How to respond to collections regarding medical bill your insurance hasn't paid?

Question

Last year our medical insurer froze my wife and children's account and refused to make any payments to any providers until my wife, her doctor, and possibly some of her other providers filled out a survey regarding the last five years of her medical history. They claimed that their reinsurer was requiring them to do this.

After several months of trying to deal with people who apparently had no power or authority to make things happen, they finally claimed that everything was good to go, and even sent a large file of EOBs regarding about thirty or so claims that they were going to pay. However, that was a couple of months ago, and from what I can tell they never actually paid. We were in contact with our providers, explaining the situation so that hopefully it would not go to collections. However, despite this we have now started receiving collections notices.

We don't have the money for any of these bills and cannot pay them - the amount of money owed is substantial, it's about 3 months worth of bills for three people. In some cases our providers refuse to give us the discount we should be getting that the insurance company negotiated with them, simply because our insurance hasn't paid them, increasing the amount they claim we owe.

What is the best way to respond to these letters? Should we ignore them? Should we write a letter to the collector disputing the validity of these bills as they are our insurer's responsibility and they are not paying like they should? Is there any extra leverage we have due to the fact that some of our providers aren't giving us the discounts they are supposed to?

Also, assuming our insurer actually pays at some point (this is a separate issue I am still working on) where does the money actually go? Presumably the provider has already received some money from the collector, would they pocket the whole thing, only the difference, or what? How would we even know they had received anything?

Answer 1

Here's your problem: The debt is valid and it is your debt, regardless of your arrangement with the insurance company. The insurance company (possibly) owes you money, and you owe the Doctor money. You are stuck in the middle, and in the end it doesn't matter whether the insurance company pays as to whether you owe the money.

Don't ignore them. Also, disputing the debt it pointless because the truth is that you do owe the debt. The insurance company may owe you money (which is in dispute), but the debt to your medical provider is your own. You are just stuck in the middle. It sucks, but is pretty common.

I think the best you can do is keep working on the insurance company and responding to the bill collectors letting them know that you are working on it and will need to pay late. In theory they deal with this a lot and probably understand, not that it will make them lay off you in the meantime. In the end it is possible you might have to sue the insurance company to get the money.

One thing to be careful about: If the debt is fairly old (several years) you may want to avoid making partial payments because if this goes on your credit report, that payment may extend the period where the negative information can appear on your credit history.

Answer 2

Your best option right now is to get a lawyer, file suit against your insurance for the full amount (total shown on the collections from the provider, without discounts) plus "damages". Include in the damages the cost of your lawyer, time spent resolving this, and any other expenses you have incurred thus far in dealing with this. Your lawyer will be able to give you guidance here. I think you'll find that the insurance company changes their tune once they are served papers.

Answer 3

It is important to understand that when or before you received services from your medical provider(s), you almost certainly signed a document stating that you understand that you are fully responsible for the entire bill, even though the provider may be willing to bill the insurer on your behalf as a service. In almost all cases, this is the arrangement, so it is very unlikely that you will be able to dispute the validity of the bill, since you did receive the service and almost certainly agreed to be fully responsible for the payments.

With regard to the discounts, your medical provides have likely contracted with your insurer to provide services at a certain price or discount level, so I would base all of your negotiations with the providers and/or the collectors on those amounts. They can't legitimately bill you for the full amount since you are insured by a company they have a contract with, and you are not self-pay/uninsured, and the fact that they haven't been paid by your insurer doesn't change that, because the discount likely depends on the contact they have with your insurer and not whether or not they are billed/paid by your insurer. Please note - this is a common arrangement, but I'd recommend that you verify this with your insurer.

Unfortunately, payment in 90+ days is often typical by insurance standards, so it's not yet clear to me whether or not your insurer has broken any laws such as a Prompt Pay law, or violated the terms of your policy with them (read it!). However, you need to find out which claims rep/adjuster is handling your claims and follow up with them until the payments are made. It's not personal, so make this person's life miserable until it is done and call them so often that they know it's you by the caller ID.

I would also recommend contacting the collector(s), and letting them know that you don't have the money and so will not be able to pay, provide them with copies of the EOBs that state that the insurance company plans to pay the providers, and then ignore their calls/letters until the payments are made. When they call, simply reiterate that you don't have the money and that your insurance company is in the process of paying the bills. You have to expect that you will be dealing with a low-paid employee that is following a script. You are just the next person on their robo-call list, and they are not going to understand that you don't have a pile of money laying around with which to pay them, even if you tell them repeatedly. Make sure that you at no point give them access to any of your financial accounts, such as a checking or savings account, or a debit card - they will access it and clean you out.

It is likely that your insurance provider will pay the providers directly since they were likely billed by the providers originally. If the providers have sold the debt to the collectors (and are not just employing a collector for debt they still own), you may have to follow up with the providers as well and make sure that the collection activity stops, since the providers may also need to forward the payments to the collectors once they are paid by the insurance company.

Of course, if the insurer refuses to pay the claims, at that point I would recommend meeting with a lawyer to seek to force them to pay.