Negotiating with a collections agency on a very modest debt
January 31, 2011 6:38 AM   Subscribe

I want to settle a modest medical bill that has gone to collections. How much should I offer?

Short version: This is a $150 bill for an urgent care clinic visit. My insurance didn't pay it because the clinic billed it with the wrong code. The clinic was supposed to re-bill it with the correct code, at which point, a rep of my insurance company told me, it would be paid. While I was waiting for a new EOB to arrive after the re-billing, the clinic instead sent the bill to collections.

I could fight this with the clinic and my insurance company, but I think it would be stressful and time-consuming and quite possibly unsuccessful (in the past, when a medical bill was erroneously sent to collections even though I was making the agreed-upon payments, it was a big pain in the butt to get it fixed). I'm not sure the amount of money involved is worth investing a lot of time and energy; I'd like to just get it settled and off my plate. $150 is inconvenient but not a catastrophe for me.

On the other hand, I probably would not have had to pay if the clinic had re-billed it as they said they would, or billed it correctly in the first place. So I feel some resentment at the thought of paying the full $150 and would like to settle with the collection agency for some fraction of the $150. Where should I start negotiations? It would delight me to get it down to $40 or $50; is that realistic?

(Also, I remember from previous AskMe conversations about collections that I should also specify that the bill will be settled and it won't be reported to the credit bureaus, and I plan to do that. And, if it makes any difference, the collections agency and I are on good terms--the initial phone call was very cordial and I have just received written "proof of debt," so they haven't been coming after me for a long time or anything. It's early in the process.)
posted by not that girl to Work & Money (12 answers total)
How long has this billing error gone on? I've had stuff linger 4-6 months due to incompetent bureaucracy, and I've never had something sent to collections. I would go up the chain of command at the Urgent Care clinic and raise holy hell that they sent me to collections because of billing error on their part. Do you have any documentation on the original billing error on their part?
posted by COD at 6:59 AM on January 31, 2011

I would walk back into the clinic and explain this, and attempt to get them to take the bill back from collections and then set up a payment plan of $50 per month.

In my experience, medical provider billing people are pretty hardassed until you talk to them and set up some sort of plan which is doable for you. Then they get nice again. Talking to them about it (rather than just sending in partial payments) is the key.
posted by Danf at 7:02 AM on January 31, 2011

1. Call the clinic and speak to the billing manager
2. if they don't bill with the right code, they are committing fraud
3. You could submit the claim yourself with the correct bililng
4. You should have paid something towards it. The unwritten rule is pay something as opposed to nothing and they shouldn't be putting you into collections
5. Yes negotiations are common. See #4 and ask them to take it off collections.
posted by stormpooper at 7:04 AM on January 31, 2011

do they mean collections in house or a collection agency? If it is the first, call your insurance agency to find out when it will be paid and then call the hospital and reiterate the situation and their role in the delay. Let them know when it will be paid. If it is the later, call and negoiate with the collection agency, explaining what happened. You will also want to make sure you get any money the insurance company paid to the hospital refunded once they pay it.
posted by domino at 7:21 AM on January 31, 2011

Go directly to the clinic's lawyer and insist that they stop the collections action and resubmit the bill or write it off entirely given the annoyance and inconvenience they've caused you. If you have a hard time reaching him/her, get a friend who's a lawyer to send a letter.

The attorney can certainly call off collections since the collections agency is doing business on behalf of the clinic. And s/he has the authority to write off the bill.

You can tell the cordial collections agent that you are talking with the clinic's attorney. I don't think they have a duty to stop calling you but you seem to have lucked upon a nice and reasonable person.
posted by paindemie at 8:01 AM on January 31, 2011

One more thing - skip the billing office. Generally, they can't do anything once your file is in collections.
posted by paindemie at 8:03 AM on January 31, 2011

I would offer $50 in a check accompanied by a letter detailing the situation, knowing that insurance will often pay a half to a third of a bill. That's worked in the past for people I know, but that was also when it was still with the hospital instead of collections. Knowing that collections usually pay pennies on the dollar, though, it still might work.

Sorry you have to go through this, it Stinks!
posted by ldthomps at 8:18 AM on January 31, 2011

Response by poster: idthomps, if I could I'd send you a prize for being the only person who even remotely attempted to answer the question as asked. Thanks.
posted by not that girl at 9:33 AM on January 31, 2011

I would do what idthomps suggests, except offer a money order instead of a personal check. Never give a collection agency anything with your bank account info on it. They're not supposed take the info from your check and do a ICH debit from your account without your consent, but they're not supposed to do a lot of things they do. It is not the most noble of professions.
posted by birdherder at 11:45 AM on January 31, 2011

Response by poster: Thanks, birdherder. I had seen the same advice earlier today on a credit forum and it would never have occurred to me. So glad to have it pointed out!
posted by not that girl at 1:11 PM on January 31, 2011

I work for a debt collection attorney. This is not legal advice. If it has been passed to collections they may not accept anything less than the full amount (we don't) until it has been filed in court and there is a judgment. We would simply send the check back to you with the instruction to pay it in full or it will be filed in court. Once it's filed in court, legal fees and interest apply and the client is actually entitled to 3 times (called treble damages iirc) what you owe (in my state anyways), although they don't always ask for that amount.

By all means, offer $50 if you like. But don't get irate if they decline that offer... it only makes us less likely to want to negotiate with you. Also, be patient if the collection agency is a law firm and you are speaking to an office admin/legal assistant. Many of our debtors don't understand that the attorney is the only one who can approve a settlement like this and he is in court for most of the day. It is hard even for us to get him to sit down for 5 minutes so we can ask him a question.
posted by IndigoRain at 8:35 PM on January 31, 2011

I work for a large county hospital, so it may be different for the clinic.
In cases like this, the patient is not responsible for the bill. If they billed it incorrectly, why should you have to pay it? I would call the clinic and ask to speak to a manager or lead. Explain to the that your insurance denied the bill because of a wrong code, and it should not have gone to collections. If the clinic does not rebill within 90 days, it usually must be written off as untimely. Billing you does not count.

I don't know about the collections end, but we can suck it back from bad debt if it went over in error.
posted by yb2006shasta at 7:21 AM on February 2, 2011

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