This is the first article in a series devoted to consumer issues for National Consumer Protection Week, March 3-8.
Imagine receiving a credit card bill riddled with charges you don’t recognize or duplicate charges for the same item. The total is far larger than what you thought you spent. When you call your credit card company to complain, you don’t get a clear explanation. Instead, you are told that you need to pay it right away or your account will be sent to collections.
Or picture this scenario: You receive a collection letter in the mail. When you call to inquire what the bill is for, you are given the name of a company you don’t recognize, or a bill you thought was already paid long ago. When you ask why you were never sent a bill, you don’t get a clear answer. Instead you’re just pressed for payment. In the meantime, your credit scores plummet when the collection account appears on your credit reports.
While these scenarios sound completely far-fetched, just substitute “medical bill” for “credit card” and they’ll suddenly make sense.
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One of the reasons you don’t hear these kinds of outrageous billing problems with credit card charges is that we have a strong consumer protection law that gives consumers clear rights when disputing credit card bills. It’s called the Fair Credit Billing Act, and it’s part of the Truth In Lending Act. As the Federal Trade Commission points out in one of its online publications:
Have you ever been billed for merchandise you either returned or never received? Has your credit card company ever charged you twice for the same item or failed to credit a payment to your account? While frustrating, these errors can be corrected. It takes a little patience and knowledge of the dispute settlement procedures provided by the Fair Credit Billing Act (FCBA).
What consumers need is a Fair Medical Billing Act that applies similar protections to medical bills.
The medical industry will no doubt say that’s impossible: medical bills are too complex and there may be several parties involved, including the patient, (sometimes multiple) providers, an insurance company and perhaps Medicare. Yet it is precisely that complexity that leaves patients vulnerable to abusive billing practices.
When we talk about National Consumer Protection Week we often focus on what consumers can do to protect themselves. But in the crazy, convoluted world of medical billing there is sometimes nothing they can do to protect themselves. Consider these stories from our readers:
- Heather incurred a medical bill for a visit for which she shouldn’t have been charged. The problem? It was improperly coded. But even though she knew her way around the system (she worked in medical billing for 14 years), she ended up paying it rather than risk damage to her credit.
- Brett Goldstein incurred $30,000 in medical bills after his daughter spent less than 24 hours in the hospital. When he delved into the charges (not an easy task) he discovered double billing, and charges for services not received.
- Sarah and her husband were delighted to finally pay off $11,000 in medical bills incurred when he had a motorcycle accident. But when they tried to get a mortgage they discovered another $21,000 in medical bills for which they had never received any kind of bill.
Steven Brill’s recent piece in Time magazine, Bitter Pill: Why Medical Bills are Killing Us, delves into medical pricing and profits. He identifies “the core problem” as “lopsided pricing and outsize profits in a market that doesn’t work.” Whether there is political will to change such a deeply entrenched and highly profitable system remains to be seen.
But in the meantime, why should a consumer have significantly more rights when they buy a $5 pair of socks with their credit card than when they incur a $5,000 bill after a few hours in the ER?
[Related Article: The Ultimate Guide to Solving Your Medical Bill Problems]
I propose adapting some elements of the Fair Credit Billing Act and applying them to medical bills. Look at some of the reasons consumers can dispute charges under that law:
- charges that list the wrong date or amount;
- charges for goods and services you didn’t accept or that weren’t delivered as agreed;
- math errors;
- failure to post payments and other credits, like returns;
- failure to send bills to your current address — assuming the creditor has your change of address, in writing, at least 20 days before the billing period ends; and
- charges for which you ask for an explanation or written proof of purchase, along with a claimed error or request for clarification.
Consumers have 60 days from the date they received the first credit card statement on which a charge appeared to dispute it. When they do, the creditor must acknowledge the complaint, in writing, within 30 days after receiving it, and then has up to two billing cycles (but not more than 90 days) to resolve it.
It is time to give patients, who can receive thousands of dollars in medical bills after an accident or illness, similar rights. The Affordable Care Act does provide some protection: nonprofit hospitals may not engage in extraordinary collection efforts until they have provided patients with a written financial assistance policy and given them the chance to apply. Yet that just barely scratches the surface.
There are other billing problems that don’t apply in the context of credit card bills, but do occur with medical bills. An example is when a provider fails to submit a bill to the patient’s insurance in a timely manner and the patient ends up with a bill that should have been covered but isn’t as a result.
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The Other Problem: Medical Collections on Credit Reports
One of the many problems with our current medical billing system is that a patient’s bills may be sent to collections while they are waiting for their insurance company to process them, or before they have even had the chance to pay them. One study found that over half of all collection accounts on credit reports are due to medical bills.
“It’s an injustice that small medical bills which are often confusing and inaccurate can prevent an otherwise creditworthy consumer from qualifying for a mortgage refinancing their home or buying a car,” says Rodney Anderson, executive director of Supreme Lending. Anderson has helped spearhead an effort to change that.
The answer is The Medical Debt Responsibility Act, which would protect consumers’ credit reports from the severe damage that can result when a medical bill is sent to collections. A simple one-page bill with bipartisan support, it has been reintroduced this year by Oregon’s U.S. Senator Jeff Merkley who says:
The Medical Debt Responsibility Act fixes this problem (of medical collection accounts on credit reports) by prohibiting consumer credit agencies from using paid off or settled medical debt collections in assessing a consumer’s credit worthiness. In addition, the bill will require the creditor or credit rating agency to expunge the medical debt from the consumer’s record within 45 days from the day it is paid off or settled.
It’s an important step in helping protect patients from abusive medical billing practices and Congress should pass it this year. Then, once that legislation is law, perhaps someone can spearhead an effort to give patients clear and specific rights when they get a medical bill.