The California medical debt collection process is far more complex than other states because collectors have to follow federal laws as well as the extra set of rules that state lawmakers have enacted.
While the FDCPA only covers third-party debt collectors, California’s Rosenthal Act covers any person or entity that is collecting consumer debts, including the original creditors (It means several debt collection rules and restrictions that apply to professional collection agencies also apply to your medical office ! ).
Are you sure your in-house employees are aware of these collection rules? And unfortunately, these rules keep changing over time.
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In California, we strongly recommend that you or your staff should not indulge in debt collection activity other than soft reminders for the first 60 days only. Any accidental violation of debt collection laws by you can bring a lawsuit to your medical practice. Let the collection activity be done by seasoned debt collectors who are constantly trained to collect maximum money while following all the latest federal and local collection laws.
If a debtor disputes a debt within 30 days of the first communication from the collector, the collector must stop collection efforts until they provide verification documents of the debt.
What a Medical Collection Agency must Offer:
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Compliance Assurance: Adherence to California state and federal laws, including HIPAA and FDCPA.
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Patient-Friendly Tactics: Use compassionate, respectful language with patients.
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Regular Reporting: Provide consistent updates on collection activities.
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Custom Payment Plans: Flexible options to help patients settle their balances.
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High Recovery Rates: Efficiently collect outstanding debts.
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Medical Collection Expertise: Knowledge of healthcare billing and insurance.
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Secure Data Handling: Ensure patient data confidentiality.
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Technology Integration: Use advanced systems for tracking and reporting.
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Multilingual Support: Cater to patients with different language preferences.
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Dispute Resolution Skills: Handle any payment disputes effectively.
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Transparent Fee Structure: Clear and upfront pricing without hidden costs.
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Tailored Strategies: Customized approaches for different types of debts.
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Positive Reputation: Good standing with local medical providers.
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Legal Support if Needed: Assistance with legal processes when required.
California Medical Debt Collection Statistics
The overall burden of medical debt is estimated to be at least $220 billion, affecting a broader population, with about 100 million Americans experiencing some form of medical debt.
It is estimated that over one trillion dollars are owed to the medical profession due to unpaid medical expenses.
As the most populous state in the country, California gets hit hard when citizens fail to pay their medical bills. It has the highest debt in the country behind New York and Texas. To date, medical debt in California has surpassed 4.6 million dollars.
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California Collection Medical Laws
California has done its due diligence to make sure that patients can receive medical treatment, regardless of their monetary stature. For instance, some patients may be eligible for payment plans without interest, and there is a cap on the amount that a patient can be charged as determined by California’s government-sponsored health care programs.
In California, the statute of limitations for breach of a written contract (i.e. the medical bill) is around four years. After this time period has passed, healthcare providers are at liberty to seek payment from patients via a California medical collection agency. However, there are certain stipulations set in place on the patient’s behalf. A hospital may not seek claims before a five-month negotiation period, which is when both parties may determine a payment plan.
Under state law, California medical debt collection agencies may not harass, threaten, mislead, or use abusive language in order to obtain overdue medical payments. They also cannot garnish wages unless the case has been taken to court and a judge has approved this method.
Credit reporting can be done only after the debt is 365 days old and must be removed from the patient’s credit history report once he or the insurance company pays off the debt.
Problems Faced Doctors and Hospitals in California
These protections for patients have created many problems for California doctors and hospitals. In 2016, California passed a law to eliminate “surprise billing” which ultimately made it unlawful for doctors to tack on extra charges after the patient has been discharged. This benchmarking process has doctors fearing the imminent closure of more and more hospitals. Doctors have also suffered from being let go from their insurance companies and have seen a subsequent pay decrease from hospitals.
California Insurance Information
California’s Medicaid program is referred to as MediCal. It gives the necessary monetary assistance for individuals who are
- Low Income
- Seniors
- Pregnant women
- Disabled
- Foster Care
- Diagnosed with diseases such as cancer, HIV, or tuberculosis
The California Health and Safety Code enforces the rules and regulations regarding charging patients and governing collection agencies. They ensure that a patient cannot be billed more than the amount set by MediCal. Medical providers may not turn away uninsured patients. Instead, they must offer them hospital charity care, and payment plan options and use reasonable care to determine if their healthcare provider can cover their expenses.