Unpaid Medical Bills

Ah, the old unpaid medical bills. We all dread it, but most of us at some time will end up with unpaid medical bills. Sadly, many of us experience the result of the hospital or doctor placing the account with a collection agency with no notification.

Often times after an insurance payment, a doctor or hospital will simply assign the debt to a third party debt collector without ever billing the patient. There's no good reason why this happens other than poor accounting habits.  A patient should have the right to be notified about a balance before it hits their credit reports as a collection account and ruins their credit rating.

In recent years, the federal government has made it harder for a medical provider to simply ruin your credit. Updates by the Big Three allow you six months to negotiate and review your medical bills before the provider can ship them off to the collection agencies. This will decrease the number of people who are blindsided by medical bills appearing suddenly on their credit reports.

Last year, the three major credit bureaus–Experian, Equifax and TransUnion–also instituted a change that requires a 180-day waiting period before medical debt gets added to consumer credit reports. 

Never "Simply" pay a collection agency for a medical bill

If you notice a medical bill has been reported to your credit reports by a collection agency then simply paying the debt is going to do little to improve your credit rating.

Unless you've already disputed (with good cause) with the credit bureaus and collection agency, paying the debt is going to do nothing more than turn it into a "paid collection". We cannot stress this enough. A "paid collection account" is the last resort. Ultimately, you want to negotiate complete deletion in exchange for paying it.  Collection agencies, unlike original creditors, often remove accounts in exchange for payment.

With HIPAA, patients will have more privacy with 3rd Party Debt Collectors

Medical collections may have become a little more difficult to collect because of privacy rules with medical laws.  The HIPAA privacy rule requires a "business associate" (collection agency or billing firm) to reasonably limit the amount of information disclosed for such purposes to the minimum necessary as well as to abide by reasonable requests for confidential communications. 

This could be a loophole for debtors against collection agencies because collection employees often know less about their industry restrictions than does the debtor. This could lead to privacy and HIPAA violations - and eventually case law to support such violations. 

If collection agency employees are not careful, they could lose out on collecting medical debts by inadvertently knowing too much about the debtor's medical condition. This will no doubt lead to many consumers seeking that the debts be pulled back by the medical provider to avoid potential suits against the provider. 

Debtor's who know how to protect themselves will use this provision to threaten collectors and gain the upper hand in settling the medical debt without it hitting their credit reports. Basically, debtors who discover that the collector knows their diagnosis and treatment will threaten the agency that their privacy has been violated. 

The agency, wanting to avoid unnecessary lawsuits will most likely agree to remove the negative entry on the consumer's credit report by agreeing to settle with such terms. The debtor will gain a clearer credit report by having the item removed rather than listed as "paid collection". 

An unpaid medical bill on your credit reports can seriously affect your credit score. Medical bills, unpaid, are a negative rating in your credit history and unfortunately most of the time we dont know they're unpaid until they've landed in collections. 

By that time, it makes less sense to simply pay it because the harm to your credit score has already happened. If this happens to you, you need to negotiate the credit rating with the bill collector before you pay or promise to pay. If you dont, you could be renewing the statute of limitations which determines how long the medical bill is collectible.

Filing a HIPAA Complaint

If you believe that your privacy pertaining to your medical history has been unlawfully accessed, you can file a HIPAA complaint. Click here to read all about filing a HIPAA (Health insurance portability accountability act) complaint. HIPAA prohibits any retaliation against you. Under HIPAA, an entity cannot retaliate against you for filing a complaint.