The first distinction to make in your head in regards to collections is that you’re just keeping cash flow stable without burning patient trust. It’s not about “getting tough.” 

You just need fewer accounts drifting into medical billing collections in the first place. So naturally, most problems start when the medical billing process feels unclear or slow, then patients stop engaging and the balance turns into unpaid bills.

Why Are Unpaid Medical Bills So Common?

In 2022, about 41% of U.S. adults reported having medical debt, which included balances owed to collections and credit card debt used to cover care. So with that in mind, when someone is already stretched, a confusing statement often gets ignored, even if they intend to pay. It’s not surprising to see.

What Does That Mean for a Healthcare Provider?

Your first bill has to prove the amount is real and show the next step. If the patient has questions, make it easy to ask them before the account becomes unpaid medical.

Where Do Unpaid Bills Begin Inside the Medical Billing Process?

Most unpaid medical balances come from coverage confusion or preventable mistakes. Fortunately, both of those are fixable with a tighter front end – and it’s something you can easily do regardless of having limited resources.

What Should You Confirm Before the Visit?

Do two checks every time:

1. Verify active health insurance and whether you’re in-network.

2. Document deductible status and the likely patient portion.

We’ve found that this reduces a lot of the “I didn’t know” moments that lead to disputes.

How Do Billing Errors Drag Accounts Into Medical Collections?

Billing errors are usually small – could be anything from a wrong subscriber ID or a missing modifier to an outdated address. So a claim is denied and your staff reworks it later, but the patient ends up with a statement that doesn’t match their memory. To avoid this, add a short pre-submit review so your claims don’t bounce for easily preventable reasons.

How do you send statements patients understand?

Patients pay faster when they can answer one question quickly: “Why do I owe this?”

What should the statement show?

Include two clear lines:

1. What the insurance company paid (or denied) and the date it posted.

2. What the patient owes now, with the service date in plain language.

How do you avoid disputes over a surprise medical bill?

As you may’ve noticed, a surprise medical bill can stop communication cold. The No Surprises Act is federal law and it protects many insured patients from certain out-of-network charges in emergencies and some non-emergency situations at in-network facilities.

So you’ll want to confirm network status and any required notices up front if a visit touches a hospital facility or shared scheduling.

When should you offer financial assistance or a payment plan?

We’d suggest offering options right after insurance settles, while the visit is still recent.

What makes a payment plan actually work?

Try to keep it predictable with one monthly date and an amount the patient can handle. If they’re having to lean on credit card debt to keep up, lower the amount rather than letting the plan fail and restarting the conversation, which would obviously be more hassle.

Where do medicaid services fit?

If a patient may qualify for medicaid services, bring it up early! Eligibility or retroactive coverage can change what they truly owe, which is definitely worth telling them about from early on. Document the guidance you provide, even if you can’t do the application for them.

How PMN Can Help

Generally speaking, collection performance is mostly a claims-quality issue. And we’re not surprised that you’re getting denials and delayed statements if your staff is balancing calls and authorizations. 

Our team at PMN handles medical billing and coding for small practices – we’ve been doing so for 20+ years, across a range of specialties and with a 99.98% first-time claim acceptance rate!

Get in touch by calling (949) 215-5055 or visiting our office in Laguna Hills, Orange County, California!

How should you think about credit reports and credit bureaus now?

Patients hear chatter about credit reports and what medical debt does to lending, so “credit pressure” is a weak strategy here.

What have credit agencies already changed?

Equifax, Experian, and TransUnion announced that medical collection debt under $500 was removed from U.S. consumer credit reports in April 2023. So that means many small balances won’t ever hit a credit bureau file.

When do you use debt collection agencies, and what about debt buyers?

If you’ve done everything from verifying the balance and resolving disputes to offering options, escalation is definitely reasonable.

What’s the last step before you escalate?

1. Confirm insurance is fully processed

2. Confirm contact info

3. Confirm there’s no open dispute about billing errors

4. Send a final notice that explains the next step and how to avoid it

How do debt buyers change the patient experience?

Debt buyers purchase accounts and collect for themselves, so you end up losing control of the tone and flexibility. We’d steer clear of this option if you’re a small practice, when the way you’re perceived matters significantly more than with larger practices on account of your unestablished reputation.

FAQs

How long should I wait before placing unpaid medical bills?

Many medical providers use about 90 to 120 days after the patient statement. Don’t start the clock until the insurance company finishes processing. Before you place, confirm there are no billing errors and offer any financial assistance when appropriate! 

Will sending an account out always damage credit reports?

Not always. Under-$500 medical collections were removed by the three nationwide credit bureaus in 2023, and the broader CFPB effort has been tied up in court. Some medical collections can still appear, depending on reporting. You’ll usually recover more by resolving balances early than by relying on credit reports later.