Once a debt has been turned over to a collection agency, you may think it's too late to see if it can be settled for less. But it's never too late.
This post comes from Gerri Detweiler at partner site Credit.com.
About four years ago, our reader who goes by the screen name “Stressed” was in a solo car accident. He was taken by ambulance to a nearby emergency room where he says he received “scans and a couple of staples” to one knee. He was there for only a few hours, and had no insurance, so when a relatively small doctor bill for about $500 arrived a few months later, he paid it immediately, thinking he was done with it.
But that was just the beginning. He writes:
“Many months later I received a bill from what seems to be a collections place asking for over $12,000 on behalf of the hospital. They said the original bill was $50,000 and they gave a discount down to $30,000 and now this collection place is asking for over $12,000. I was barely 24 years old and didn’t have that kind of money.”
He asked the hospital for an itemized bill but still didn’t understand it. “They had all sorts of small charges with codes that racked up thousands of dollars. And because they called in an emergency code when they brought me in, that automatically cost like $10,000?? I don’t get it!”
The bill went unpaid, and he has not heard from anyone about it since then. It’s also not on his credit reports. However, he discovered the hospital website says he owes more than $30,000.
He writes, “I would like to take care of this if there’s a way for them to bring the cost down and for me to make payments but who do I talk to? I tried going to the hospital but the staff there was not able to help me. This has been really stressing me out. I don’t want to ignore it and have it become worse in the future.”
Can you negotiate a medical bill, even if it’s overdue?
Welcome to the crazy, convoluted world of medical billing. Because our reader was uninsured, he was no doubt charged the “chargemaster” rate for the services he received. As investigative journalist Steven Brill recently wrote in a detailed story about hospital billing, there seems to be “no process, no rationale” behind these charges. And yet they are the reason why a few hours in an ER can result in a bill larger than a patient’s annual salary.
Despite the high sticker price, medical bills can often be negotiated. But in this case, is it too late for that?
“A balance due from a patient can always be negotiated,” insists Britta Erickson, a senior medical billing advocate at CoPatient Inc., a firm that helps consumers find errors and overcharges on medical bills. “If a provider or a collection agency wants money from someone, there is no law that places a deadline on negotiating that dollar amount down. The provider can certainly refuse to negotiate, but it is rarely in their best interests to do so.”
Erickson says that with this large of a balance outstanding, the hospital should be “pretty eager to deal.” There are, however, other factors that should be considered:
- It’s worth investigating whether the hospital properly billed this patient in the first place. “The patient’s relationship with the provider of service is essentially contractual, and the provider’s failing to bill for services within a reasonable time may constitute a breach of that contract,” she says.
- If he was treated in a nonprofit hospital, it has a “statutory duty imposed by their nonprofit status to provide charity care to indigent or uninsured patients, and this can be a very useful bargaining point for patients with large balances.”
- “If I were this patient, I would get my itemized statement — if he still has it — to someone who can analyze it for [him] and speak on [his] behalf to the hospital billing department,” Erickson says. “Given the description of the services provided, the bill does sound outrageous, but the itemized statement would need to be compared to the medical record for this to be definitively determined.”
Other sources of medical debt help
Tracy McDougald, also a medical billing advocate at CoPatient Inc., suggests that our reader also try to find out if he “was ever screened for other programs such as state medical and financial assistance.”
She adds that the auto insurance he had at the time may also have provided some benefits. “Even though he may not have had medical insurance he could have had medical pay on his auto policy.”
Both Erickson and McDougald investigate and negotiate medical bills for a living, and both believe he has a good shot at getting a significant discount.
Before he tries to do that, though, he should contact a consumer law or bankruptcy attorney to determine what the state statute of limitations is for those debts. That’s the time period that a creditor may sue to collect a debt. It’s a matter of state law, and usually runs between four and six years. If he negotiates and starts paying on a debt that is outside of this time period, it may “revive” the statute of limitations, causing it to start over again. And that could leave him vulnerable to a lawsuit for the balance.
While it sounds like our reader is trying to do the right thing here and take care of his bills, if it turns out he owes more than he can negotiate and pay in a reasonable period of time, he may also need to consider bankruptcy.
More on Credit.com:
- The First Thing You Must Do Before Paying Off Debt
- 9 Ways to Turn the Tables on Debt Collectors
- 4 Medical Bill Myths That Can Cost You Dearly