You just received a phone call from an upset patient because their overdue balance with your practice is affecting their credit, and they are trying to get a loan for new car. It is the mission of your healthcare organization to establish lasting relationships with your patients while providing the highest quality patient care, so you begin to wonder whether credit bureau reporting past due balances is really the right choice for your practice.
We want to help you determine whether credit bureau reporting is the right choice for your healthcare organization's revenue cycle, so we have compiled a list of our clients' most frequently asked questions.
Is credit bureau reporting our patients worth it?
Our experience shows that those practices that do credit report are far more likely to recover more of their past due balances, and to receive more payments on time, than those that do not. Whether to report or not is a business decision that must be made by each practice. It is important to remember that while you are in the business of providing care, it is still a business.
How does credit bureau reporting affect the patient?
The past due balance from your office will be placed on the patient's credit report. The report is a summary of the patient's financial history and is regularly updated by the three national bureaus - Experian, Equifax, and TransUnion - by reports made from creditors. Creditors will report whether a consumer paid on time or late, and how late the payments were. Credit reports and scores are used to determine whether the consumer can obtain more credit in the future. How your practice's overdue balance will affect the patient is dependent upon the totality of their credit history.
In our experience when a late payment is reported to the credit bureaus, it takes between 30 and 90 days for the patient's report to be updated, so there may be a delay from the time the payment is missed and reported until the patient feels the effects of it on their report.
How long does the debt remain on the patient's credit report?
State laws may differ, but federal law states that late payments stay on a consumer's credit report for up to seven years from the date of first delinquency. Typically in healthcare the date of first delinquency is the date of service. Positive reports typically remain for up to ten years.
However, new scoring models have made some changes to this timeline. In October 2014, the Fair Isaac Corporation, better known as FICO, announced its newest scoring model : FICO 9. The model places a lower weight on medical debt and also removes all paid collection agency accounts from the consumer's report when calculating a person's credit score.
Not all creditors have adopted FICO 9, in fact it may take years before some lenders make the switch. If you are currently using an agency that reports, discuss their policy for the removal of paid accounts so you can educate your patients on the process.
If our agency removes paid debt from patient reports, how will the patient know it has been removed?
Collection agencies and other creditors will receive a receipt of the e-transmission to the bureaus removing the debt. This receipt can be provided to the patient upon request as proof of the removal. If your patient would like proof of removal you can request this receipt, also known as a Universal Data Form, from your agency. As with reporting debts, it can take the bureaus 30 to 90 days to update the patient's report.
My patient made a payment on their overdue balance, but it was not reflected on their credit report. Why?
The actual amount due to your practice may not match the amount past due on the patient's credit report. The credit report reflects the full amount due at the time of delinquency or reporting. The bureaus do not update the balance due as payments are made. The balance on the patient's credit report will not change until the debt is paid in full.
If the patient believes that the total amount due as reported by your practice or your agency is incorrect, they have the ability to dispute the debt with the bureaus by phone, mail, or online. The bureaus will investigate any dispute within 30 to 45 days.
The Business of Providing Care
Whether to credit bureau report your patients' overdue medical debt is a business decision that must be made by the managers within your healthcare organization. If your practice does report, we hope this article can help you better understand the process so that you may educate your patients. Providing them with the information they need and helping them to make good financial decisions will help to maintain your relationship with that patient.
If you would like to learn more about how credit bureau reporting works for our clients, contact us today.
Having trouble keeping up with the changing regulations surrounding credit bureau reporting? We made you a guide.
For an in-depth review of the regulation changes and how they will affect your practice's recovery, watch our Credit Reporting Update webinar on demand!
For more information on credit reports and scores, visit the frequently asked questions pages of the three national bureaus: Experian, Equifax and TransUnion.
Written by Ali Bechtel, Public Relations & Digital Marketing Coordinator
This information is not to be construed as legal advice. Legal advice must be tailored to the specific circumstances of each case. Although we attempt to provide up-to-date information, laws and regulations often change. We make no claims, promises, or guarantees about the accuracy or completeness of this document. For legal advice, please consult an attorney.