Debt Collection in Healthcare: How to Collect Debts Efficiently and Legally

PART III: The Fair Debt Collections Practices Act (FDCPA)

What is the FDCPA?
The FDCPA was established to protect consumers from unfair treatment at the hands of debt collectors. Failure to comply with any part of the act’s strict guidelines and requirements can result in sizeable fines, penalties and judgments. Therefore it is critical that you become familiar with the FDCPA’s regulations to avoid legal action being taken against you and your organization. Not only do you need to understand and abide by collections law, but you need to know the strategies and techniques that will help you easily and effectively contact and deal with debtors.

Who is a debt collector under the FDCPA?
· The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of debts, or who regularly collects or attempts to to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. The term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.
· Although the statute does not expressly distinguish between a “debt collector” and a creditor collecting its own debts, the statute does specifically exclude from the definition of “debt collector” a person collecting or attempting to collect a “debt which was originated by such person.”

Am I subject to the FDCPA?
· Simple question, complicated answer.
· The general answer is NO. If you are collecting a debt that your facility originated, you are considered a creditor and NOT subject to the FDCPA.
· However, you must be using your facility’s name in all collection attempts. If a facility itself attempts to collect the debts as a parent company, then the facility may become a “debt collector” and subject to the strict requirements of the FDCPA.

What is prohibited by the FDCPA?

The act prohibits certain types of “abusive and deceptive: conduct when attempting to collect debts, including the following:
· Hours for contact: contacting consumers by telephone outside the hours of 8:00 a.m. to 9:00 p.m. local time
· Failure to cease communication upon request: communicating with consumers in any way (other than litigation) after receiving written notice that said consumer wishes no further communication or refuses to pay the alleged debt, with certain exceptions, including advising that collection efforts are being terminated or that
· Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously: with intent to annoy, abuse, or harass any person at the called number.
· Communicating with consumers at their place of employment after having been advised that this is unacceptable or prohibited by the employer.
· Contacting a consumer know to be represented by an attorney.
· Seeking unjustified amounts, wich would include demanding any amounts not permitted under an applicable contract or as provided under applicable law.
· Threatening arrest or legal action that is either not permitted or not actually contemplated..
· Abusive or profane language used in the course of communication related to debt.
· Communication with third parties: revealing or discussing the nature or debts with third parties (other than the consumer’s spouse or attorney)
o Collection agencies are allowed to contact neighbors of co-workers but only to obtain location information;
o Contact by embarrassing media, such as communicating with a consumer regarding a debt by post card, or suing any envelope when communicating with a consumer any use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.
· Reporting false information on a consumer’s credit report or threatening to do so in the process of collection
· Communicating with consumer after request for validation has been made: communicating with the consumer or the pursuing collection efforts by the debt collector after receipt of a consumer’s written request for verification of a debt made within the 30 day validation period

FDCPA requires debt collectors to:
· Identify themselves and notify the consumer in every communication that the communication is from a debt collector, and in the initial communication that ny information obtained will be used to effect collection of the debt.
· Give the name and address of the original creditor (company to which the debt was originally payable) upon the consumer’s written request made within 30 days of the receipt of the §1692g notice
· Notify the consumer of their right to dispute the debt, in part or in full, with the debt collector.
o The 30-day §1692g notice is required to be sent by debt collectors within five days of the initial communication with the consumer, if a consumer needs a written dispute or request for verification within 30 days of receiving the §1692g notice, then the debt collector must either mail the consumer the requested verification information or cease collection efforts altogether.
o Such asserted disputes must also be reported by the creditor to any credit bureau that reports the debt. Consumers may still dispute a debt verbally or after the thirty-day period has elapsed, but doing so waives the right to compel the debt collector to produce verification of the debt. Verification should include at a minimum the amount owed and the name and address of the original creditor.

In a nutshell…
· All mail or collection attempts must be made in the name of each individual care center, or you may be subject to the stringent requirements of the FDCPA
· Always identify yourself as a representative from the care facility to which the debt is owed.
· If your facility originated the debt you are a creditor collecting your own debt and not subject to the FDCPA.

It is more beneficial to be categorized as a creditor:
· Less liability
· More techniques available for effective collection
· Did we mention LESS LIABILITY? Oh, okay. Well, LESS LIABILITY

Debt Collection in Healthcare: How to Collect Debts Efficiently and Legally

PART II: Techniques to improve your debt collection now.

CLEARLY OUTLINE RESPONSIBILITY FOR PAYMENT.
Make sure you have a Terms of Payment procedure visibly posted at the front of the office. New patients need to clearly understand what they are expected to pay up-front. This needs to be clarified before services are rendered.

Authority to Make Healthcare Decisions
Decisions can be legally made by:
· The patient (if mentally and physically competent)
· A designated agent under an advanced healthcare directive
· Healthcare surrogate (under MS Code. Ann Sec. 41-41-211)

Helpful facts to know about collecting debt:
· The longer an account goes unpaid, the more difficult it becomes to collect.
· Timing is everything. No account, with the exception of the government or certain medical claims should be uncollected for more than 90 days.
· By 120 days, very serious measures should be taken. After the original billing goes out, a notice should be sent once the due date has passed.

Keep up the good work!
· Notices should be sent out at 30/60/90 days.
· Utilize collection letters.
· Phone calls should be attempted to reach the responsible party.

Make the phone calls count!
· Confidence: When calling past-due customers or debtors, communicating confidence is key. You have to stay in control of the call, and the only way to do this is by being confident and prepared.
· Documentation: Document all collection efforts, including when you called, with whom you spoke, and what was said. Also include anything else you think might be important to someone who might call or take a call from the debtor, so they know the status of the account and the payment.

Tips for making debt collection calls:
· Smile: Come up with a greeting that says you’re pleasant and confident. When your customer answers the phone and realizes you’re calling about a past due invoice, they’re not going to he happy. You want to portray confidence and not a dull, boring message. Smile when you talk on the phone; it will be noticeable in your voice.
· Speak Up: You voice should be lound enough to be heard and convey confidence—not too loud but not too soft. You want your debtor to hear you and understand what you’re saying.
· Focus: Maintain virtual eye contact by staying focused on the call. Don’t check your email or watch other people in the office. Sit up straight in your chair and imagine that the debtor is sitting across from you.
· Relax: Use your face, voice and posture to portray your confidence over the phone and in person.

If you use these techniques, you’ll collect more money and have better results from the collection calls you make. Make your calls in the most effective way the first time, so you don’t have to continue making them—and risk letting the debtor take control of the call.

For suggestions in developing long-range debt collection solutions, see Part I: Changes You Can Make In Your Debt Collection Policies and Procedures

Debt Collection in Healthcare: How to Collect Debts Efficiently and Legally

Collecting money owed to your organization can be an exercise in frustration if you’re not familiar with strategies that get results and keep you legally compliant with government guidelines. This three-part series will help you make changes in your debt collection policies and procedures to increase effectiveness, aid you in collecting debt right now, and educate you about the Fair Debt Collection Practices Act (FDCPA).

PART I: Changes you can make in your debt collection policies and procedures.

Make sure you get all the facts.
· Collect ample and accurate patient information during the admissions process.
· Get the work information, address, phone number of the patient AND the information concerning the person checking them in or signing as the responsible party.
· The more information you can get, the better for collection purposes.
· The more points of contact you can establish with the patient’s family or caretakers, the better. If the account becomes delinquent, this will aid collection efforts.

Consider different payment options.
· Checks
· Cash
· Credit Cards
· Debit Cards
· Automatic Bank Draft

Solutions for checks bouncing:
· Credit Reporting services such as Equifax
· Service such as Telecheck or other providers that utilize leading risk assessment technology, extensive check writer negative and activity databases to evaluate the risk of accepting a check.

Daily Practice pointer for checks:
Scan or copy each check received from a patient. This ensures that you have access to account information contained on the check should the check bounce or the account later become delinquent. For instance, this information can be used for garnishment of the account.

What is Risk Assessment Technology?
· Services use leading risk assessment technology, extensive check writer negative and activity databases to evaluate the risk of accepting a check.
· Some companies offer verification and warranty service options so you can determine the risk coverage level that is right for your organization.
· Electronic check acceptance (ECA), checks can be converted to electronic transactions at the POS to streamline processing and get you the money you are owed faster.
Advantages of using a Risk Assessment system:
· Make fewer trips to the bank.
· Reduce bank fees and processing costs.
· Improve cash flow and operational efficiencies.
· Streamline back office operations.
· Reduce the risk of lost, stolen or damaged checks.
· Protect your customers’ personal information.

Pre-Authorization of Credit Card:
Consider adding a provision to the payment policy which give the facility the right to hold a credit card number and to charge that card in the event that the account becomes more than 30 days past due.

Credit Checks:
Consider adding a provision to the agreement or a separate agreement, which authorizes the facility or its agents to conduct a full credit check at the time of admission or if the account becomes delinquent by over 30 days.

Advantages of using an Automatic Bank Draft:

For Your Business
· Enhanced customer service through a non-interest bearing payment option.
· Saves your business money compared to paying credit card fees. It is much more cost-effective to have customers utilize the automatic bank draft option because it is set as a flat fee, NOT a percentage like credit card fees.
· Helps managers lower A/R percentages.
· Reduces billing and collection letters.
· Reduces collection work for managers so they can focus on new business.

For Patients and their families
· Convenient
· Less worry. Life is stressful enough without the worry of paying bills on time.
· No phone tag.
· No late fees.
· No reminder calls.
· No credit card interest.
· No costly last-minute trips to deliver payment.