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Medical debt dynamics, part 2: collection guidelines

In the first part of this post, we began discussing the ongoing challenge of medical debt.

As we noted, for years unmanageable medical bills have been one of the leading causes of bankruptcy. And the passage of the Affordable Care Act (ACA) has not really altered that fundamental dynamic.

In this part of the post, let's take note of government-initiated efforts to get the health care and debt-collection industries to agree on common standards for the collection of medical debt.

The standards are voluntary. Government has not mandated their use.

But the new standards, announced last month, should help prevent medical debt from becoming an excessive burden for so many people. The guidelines encourage hospitals to be more up-front with patients about costs right from the start.

This is important because, as we discussed in part one of this post, the sticker shock from medical bills can be a bitter pill for patients to swallow. Improved transparency up front would help a lot in that respect.

Hospitals should also be doing a better job of making sure patients know what their payment options are. This includes informing patients about any discounts or financial aid arrangements that may be available

Regardless of what the voluntary guidelines call for, it is also important for patients to know what is or is not covered by their health insurance policies.

Of course, even when someone has insurance it may not be possible to pay the entire amount of a hospital bill at once. But if that is the case, it is generally better to try to work out a payment agreement with a hospital before the hospital sends the bill to a debt collection agency.

And, in appropriate cases, there is also the possibility of a bankruptcy filing due to medical debt.

Source: News-Sentinel, "New rules to help patients with debt," Linda A Johnson (AP), Feb. 17, 2014

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