Alex comments in my last post:
Jeff, I just received a statement from my child's pediatrician's office. The statement is for services from February. This is the first statement that I have received for this visit and the amount due is already 31 to 60 days late. I'm meticulous about keeping credit bills and statements for about two years, especially medical bills because of the tax deduction for medical expenses. Seeing that the statement was already considered late, it made me interested to find out how many times I've been billed for medical expenses so long after the visit. I looked back and found that about 90% of my bills were either; billed before the insurance company had paid for the visit, making my bill/statement for the entire amount of the visit (which, of course, I had no intention of paying until insurance had paid their portion, making my amount due late by the next time the billing cycle had come around to find out my "real" amount due); or, billed thirty or more days after the visit, after insurance had paid (making my amount due fall in that "late" category). In every instance, I've found that I've never been charged a late fee or interest on the amount due although, by stated billing practice, I could have been.This is a very good set of questions. I think, in general, that the medical bills themselves aren't so much the problem. Medical-related bankruptcies involve lots of debts... when you're sick, you can't make the mortgage/rent, car payment, credit cards, etc. Eventually, medical debts do get sold to collectors who will sue you, ruin your credit, etc. But before that, doctor's offices are pretty good about working with their patients to get payment. They'll accept payment plans, they'll accept late payments without dinging your credit, etc. (I'm saying all this in general... I'm sure there are individual exceptions to this all over the place.) All those other debts aren't so understanding and flexible.
This raises the question for me: How many of these collections/bankruptcies due to medical bills that we hear about are because of, what I would consider, sloppy billing practices used by the medical office or insurance company? Sure, I understand the huge emergency medical bills that have defaulted because of lack of insurance (I have a family member who works construction in that bind), but what about the people that have insurance but just don't understand the billing statements that they receive?
So yeah, I think a lot of medical bills are sent late and contain innaccuracies (I've had a billing/insurance issue with a doctor's office myself, and in the last 60 days), but I don't think those kind of delinquencies are reported to the credit bureaus right away. Because insurance companies drag their feet, medical offices are used to a certain amount of delay in getting their payments. That's probably why in your experience you don't tend to get charged late fees even when the payments are technically going to be late.
And remember, the medical bankruptcies we keep hearing about are wildly exaggerated. And even when the bankruptcy case isn't willfully misinterpreted by scholars with an agenda, the medical bills themselves aren't always what brought on the bankruptcy, but the credit cards, taxes, and other expenses that got out of hand while the debtor was sick.
So my take on your final question is entirely different. I'm guessing that while sloppy billing practices and insurance-related billing problems are probably pretty common, they aren't especially responsible for collections or bankruptcies. I think it's even possible that hospitals, insurance companies, and medical offices are more likely to make extra money off of these billing issues than to drive a debtor to bankruptcy. (I suggest that because with the last three medical issues I've had, I've been double-billed or had some other over-charging that I had to dispute to get resolved.)