On the Hunt: What It’s Like to Be a Medical Debt Collector

Americans pay more for healthcare than in any other country in the world, with estimates sitting at $8,745 per capita. Unfortunately, many Americans can’t afford to pay their bills. Paying for medical services out of pocket or taking an ambulance can easily derail a family’s finances. In fact, 43 million Americans are carrying around unpaid medical debt, and around half of all overdue debt on Americans’ credit reports is from medical expenses.

When patients can’t pay their bills, their debt may go to what’s known as a medical debt collector. As you can imagine, hunting down unpaid bills can be a nasty business.

Medical Debt in the U.S.

Oftentimes, patients may find themselves unable to visit a provider within their insurance plan network, forcing them to see a doctor outside of the network. This often leaves them with a massive bill for routine medical services. Patients can also get hit with surprise medical fees and expenses. Studies show about one in six Americans received a surprise out-of-network medical bill in 2017 after being treated in a hospital, even though they had insurance.

When patients can’t pay their bills, we’d like to think some doctors may give their patients a pass, but billing decisions are often left to facility administrators and large corporations. Care providers often have little say in terms of how much their patients are charged for certain healthcare services.

What Is a Medical Debt Collector?

Instead of collecting payment themselves, some medical facilities and corporations will sell their debt to debt buyers. Debt collectors typically pay pennies for each dollar owed, then do everything they can to collect more than they paid for the debt. Some hospitals and doctor offices may sell their medical debt as a way of not having to deal with the collection process. They’d rather leave the aggressive collection tactics to another company, so they don’t have to harass their patients for overdue bills.

By hiring a third-party debt collector, hospitals and facilities can make sure they at least get some of the money they’re owed upfront without having to wait around for the rest of the payment. This also puts distance between care providers and the debt collection process. Patients will need to forward their money to a company they’ve likely never heard of, instead of sending it to their care provider.

Collecting a Debt

When patients can’t pay their bills, the hospital or debt collection agency will usually start off with what are known as “soft” collection tactics. They may send a letter or call them on the phone with a polite message reminding them to pay their bill. However, if collectors don’t receive a response, the process can quickly turn ugly.

Debt collection agencies will often report the unpaid bill to the individual’s credit agency. The unpaid bill may lower the person’s credit score, making it more difficult for them to borrow money in the future, whether it’s for a car or a home. Debt collectors may also bombard patients with phone calls reminding them to pay their bill.

A recently proposed federal law from the Consumer Financial Protection Bureau would limit these kinds of calls to no more than one a day per claim, but patients with multiple unpaid bills would still receive more than one call per day. This could easily amount to dozens of calls per week for some individuals. In other cases, patients may receive dozens of overdue notices and letters asking for payment. Some patients will even stop checking their mail due to all the notices.

Some medical debt collectors may end up sending the debt to an attorney for collection. In this case, the patient may end up in court having to settle these charges. The more recent the bill, the easier it is to defend in court. But some debts may reach a statute of limitations, which means collection can no longer be enforced. Several states, including Wisconsin, North Carolina, and Mississippi, have laws on the books that would clear certain debts once they are past the statute of limitations.

Throughout most of the country, debt collectors can go on trying to collect a debt until it reaches the statute of limitations, but that might not be enough to put collectors at ease. A recent report in the Washington Post details how debt collectors are trying to revive old debts, including those that have passed the statute of limitations, by threatening to sue those that still owe them money. This is a trick that’s designed to catch consumers off-guard.

In one case, a woman thought her debt had passed the statute of limitations, but when the collector decided to sue, they were able to garnish a mere 19 cents from her wages. Any amount of payment automatically revives the old debt, which means the individual will still be on the hook for the entire amount.

Other debt collectors will promise to stop calling individuals if they make a partial payment, but this is often just a ploy to revive the old debt. Some in the industry have started referring to these debts as “zombie debts,” playing up the fact that they never seem to die. All of this excessive back and forth can leave consumers isolated and confused. Some may accidentally revive an old debt, while others may have to live with poor credit scores for the rest of their lives.

There’s a lot of money in collecting old debts. The debt collection industry is currently worth around $12 billion dollars. Until the laws change, some consumers will continue getting hammered by debt collection calls and letters. Keep this information in mind as you talk to your patients about paying for healthcare. Encourage them to visit the CFPB website to learn more about the debt collection process and how they can protect themselves from fraud and other scams.