jarman nickMedical debt generates the largest amount of accounts placed with debt collection agencies, so it is no surprise that, as of late, medical debt has generated the most attention as well. Based on a recent study by the CFPB, well over half of all collection accounts reported to credit reporting agencies are medical in nature and almost all were reported by collection agencies, not the medical provider. It was only a matter of time before the things boiled over and medical debt became front and center for consumer activism. Whether or not you believe medical debt is indicative of a consumer’s ability to repay a debt, the one thing that is for certain; medical debt is unlike any other form of debt due to the fact that it comes about unexpectedly, unplanned, and unbudgeted.

Understanding how medical debt evolves is critical when preparing a successful medical collection strategy. It is imperative to listen to the consumer, understand their present financial situation and work together with them under your client requirements on the best way to get the provider repaid. This approach should take into account every aspect of the consumer’s involved circumstances. There is a need to be empathetic and flexible when collecting medical accounts for two main reasons: one is that the consumer needs direction and guidance on how to help resolve their situation, especially when there is little to no disposable income. Second, the consumer will determine future provider relationships based on how they are treated in the collection process with your client, so it is imperative to assume the consumer will go back to your client in the future. You don’t want your client losing future business because of your poor approach to resolving a delinquent medical debt owed to them.

Self-Pay

When collecting on medical accounts, the strategy should focus on self-pay, balance after insurance, and insurance covered. Self-pay accounts are accounts in which the consumer does not have medical insurance and therefore is responsible for the entirety of what is owed to the providers. Generally self-pay accounts are the more difficult segments of medical debt on which to collect. But nonetheless, an opportunity exists if these accounts are treated correctly. Once you have established contact with the consumer in this situation, spend time coming to an understanding of their circumstances and determine the best route for them to take in order to begin repayment. With no insurance involved, self-pay accounts will rely solely on what the consumer can or can’t do to repay.

Balance After Insurance

Balance after insurance is another large segment of medical collection accounts. These accounts come about after the consumer’s insurance company has made payment to the provider but there is still an amount owed that the insurance company has refused to cover. This generally comes about when the consumer is responsible for a deductible or the consumer goes out of network for coverage. Once contact is established with the consumer in this case, the account takes a self-pay feel in regards to the strategy as we mentioned above. However, it is important when speaking to the consumer to understand what they believe their coverage to be because in certain circumstances the insurance company may not have covered all they should have. By taking the time to understand the consumer’s insurance coverage and speaking with the insurance company, you may be able to identify coverage that was missed which will generate some nice collection opportunity.

Insurance Coverage

The last segment we will discuss is medical debt with insurance coverage. This makes up the smallest amount of medical debts in collections, but they are there. In most cases, the providers do a good job of processing and collecting all monies owed from the insurance companies. However, the reality is sometimes things slip through the cracks. When this happens it leaves what some collectors call a pot of gold at the end of the rainbow. While some providers discount or even discredit collections from insurance with their collection agencies, it never hurts to try and take advantage of the opportunity. Sometimes it just takes a professional collection specialist who knows the medical debt account receivable process to clean up a situation where an insurance company failed to pay even though they should have. Make no mistake, sometimes collecting from insurance companies can be more difficult and time consuming than collecting from consumers, but once the process is completed it generates much larger payments than self-pay and balance after insurance.

In the end, medical accounts in collections make up the most opportunity for any type of debt in the collection industry. Medical debt also has several different aspects that separate its strategic approach from traditional credit debt accounts. Success in medical debt collections is based primarily on the empathetic and understanding approach the collector takes when listening to the consumer’s circumstances coupled with the strategic approach taken to collect the accounts.

Nick Jarman is COO at Delta Outsource Group, Inc. He also serves on the Board of Directors for ACA International.