One of the tools available to assist with the collection of unpaid patient balances is to report the debt to a credit reporting bureau. While typically used as a last resort, it has had the effect of ultimately achieving collection when the patient applies for a loan that requires them to clear up the open balances shown on the credit report. While most physician groups are compassionate and are willing to work with their patients to avoid credit bureau reporting, they are required by insurance laws to pursue collection of patient co-payments and coinsurance. With patient deductibles, copayments and coinsurance increasing in many plans, loss of revenue to the practice through non-collection has become a bigger concern over recent years.
The three major credit reporting bureaus have announced a significant change to their policies related to the reporting of medical debt. Beginning July 1, 2022, Equifax, Experian, and TransUnion will no longer report medical collection debt for the first year (an increase from the previous six-month grace period), and once the debt has been paid off it will be removed from the credit history altogether. Medical debt of less than $500 will no longer be included in credit reports beginning in 2023.
In announcing the policy change, the reporting agencies cited unexpected medical bills as the primary source of medical debt. However, the No Surprises Act that became effective this year reduces the possibility of large, unexpected balances from physicians that are outside of the patient’s insurance network. Their responsibility will be limited to the same amount as they would have paid in-network; in other words, the very co-payments and coinsurance that practices usually have trouble collecting.
For radiology practices, co-payments and coinsurance balances have historically been relatively small amounts, but they can add up to a significant amount for the average practice. Based on a study reported in the Journal of the American Medical Association (JAMA), the average amount of medical debt shown on consumer credit reports between 2009 and 2020 was $429, so these new policies will virtually eliminate the reporting of any radiology group balances to the credit bureaus.
The loss of credit reporting as a collections tool reduces the leverage the practice and its collection agency have to assure that patients comply with their obligation under their insurance plan. With no consequences, patients have less incentive to comply with co-payment and coinsurance balances. The take-away for practices is to be more diligent than ever to collect any expected patient balance at the time of service whenever possible. However, up-front collection is not an option for most hospital-based groups and so this reporting bureau policy change will have a real impact on their revenue.
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