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Consumer agency weighs restrictions on medical debt in credit reports

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Consumer agency weighs restrictions on medical debt in credit reports

“Don’t panic,” said Caitlin Donovan, a spokeswoman for the Patient Advocate Foundation. Start by checking whether the bill is accurate. This usually means comparing it to your health insurer (if you have coverage) to “explain the benefits” or contact the provider for clarification. The so called EOB usually says it is “not billed” so people sometimes ignore it. “Don’t,” said Ms. Donovan. The benefit statement is proof that your insurer has been billed and gives you information to help you challenge suspicious charges. In some cases, Ms. Donovan said, hospitals may mistakenly bill the patient directly instead of billing the insurer first.

If the bill is accurate, call the provider’s billing office and ask about monthly payment plans. In addition, many hospitals have programs to help low-income people pay medical bills—but they may not mention them unless you inquire. “You have to ask,” said Ms. Donovan.

Chi Chi Wu, an attorney at the National Consumer Law Center, said it’s also worth asking whether the provider would reduce the bill amount instead of paying a lump sum. She recalled that she once called a provider to ask about the bill and, without prompting, the billing representative immediately offered a 25 percent discount if she paid in full.

Consumer advocates say try to exhaust other options and negotiate the lowest possible bill before putting a balance on a credit card. Paying medical bills with a credit card and then failing to pay can be worse for your credit than not paying the first bill. That’s because the latest versions of both the FICO and VantageScore credit scores ignore reports of medical debt that has already been paid off and limit the impact of medical debt that remains unpaid, Ms. Wu said. Be aware, however, that not all lenders use updated credit scoring systems, she said. Mortgage lenders, in particular, may use older versions that do not treat medical loans differently.

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And, Ms. Wu said, some credit score users, such as employers and landlords, can see your entire credit report, not just your score. So medical debt can still cause problems, even if it doesn’t show up in your credit score.

A law called the No Surprise Act, which went into effect in January, established new consumer protections against surprising medical bills. Surprise bills can arise when patients inadvertently receive care from emergency rooms and doctors outside their insurance plan’s network. (According to an analysis by the Kaiser Family Foundation and the Peterson Center on Healthcare, this occurs in about one in five emergency room visits.) The federal government estimates the law will apply to about 10 million out-of-network surprise bills. The year.

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