Avoid fines and penalties: Make sure your debt collection agencies are compliant

Published: October 31, 2017 by Experian Health

As deductibles and premiums increase, more patients struggle to pay healthcare bills, and, in turn, the patient collections process becomes more and more daunting. Hospitals and clinics are now relying on debt collection agencies more than ever. At Experian Health, we estimate a 119 percent increase in this specific outsourcing over a four-year period, from 2014 to 2018.

A third-party debt collection agency is attractive for many reasons. For one, it frees up your healthcare practice’s valuable resources. Also, patients with delinquent bills typically respond well to a debt collector’s call.

However, using a debt collection agency does not relieve all concerns because you must consider vicarious liability.

By law, your hospital or clinic can be held responsible for the debt collection agency’s actions when it acts on your behalf. To keep your healthcare practice out of legal trouble and clear of costly fines, ensure the debt collection agencies that you hire comply with relevant laws and regulations. Also, consider using tools to make sense of these complex requirements.

Do You Know the Laws Controlling Debt Collection?

The legal requirements governing debt collection are varied and frequently evolving. It can take a lot of work to keep up with them, but there’s a tool to help you. We’ll describe this tool in just a moment, but first, let’s review a sample of federal debt collection laws and regulations to make sure you’re up-to-date:

  • The Fair Debt Collection Practices Act (FDCPA) limits the behavior and actions of collectors who attempt to collect debts on behalf of another person or entity. This federal law aims to eliminate “abusive, deceptive, and unfair debt collection practices.”
  • The Telephone Consumer Protection Act (TCPA) governs interactions between businesses and their customers, including healthcare providers and their patients. In many cases, this federal law requires consent before a provider can communicate with a patient’s mobile device through automated dialing systems, such as auto-texting or “robocall” systems.
  • The Fair Credit Reporting Act (FCRA) regulates the collection, dissemination, and use of consumer information, including credit information.
  • The Gramm-Leach-Bliley Act (GLBA) requires institutions to explain their information-sharing practices to customers and any available opt-out provisions.
  • IRS Code 501(r) is a federal regulation enacted by the Affordable Care Act. It mandates certain financial assistance practices in order for an organization to maintain a nonprofit 501(c)(3) status. A key provision holds many hospitals and healthcare systems accountable for the acts of their debt collection agencies.
  • The Electronic Fund Transfer Act (EFTA) establishes the rights and liabilities of consumers in electronic fund transfer activities, as well as the responsibilities of all parties.
  • The Truth in Lending Act (TILA) requires disclosures about lending terms and the costs associated with borrowing.

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