | Payment history | Anything about the medical content of the visit | | Insurance information relevant to the balance | | **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](/concepts/industries/behavioral-health). ## Steps Minimum balance, minimum age, required prior contact attempts, hardship screening, and exclusions, for example, accounts in active dispute or with a pending appeal. 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. 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. Track recovery rate, complaint rate, and recall rate. A high complaint rate is a signal about the agency or about your placement policy. Including a sample of their communications with your patients. ## Alternatives worth exhausting first | Alternative | Why it often works better | | --------------------------------------- | ------------------------------------------------------------------ | | **A phone call from your own staff** | Many balances resolve once someone explains the bill | | **Payment plan with autopay** | Collects more, at lower cost, without reputational damage | | **Discount for prompt payment** | Where lawful and consistently applied | | **Financial assistance / charity care** | Appropriate where genuine hardship exists, and better for everyone | | **Write-off** | Sometimes the right answer for a small balance | ## 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](/concepts/model/what-msos-can-and-cant-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 ## Common failure modes | Failure | Consequence | | ------------------------------------------------ | --------------------------------------------- | | No BAA | HIPAA violation | | Sending clinical detail | Over-disclosure | | Placing accounts with pending appeals | Collecting on money the payer may owe | | Placing accounts where you owe a refund | Complaints, and reputational damage | | Slow recalls | Errors become complaints | | No complaint monitoring | Discovering agency behavior via a review site | | Relying on outdated credit reporting assumptions | Non-compliance | | Not exhausting internal options first | Reputational cost for recoverable balances | ## Related topics - [Run patient statements and balances](/guides/billing/manage-patient-statements.md) - [Resolve credit balances (patient and payer)](/guides/payments/resolve-credit-balances.md) - [Deductibles, copays, coinsurance, and patient balances](/concepts/payments/patient-responsibility.md) - [HIPAA for MSO-PC operators](/concepts/compliance/hipaa-fundamentals.md) - [Chargebacks: when patients dispute card payments](/concepts/payments/chargebacks.md) - [Patient refund timing requirements by state](/reference/banking/refund-check-requirements.md)