Tag Archive for: medical bills

Medical Bills Collections, and Your Credit Score and Upcoming Changes

Many people don’t realize that their credit report may contain medical bills in collection that can seriously affect their credit score. Even if you’ve been paying your credit cards, mortgage, rent, and other reportable lines, you may be surprised that medical bills carry their own weight when reported. Fortunately, you have more leeway when addressing these bills than other regular credit lines. In addition, they can be more easily removed from your credit report after they’re paid off. You should however monitor your credit report to make sure they are removed. Don’t forget to check all 3 major Credit Reporting Agencies, Equifax, Experian, and TransUnion. 

According to the Consumer Financial Protection Bureau, approximately 31.6% of adults in the US have collection accounts on their credit reports. That’s an astounding 1 out of every 3 Americans. And, medical bills account for over half of all collections with an identifiable creditor. So, it stands to reason, that you may have a medical bill in collections. Even more probable if you’ve moved and aren’t receiving your bills. After a period of time, they are reported to a collection agency. After attempts to contact you via mail and or phone without arrangements being made by you, they will be reported to the credit agencies.  

This can be really damaging to your credit history as it can affect your borrowing interest rates, your ability to secure financing, and secure employment as many employers pull your credit report.  

Areas that you need to be aware of:

  1. Just because you have insurance and possibly good insurance, it doesn’t mean you will not owe anything. I would suggest you review your Evidence of Benefits (EOB) to get an idea of your responsibility. If in doubt about a bill, contact the medical provider as well as the insurance provider in the event of incorrect billing. 
  2. It is possible to pay a medical bill and it is still sent to collections. This can be extremely frustrating. If you’re making small payments or paying even a few days late, the bill can be sent to collections. Fortunately, you can call the collection agency and make payment arrangements with them. You are given a grace period. They give you typically 180 days before they report to the credit agencies. If you pay it off and are on time you can generally avoid it hitting your credit report. 
  3. Protections under the ACA give patients at a non-profit hospital time to apply for assistance before any extraordinary measures are taken. But remember, any unpaid balances can be and probably will be reported. I’ve seen bills hit a credit report with only a few dollars outstanding. The hit to your credit score is the same regardless of the amount! 
  4. Be sure to make payment arrangements with the medical provider and get a copy of it in writing. Then pay off the bill according to the agreement. I will say over and over again, that keeping a copy of agreements/arrangements that you have with your insurance company and provider makes good business sense in the event you find a discrepancy and need documentation at a later date.  

Managing Collection Calls

Whenever you’re contacted by a collection agency on behalf of a medical provider, have them send you a written confirmation of and a detailed itemized list of the debt as well as the right to dispute it. You have this right but you must do it in a timely manner. Again, make sure the bill is accurate. Compare it to the EOB. You should not be responsible for paying more than your responsible amount referenced on the EOB. After you’ve paid, keep a copy of the payment confirmations for a few weeks in the event you need to reference the transaction. It isn’t unheard of for things to cross in the mail, get lost, or even have payments applied to the incorrect patient account.  

If you’re concerned about your credit and or bills, get a free credit report one time a year for free through credit.com. Credit.com will also provide an easily understandable breakdown of the information on your credit report. Additionally, credit agencies can give you pointers as to how to establish and repair your credit history. Credit is a very integral part of our financial lives. Keeping a good credit history can present options such as cheaper car insurance, and better interest rates on personal loans.  

Upcoming Changes to Medical Bill Reporting

Make it a habit to review your credit reports regularly, Don’t assume you owe anything for medical visits. Ask for payment arrangements early and stick to them. Be proactive and free up time to do the things you’d rather be doing and not worry about collections and your credit report.  

The good thing about medical bills and credit is the changes that go into effect in 2023. But before I get into that, for those who currently have medical bills on their credit reports, very few of those existing bills will change. The credit reporting system has long been used as a threatening tool to try to coerce people to pay bills they may not even owe.  

Past research by the CFPB, suggests that medical collections are less predictive of future repayment risk than other collections or payment history on loans. Yet many creditors rely on older credit scoring models that penalize individuals with medical bill collections on their credit reports.  

Fortunately, as a result of the changes, two-thirds of medical collections on credit reports will no longer be reported. Starting in 2023, medical collections tradelines with less than $500 will no longer be reported to credit bureaus. For those who have relatively small outstanding bills, the $500 watermark could mean a large reduction in coercive reporting. Therefore bettering their credit scores.  

Not surprisingly there is a disparity in the beneficial impact of the proposed changes. Both geographically and racially. It is estimated that patients and families living in the northern and eastern states have a higher concentration of medical debt that is paid or they have lower medical debt balances. Consequently, these families are more likely to benefit from the changes.  

Conversely, residents of lower-income those being the majority of Black or Hispanic will realize less of a benefit from the proposed changes. This is because they may have higher bills reporting to credit because they are less likely to be able to pay down or off their medical bills due to the lack of income. Therefore it is particularly prudent that these groups pay particular attention to programs that may help them reduce their medical debt burden prior to it being reported to the credit bureaus.  

Knowing your financial responsibility ahead of treatment as well as working with your healthcare team to locate and secure payment options and arrangements can prevent the fall into financial stress. 

How to Comprehensively Explain a Medical Bill to a Patient

Talking about difficult medical situations and finances can be challenging for anyone. When a patient is suffering or attempting to process a potentially traumatic medical condition, it’s understandable they might get more easily upset or frustrated and have a harder time listening. Still, this is the territory that comes with working as a healthcare professional, and it’s important to be mindful of a patient’s situation when discussing certain topics.

Going over a medical bill, for example, can be incredibly confusing and stressful for a patient. In fact, studies have shown that 72% of patients in the U.S. are confused by their medical bills, which can undoubtedly cause them to be further upset on top of everything else they are dealing with.  Understandably, as a healthcare professional, your day is also exhausting and stressful, but reacting negatively to a patient who is potentially struggling never helps.

While the best scenario would be healthy communication where both the patient and the medical professional speak calmly, understanding that you are both under immense amounts of stress—this is not always the case. And as a healthcare professional, it is ultimately your job to help the patient.

Patients put their trust in you, so it can be upsetting for them when the person they trust is handing them an expensive bill they can’t afford or when their claim gets denied by their insurance. These things can easily damage the trust you’ve built, which can make it hard for the patient to remain calm and understanding.

This article will offer tips and considerations for healthcare professionals to help their patients better understand the medical billing process and how to make the conversation go as smoothly as possible.

Tips for Explaining Medical Bills

The medical billing process is extensive and complex, which is often why it is so confusing for patients. For them, they see things from a very removed perspective—understandably. They are not healthcare professionals, nor do they likely have experience in complex billing processes. So when a bill is much more expensive than they were expecting, it makes sense that they might get upset.

As a medical professional, you understand more thoroughly how the process works and why costs are so high, but the patient does not. So getting defensive is never helpful. It’s important to stay calm and remember that they are not experts in billing, and they are dealing with this stressful financial situation in addition to their medical condition.

Avoid talking down to them as if they are ignorant, but do try to help them understand. It would likely not be helpful to fully explain the medical billing process and how insurance costs work, but you can try to calmly walk them through the basics to help them better understand.

This can involve talking about front-end versus back-end costs, for example. Most patients likely understand where front-end costs come from, but as back-end costs are out of sight, out of mind, those are harder for them to understand.

For a quick refresher on the two, front-end costs are costs associated with patient registration, scheduling, initial patient collections, and administration of the patient’s care and files. Back-end costs are those related to medical billing and claims management and final patient collections.

You can also briefly go over how drug costs work, as this is another factor that can make a patient’s medical bill higher than they were expecting, even if they have insurance.

Additional tips for having conversations with patients about their medical bills include:

  • Be mindful of your body language. Your words are not the only thing that can trigger a patient and make the conversation more difficult. How you use your hands, your facial expressions, and your posture can all communicate to your patient how you are feeling or even what you are thinking. So be careful and try to use friendly and open body language.
  • Don’t dismiss their feelings. It’s easy to get defensive and treat a patient like they are overreacting, but this will just make the situation worse. Even if you don’t understand things from their perspective, acknowledge that their feelings are valid. Use phrases like “I understand why you’re upset or why this is upsetting” instead of saying things like “calm down” or using negative words such as don’t, can’t, or won’t.
  • Be a better listener. Healthcare professionals often have a habit of always explaining things to their patients, and while this is necessary for some situations, it’s also important to let them speak as well. Even if you don’t agree with them or if they don’t fully understand why their medical bill is so expensive, it’s still crucial for you to hear them out and be a good listener. This can show them that you respect them and aren’t just trying to speak down to them.
  • Offer them additional help. In some cases, you might need to seek out another coworker for help. If a patient has already decided that you are against them, it can be hard to change their mind. So offer to get someone else that you know might be able to more calmly talk to them. Having another person say the same things you did might also help the patient better understand that you were being honest with them and telling the truth. If available, you can also direct them towards financial programs that can help them handle their medical bills if they are low income and need financial assistance.
  • Be kind and compassionate. Overall, the most important thing to remember is to be as kind and compassionate as possible. Kindness really does go a long way. If a patient is upset and being difficult, matching their attitude won’t help. It’s always better to rise above than to sink to someone else’s level, especially when that person is a patient dealing with a potentially traumatic condition. So always try to be as kind and understanding as possible.

Final Thoughts

Just because you are a medical professional doesn’t mean you should be an emotional punching bag for your patients. So it’s understandable that it may be challenging at times to remain calm when dealing with a difficult patient. Still, the calmer, happier, and more positive you are, the more likely your patient will reflect those things in return. Generally, happy staff equals happy patients.

Using health records software (EHR) can also help in situations where in-person communication is going nowhere. With an EHR, patients can return home and more calmly review their records on their own, which can allow them more time to process and potentially come up with more helpful questions that you can then better answer for them later. Just be mindful not to always rely on EHR to do the work for you. It’s important to still maintain a good relationship with your patients, as this can help establish that trust that is so important.

How to Pay for Long-term Care on a Fixed Budget

Long-term care costs are rising yearly, and with more people approaching age 65+ than ever before, the rates are not expected to fall. Not everyone plans ahead and unfortunately, we cannot know for certain when someone will begin to need long-term care, as it varies case by case. For the elderly population specifically, many individuals begin long-term care after a sudden life change that renders them incapable of caring for themselves, like a stroke or a fall. In the best-case scenario for a stroke or a fall, patients return home after successful rehabilitation. However, as unfortunate as it may be, many individuals are unable to return to their former health.

Sometimes, there is no sudden change and it is simply advanced age that is the main factor determining whether or not a person can safely remain independent. When someone does begin to need long-term care, depending upon the severity of the person’s situation, they are either taken care of by professional caregivers, family members, or moved into an institutional setting. Statistically speaking, about 80% of elderly people who need long-term care receive services within their own home or the home of a family member. The remaining 20% move into facilities, specially designed to accommodate a wide range of needs. Regardless of where we choose to spend our twilight years, there are costs involved. Below, I’ll outline some common ways people are able to fund their long-term care.

What Exactly is Long-term Care?

Long-term care simply refers to the type of assistance provided to people with cognitive or functional limitations to help them perform daily activities. If patients are unable to return safely home after a hospital stay, facilities continue rehabilitation to try and strengthen patients and improve their quality of life. The more a resident can do by himself or herself (eating, using the bathroom, bathing, and changing), the happier they generally are.

According to the Medicare Current Beneficiary Survey, the elderly population in nursing homes has declined over the past ten years. Through more advanced rehabilitation practices and increased availability to services, the majority of long-term care recipients are able to live with loved ones, in assisted living, or group homes if they do not need the intensive 24hour supervision that comes along with nursing home residence. Nevertheless, the question still remains: how to pay for the care you need.

Medicaid Long-term Care:

For many people, Medicaid is the best option when it comes time to pay for long-term care. If your loved one meets certain medical and financial requirements, or they are already receiving SSI benefits, they may be eligible. For most states, the monthly income limit is around $2,200 and the asset limit is $2,000. For Arizona specifically, the monthly income limit is $2,205. Anything beyond these values needs to be spent towards care or the applicant may be ineligible. The medical eligibility is stringent and the recipient can only live in Medicaid-approved homes or receive Medicaid-approved services in the community. Even with all of the requirements, this is still the best option for many families. For up-to-date Medicaid information, follow this link.

Long-term Care Insurance:

Although a person may have paid for medical insurance their whole life, medical insurance companies do not cover long-term care. There is, however, such a thing as long-term care insurance. There are different policies with different features, but generally, a person pays a monthly premium and when long-term care services are needed, the policy will pay out a certain amount, usually in the hundreds of thousands. Similar to life insurance, premiums are cheaper if the person buying insurance is young and healthy. Those already in need of long-term care services are not able to get coverage. Although these policies do not last forever, the payout is usually sufficient for the entire cost of care.

Sometimes, however, the care outlasts the insurance coverage. Don’t worry because many states have what is called a long-term care insurance partnership, useful when people spend through their policy and need to apply for Medicaid coverage. The partnership is a program between the state and private insurance companies. Partnership policies protect assets by reciprocating dollar for dollar what policyholders pay into their policies. For example, if you bought a Partnership Policy with a maximum benefit payout of $200,000, you are able to protect $200,000 of your assets. For married couples each spouse needs to purchase their own policy.

Once the original long-term care insurance coverage is exhausted, you may apply for Medicaid with the benefit pay out’s worth of assets exempted. This is extremely beneficial because again, most states have an asset limit of $2,000. In addition to the asset limit, Medicaid penalizes people who have given away or sold property below fair market value within the five years preceding the need for long-term care assistance.

Qualified Income Trust:

If an individual is over the financial limit for Medicaid long-term care coverage, some states allow applicants to spend down income towards medical care while others allow the creation of Qualified Income Trusts, also known as Miller Trusts. Miller Trusts place any income beyond the state’s limit into a trust, designating the state Medicaid program as the beneficiary once the long-term care recipient dies. The problem many people have with spend-down and Qualified Income Trusts is that for the most part, all assets and income eventually go towards care. Long-term care insurance, as described above, helps prevent the complete drain of assets for people who are hoping to leave behind a legacy.

Reverse Mortgage:

Another option that has gained popularity in recent years is the reverse mortgage. A reverse mortgage is not complicated, but may not be the best option for every situation. Essentially, a reverse mortgage is a loan borrowed against the equity of a home, but rather than making monthly payments, the bank reversely pays the borrower. As long as the borrower remains in the home they do not have to pay the bank.

If the borrower moves to a care facility or passes away, then the bank claims the property to pay off the amount given in the loan. This is a good option if the homeowner is healthy enough to remain at home, but requires some caregiving services. Also, this is for people who are not interested in leaving their home behind to loved ones. See here for a more detailed explanation of pros and cons.

Even with 80% of elders receiving “free” care through informal caretakers such as family members, the Congressional Budget Office estimates the value of this donated care at approximately $234 billion for 2011, the last year calculated.[1] This number is determined based on calculating forgone wages, time that could be spent employed elsewhere, transportation costs, and performing duties otherwise performed by paid healthcare aids.

For family caregivers it is especially important to reach out to a social worker for benefits you may not be aware of in your home state. If you are a family caretaker, your loved one may be eligible for respite care, a paid-for medical alert, home health services, or community based waivers paid for by Medicaid depending on financial and medical eligibility. Don’t wait until it is too late and start planning today.


[1] See page 2. http://www.cbo.gov/sites/default/files/44363-LTC.pdf

 

Medical Bills, EOBs, and You

Medical bills are confusing, and often frightening. Even if it’s for something simple, the numbers add up fast, and to sometimes alarming levels. Add the Explanation of Benefits (EOB) documents you get from your insurer for the same clinical visit or hospital stay, and you can find yourself wondering how much you owe whom, and for what, exactly?

“Not A Bill”

This will be printed on all EOBs, and is the only sure way to tell which is an actual medical bill, and which is an EOB. However, an EOB can be confusing – other than that clear “Not A Bill” printed somewhere on the form.

This is one of the EOBs I got during my own cancer treatment. It’s for my lumpectomy, but the only way I’d know that is the dates on the form. The singular lack of information on what the EOB is for is one of the distinguishing characteristics of these forms, so knowing what the services were, and what your plan’s coverage is for those services, are important details. The numbers are indeed scary, given the Provider Charges of $50,231.25, and the Amount Paid of $0.00. Someone unfamiliar with EOB-ese might have a panic attack before getting to the important phrase “there is no liability on your part for these services” in Remark(s) Explanation 3.

“Statement of Account”

Here’s the summary bill from the hospital that covers the same services (my surgery), but this might only add to the potential for confusion.

The bill has slightly more detail than the insurer’s EOB, but not that much. It mostly seems to be to a series of magic incantations that take the starting amount – New Charges or Adjustments, $53,911.00 – and bring that down to an Amount Due of $50.00. My insurer paid $5,430.02, and there were Adjustments of $48,430.98, which leaves $50.00. On the one hand, hallelujah; on the other hand, what’s the story with that $48,430.98 “adjustment”?

If I didn’t have insurance, would I be on the hook for that whole $53,911.00? Probably, but it’s hard to know exactly. This is where the “chaos behind a veil of secrecy” that is healthcare pricing is most visible: hospital charges.

I learned a lesson from this bill, by the way: always ask for an itemized bill, not a summary bill. Ask for that during the admission process (if it’s a hospital), or at the medical office or testing facility during check-in.

Staying ahead of the healthcare cost curve

Here are my tips for figuring out your medical bills, and your EOBs, to ensure you get what you pay for, and only pay for what you get:

  • ALWAYS ask for an itemized bill, don’t just take a summary bill (the mistake I made with the billing for my own cancer surgery).

  • Review that bill, line by line. Make sure that it doesn’t have anything on it that you did NOT receive. Use CMS’s CPT code look-up tool to help you break down the blizzard of numbers. [CPT codes are the five digit service codes used by all medical providers; they’re in the column labeled Svc Code in the bill example above.]
  • Have your insurer’s Summary of Benefits documentation handy while you review the bill(s). That will be available on your insurer’s website.
  • Do not pay a bill until you get the EOB associated with those billed services.
  • Line up the EOB, and the bill, to make sure the dollars and the codes are correct.
  • Challenge any billed items that are for services you didn’t receive.
  • If services you received are listed as not covered by your insurer on your EOB, challenge that with your insurer’s customer service crew.

Yes, it takes work. And it’s a little crazy that the American healthcare system expects people, particularly sick people, to manage this blizzard of paper with scary dollar figures on it. But the only way to make sure you don’t pay more for your medical care than you should is to be proactive. It’s what empowered patients do.