Medical billing question

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 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?

Alex

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.

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.)

Comments

[Rich]

I have a question. I have discussed the following situation both with the phsyicans office and the debt collector they work with.
I was divorced in 2002 and the divorce decree/ child support order from the court states that I am to provide medical and life insurance for my children. My ex-wife is to pay any co-pays or incidentals not covered by insurance.
What she has done in the last year (btw we have both remarried) is 1) go to practioners and fill out forms stating I am 100% financially responsible for all debts.
2) Is using her previously married name (my last name)
3) Told the physicians office we were still married and that I lived at her residence.
4) Not paid any co-pays for office visits.
5) The physicans offices have sent bills to her residence in my name because she listed me as both responsible for the debt and living at that address.
6) Left unpaid, these charges are now in collections and on my credit report.
7) Both the provider and the collections agency I am legally responsible for any and all debt she incurs in this manner and my only recourse is to pay to have it removed and seek compensation from my ex-wife through small claims court. No one can cite a specfic law that says this - just that it is law and it sucks to be me.
How is this legal and what rights do I have to combat this?

[Jeff Michael]

I can't believe what she's doing is legal. Sounds like it's time to get a lawyer.

On some level, it's like identity theft. If someone is putting your name on debts without your prior knowledge or authorization, then they're stealing your identity, right? Maybe you could fill out an ID theft affidavit stating you aren't responsible for the debts. (And the standard affidavit has a place for you to name the person you suspect of stealing your identity.)

I think it sounds like going to court is ultimately the answer, but not just small claims court. Of course the collectors are giving you a suggested solution that is easiest for them, but if we're talking about a significant amount of money, I'd say you need an attorney of your own to help you sort it out.

[Deb]

I have received a collector's statement saying I owe for a past medical bill from the year 2006. I never received any bills from the hospital billing this visit. The collectors are billing for the "original" amount plus interest. Can they do this? What do I do? Are threatening to affect my credit.