Medical Debt: Is There a Statute of Limitations?

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When it comes to medical debt, a statute of limitations is a law that determines how long you have to sue your delinquent patient over an unpaid bill. As long you serve them within this time limit, you retain your right to take legal action over a debt.

Once you exceed the statute of limitations, debt becomes “time-barred”, and you may not sue you debtor. This is why we encourage you to call us about an unpaid account as soon as you realize your client won’t pay. Debt grows harder to recover with time, and this time-barred law is one of the reasons why.

The good news is that even time-barred debt is possible to retrieve. As one of the country’s foremost medical collection companies, we have experience converting even the most challenging debt into payments. Our team of licensed professionals work tirelessly to get the money you’re owed.

What Are the Statutes of Limitations?

All consumer debts, including medical bills, have a statute of limitations. How long it lasts depends on two main factors.

  • Location. Each state regulates its own statute of limitations on debt. The state in which your client lives may determine your time limit, even if you operate in another area of the country.
  • Type. The type of debt — that is, whether it’s a verbal agreement, written contract, promissory note, or open-ended account like a credit card — will also determine the statute of limitations. 

Broadly speaking, the statute of limitations may last anywhere between three and 10 years depending on location and type of debt.

What Happens When You’re Dealing with Time-Barred Debts?

Time-barred debt simply means the clock has run out on your chance to take legal action, but it does not mean debt recovery is impossible.

Medical debt that exceeds the statute of limitations does not disappear. Your client is still responsible for time-barred debt, and it will show on their credit report for up to 7.5 years. During this time, this negative payment history will affect how easily they can open new accounts.

As a medical practice worried about your profit margins, it’s well within your right to contact your customer about time-barred debt to recover what they owe you. You just can’t take legal action unless you manage to convince your client to make a partial payment. In many states, a partial payment resets the clock and a new statute of limitation begins.

How the Pandemic Affects the Task Ahead

Medical debt collection requires you to walk a delicate tightrope. On the one hand, you need to receive payments for products or services you provided to preserve your business’ positive cash flow. But on the other hand, your practice is built around your patients, and your relationship with them is a crucial component of your success.

The tightrope you walk has never been finer as businesses shutter and people lose their jobs.  

Before the pandemic hit, more than 137 million Americans reported medical financial hardship. Now, new research from the Society for Human Resource Management and Oxford Economics found the average U.S. worker lost nearly $9,000 due to the coronavirus pandemic. This loss may have a serious effect on the average person’s ability to pay their bills.

Failure to recognize this unique and highly stressful situation may do irreparable damage to your reputation.

Aggressive, threatening, and unethical tactics are particularly tone-deaf for the current situation. Not only will they fail to produce results, but they can also destroy the relationships you’ve worked so hard to build with your patients.

Turn to a Compassionate Medical Collection Agency for Help

As a friendly debt collection agency, we appreciate the unusual circumstances of today, but we also understand how important it is to recover payments. If your patients neglect to pay for any reason, your business may suffer. You need positive cash flow to pay staff, rent, and all the other costs associated with your practice.

With Summit A*R’s commitment to the “P.H.D Philosophy” (Preserve Human Dignity), we are uniquely suited for this complicated recovery process.

Our P.H.D in medical debt recovery ensures we approach each case with professionalism, compassion, and integrity at every step, including those that exceed the statute of limitations. Our team of experienced debt recovery experts handle accounts with sensitivity, so you may preserve your relationships with your patients without sacrificing your bottom line.

Consider Pre-Collection Services                

Here at Summit A*R, we believe the best debt collection strategy is prevention. The way you manage your accounts may help you avoid having to collect an overdue bill in the first place.

In addition to our medical collections, our team of account receivable management professionals can help your business take preventative measures against delinquencies.

One of our tasks involves streamlining your accounts receivable to improve your cash flow. We pay particular attention to the average turnaround for bills. Try this 90 day calculator that crunches your Day Sales Outstanding (DSO) to see your business’ cash conversion cycle.

If your result is under 45, you’re in a great position. However, a DSO higher than 45 may indicate you’re wasting valuable time. By outsourcing the busy work to us, we can concentrate on improving this number while you focus your attention on what really matters.

At Summit A*R, we’re 100% HIPAA-compliant, so you can trust our assistance aligns with your legal obligations as a healthcare business.

We also respect the rules and regulations dictating how collection agencies may approach medical debt. As the federal and state governments adjust these laws to alleviate some of the pressure felt by Americans during the pandemic, we’re closely monitoring these provisions to ensure our methods are above board at every step of the process.

Our unmatched dedication, recovery rate, and A+ rating from the Better Business Bureau (BBB) means you’re in good hands. Our team offers cost-effective strategies no matter how big your health practice may be, and you won’t have to pay until we’ve successfully recovered your medical debt.

If you need help navigating the statute of limitations on aged receivables, get in touch with us today by phone or through our website. We’re happy to discuss how we intend to get your practice’s cash flowing again.