Medical Debt: How it Arises, and How to Recover It

medical debt

Two-thirds of bankruptcy filings in the United States are the result of high medical bills. If you run a medical practice, collecting medical debt can be a daunting task, especially if there is an existing past due balance.  

While there’s no single solution to collecting payments on patient bills, we’ll cover some proven tips on how hospitals improve their cash flow when it comes to medical debt recovery. Then we’ll cover some national trends that are working to address the ongoing medical debt crisis. 

Keep reading to learn more. 

Top Causes of Medical Debt

Medical debt isn’t simply a problem for the poor or uninsured. Even with health insurance, one debt relief company found that the average cost of medical treatment for an illness left patients with nearly $18,000 in debt. For folks who don’t have health insurance, that number balloons to around $27,000.

Beyond prescription drug costs and doctor bills, here are two top causes of medical debt.  

1. Chronic Health Conditions and Medical Debt

Individuals with chronic health conditions are more likely to accrue significant medical debt for a number of reasons. The National Institutes of Health found that people with chronic health problems are more likely to pay out of pocket for medical treatments.

Those costs often exceeded 20% of their annual income, because many people with chronic diseases are 60 and older.

2. Medical Insurance and Medical Debt

The link between medical debt and not having medical insurance may be obvious, but even the insured run into debt problems. For one, medical problems rarely fall neatly into one year. If you have to pay an entire $7,000 premium before your insurance kicks in, you may be on the hook for an additional $7,000 once the new year starts.

Then there is always the risk that you inadvertently use a treatment or service outside your network. In the event of a medical emergency, few people have the time to search which hospitals and doctors they are supposed to work with. The results can be large bills that can reach the tens of thousands.

Illnesses are often unexpected, and no insurance program is perfect. Increasingly, many medical debts end up being sent to medical debt collectors.  

What Can Medical Practices Do About Medical Debt?

If you run a medical practice and have patients who are past due on medical debt payments, the first steps should involve working directly with the patient to resolve the issue. Here are three ways medical providers can help their patients pay down debt. 

1. Check Their Medical Insurance

If the patient has medical insurance, they may not know that most or all of their expenses may be covered. If the patient does not have insurance or still has debt after you file the insurance, the next step is to discuss a payment plan. It is up to your billing department to determine how payments are made, but most people are able to afford smaller monthly payments.

2. Offer Information on Medical Credit Cards

If payments are not an option, you can tell the patients about medical credit cards. Many medical credit cards are free of interest for six months or one year. Unsecured credit cards or loans may be another option, but it will be up to the patient to pursue those forms of financing.

3. Hire a Medical Debt Collection Agency  

Often, the easiest and most effective means of collecting debt is to work with a debt collection agency. The companies are ideal for a medical practice that has multiple patients who are significantly behind on payments.

Companies that specialize in collecting medical debt understand how to recoup late payments. Using their services saves your staff time and money, and lets your business focus on providing medical services.   

What Individuals Can Do to Prevent Medical Debt

On the health-related side of things, patients can schedule annual check-ups with their primary care provider. Managing conditions like diabetes by following doctors’ recommendations can prevent medical emergencies.

Beyond that, eating a healthy diet and exercising while refraining from smoking can lower the risk of accumulating medical bills. Here are two helpful tips for preventing medical debt. 

1. Open a Medical Savings Account

Financial savings are another component of medical debt. Debt occurs when patients are unable to pay their bills or make monthly payments. The most straightforward way to prevent that situation is to have a savings account or some sort of medical savings account.

A flexible spending account and a health savings account are two tax-free savings options. Finally, patients should check their bills closely. Hospitals sometimes make errors, and it never hurts to call the hospital with questions that you may have. 

2. Talk to Managers About Health Insurance Plans

Workers should talk to their managers about healthcare benefits. Companies have an obligation to provide quality health insurance.

If a company doesn’t make an earnest effort to find the best insurance possible for a given budget, employees can become advocates for better medical coverage. Some companies even create medical debt relief programs solely to help their employees when they end up under large amounts of unexpected debt. 

National Efforts to Curtail Medical Debt

Medical debt is a serious problem, both for patients and for medical providers. Fortunately, there’s hope that some of the major causes of medical debt are finally being addressed.

The No Surprises Act was passed by Congress last December and signed into law. The bill addresses a lingering problem with medical billing in this country. When a patient goes to a hospital that is in-network with their insurance provider, they rightfully believe that the hospital treatment will be fully covered.

Too frequently, a visiting physician, often a specialist like an anesthesiologist, may see the patient. If the specialist is not in-network with the insurance, the bill can end up being exorbitant. 

Learn More About Medical Debt

Medical debt continues to be a top concern for hospitals and patients. Like any business, medical practices have to earn enough to pay their employees and cover overhead expenses. When patients become overburdened with medical debt, that can lead to challenges when billing for services rendered. 

Are you looking for a flexible, talented, and professional team of debt recovery specialists? For more than 50 years, FFCC has led the industry by surpassing the competition’s success rate.

We don’t use hidden fees or upfront costs. Contact our office today so we can help you successfully collect medical debt.