The Age of a Past Due Account Affects Recovery Efforts
October 05, 2017 at 6:35 PM
For a collection agency, the age of an account directly affects how that account is handled and the rate of recovery.
Rules and regulations established under the Fair Debt Collection Practices Act dictate collection processes. For example, there is a 30-day window for the consumer to dispute the debt (starting on the day the collection agency makes the required first contact with the consumer).
A medical debt cannot be reported to the credit bureau before 180 days from time of service.
If the healthcare provider is a not-for-profit organization, 501r regulations are time sensitive and there are several time benchmarks the organization must adhere to for compliance before submitting for collection.
The next step…
In general, the older the debt, the less likely it is to recover. With that in mind, PCS has established processes to “work the debt” more frequently in the first 6 months to increase recovery. If the consumer does not respond, we may start the process for legal action but that takes time and has its own set of time benchmarks.
Then there is the Nebraska Statute of Limitation Laws regarding debt.
Each state has different Statute of Limitation laws regarding debt. In Nebraska, oral agreements and open accounts (such as revolving) have a Statute of Limitation of 4 years. For written and promissory contracts, it’s 5 years. FYI…medical debt is considered a written contract and therefore is 5 years.
Keep in mind...If the consumer makes a voluntary payment it “resets” the statute from the date of this last payment. The submission form asks for the last payment date so that the statute clock can be set accordingly.
Here are some links to additional information on Statute of Limitation Laws…
What to do?
As a business, consider time benchmarks and be pro-active when deciding what past due accounts you send to collections. Remember that the older the account, the harder it is to recover the money. So…submit as soon as you have determined that the consumer is not going to pay you voluntarily.
If you are a healthcare provider, be assured that when you send an account over for collections, Professional Collection Service has time safeguards in place to assure compliance. However, you should still have internal procedures in place to assure compliance to regulations, particularly if you are a not-for-profit organization.
We are your partner in Accounts Receivable Management.
Compliance and recovery can be daunting! Our staff reviews our processes and performance on a regular basis. We also review recovery rates and average age of accounts and work with our clients to improve recovery.
We have put some additional reports on our online client portal and will be launching a consumer payment portal in the very near future. Our goal is to recover money for our clients!