Some providers have stopped sending debt to their agencies, especially for accounts under $500, as a result of new legislation and constraints relating to credit reporting and the placement of healthcare debt with collection agencies. Due to the reaction, suppliers no longer receive the same amount of money from bad debts that they would have otherwise given to their partners in the collection.

For many healthcare organizations, failing to use a debt collection agency could result in a significant loss of income. What should the medical industry do in response to these new regulations? What actions can they take to maximize the value of their bad debt stock?

This article provides some key lessons learned from the new rules as well as advice on how to maximize the money your medical practice will receive from its debt inventory.

The Changes to Credit Reporting

Recently, Equifax, Experian, and TransUnion made adjustments to the way that medical bills will be reported on credit. In reaction to a recent study by The Consumer Financial Protection Bureau (CFPB) about medical debt in the United States, the national credit reporting agencies (NCRAs) have made an announcement.

For instance, one change achieved by the NCRAs is that settled medical debt collection accounts are no longer shown on consumer credit reports. The NCRAs will instantly delete an account after payment if it is sent to collections, credit reported, and then paid.

A new balance minimum and credit reporting period are two further modifications.

Debts Under $500

A medical collection account must satisfy a $500 minimum before it can be credit reported, according to one of the NCRAs' new regulations.

Credit reporting is a crucial tool for many healthcare organizations to persuade patients to pay their past-due debts, especially for accounts with a balance of under $500 that customers might consider of lower priority. Normally, a patient would be persuaded to remedy the issue if it appeared on their credit record.

In response to this new regulation, several providers have decided to stop submitting accounts worth less than $500 to their partners for collection because they think that without credit reporting, patients will be less inclined to pay.

However, healthcare debt collection agencies can use their negotiating abilities to establish payment plans and settle past-due debts under $500 by using win-win talk-offs. Nobody wants to be in collections, and a straightforward call, text, letter, or email from a collection agency is frequently sufficient to cause a bad debt to be resolved.

Credit Reporting

Healthcare revenue cycle management accounts do not need to be reported until at least 365 days have passed since the original creditor's date of first delinquency, according to another NCRA guideline. With this modification, the reporting wait period will be extended from 180 to 365 days.

Although it may appear that this law slows down the collection process, credit reporting has always been a lengthy procedure. After all, patients don't want their accounts to be past due. Credit reporting frequently works since patients learn about the debt when attempting to get a new credit line.

An early conversation about a past-due account with a patient can make all the difference because a debt collection agency can reach out to them before credit reporting takes place.

For the best financial benefits, it is frequently advisable to file a debt to a reputed collection agency within the first six months of delinquency. In contrast, the examination of debt inventories reveals that after a year, the placement of debt with a collection agency reduces the likelihood of collecting a bill by 50%.

The Bottom Line

Healthcare organizations are urged to send debts under $500 to collections as soon as possible, ideally during the first six months of delinquency, regardless of the changes to credit reporting and new laws.

The highly qualified Patient Financial Representatives at a healthcare debt collection agency strive to give patients a great experience by answering any questions they may have about paying off their medical debt and providing the information they require. This keeps those important patient-provider connections intact and helps prevent any conflicts.

The skilled staff at a collection agency collaborates with patients to enhance their financial outcomes. By staying up to date with the most recent regulatory changes, an agency also navigates the shifting healthcare debt recovery scenario. You may rely on a healthcare debt collection agency to continue recovering more money for your healthcare organization's bottom line despite the new rules.

Data Security and Compliance for Better Debt Collection

Your initial thoughts when considering how to assess a possible debt collection agency partner are probably not data security and compliance but rather performance or experience. However, when picking a debt-collecting agency, operational compliance and cyber security are still essential. When working with an accounts receivable management business, your risks are minimized by making sure that the data of your customers is protected and that they are handled properly in accordance with statutory requirements. When choosing your next collection agency, keep an eye out for these crucial qualities.

Security Certifications and Audits

The news is still dominated by security breaches. Therefore, in order to safeguard their clients, collection agencies are raising their cybersecurity standards. Verify that the prospective partner possesses the most recent and advanced security certifications.

You might be able to learn what certifications to seek from your IT department or a cybersecurity specialist, such as PCI DSS 3.2.1 or a SOC 3 report. However, one thing you may look for in this alphabet soup is whether your prospective partner utilizes a self-audit or a professional auditor. More so than self-evaluations, third-party auditors will vouch that a debt collection agency complies with the stringent requirements for security certifications.

Even if a business is certified or passes an audit, nothing guarantees that nothing will change in a month. A combination of internal audits and outside auditors should be used by your organization to regularly check the effectiveness of its security procedures. Verify that your collection partner conducts audits on a regular basis. If they don't, they can be endangering the security of your data.

Regulatory Compliance and Protocols

Because the collection business is dynamic and always evolving, your collection partner should be focused on regulatory compliance. Inquire about your partner's system for managing compliance risks, which ought to establish the essential checks and balances to shield you, your clients, and the agency from any risks.

Of course, a third-party debt collection agency must adhere to all applicable regulations, including those set forth by the Consumer Financial Protection Bureau (CFPB), the Fair Debt Collection Practices Act (FDCPA), the Telephone Consumer Protection Act (TCPA), as well as those of the several states that regulate collection activities. Each of these aims to safeguard patrons from abuse and provide fair treatment.

Additionally, your collection partner should:

• Train and reinforce regulatory laws as part of its organizational objectives
• Schedule regular tests on applicable laws
• Regularly conduct internal and third-party audits of all processes
• Verify vendor due diligence
• Address and track all consumer complaints
• Audit call quality to ensure compliance

While making sure customers are treated fairly and in accordance with the law, making sure your partner adheres to these best practices will reduce risk to you.

What Are Your Agency's Core Values?

Looking at their culture and basic beliefs might often be the best method to confirm that you've selected the proper debt collection agency for your business. Do their values reflect a concern for data security and compliance? How do they approach customers in light of those values?

People, Integrity, Performance, Pride, and Innovation are the guiding principles of a reputed debt collection agency.

Excellent data security and compliance result from a sincere desire to protect both your company and your customers. Learn more about how a third-party debt collection agency demonstrates empathy in collections and how this improves your business performance. Contact a reputed collections firm in the USA to get better results.