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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?

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    There are few people more evil or relentless than medical bill collectors. I even had one a few months ago who tried to claim that my health savings account contribution towards a bill was actually a credit from the insurance company against their negotiated rate. Thankfully my insurance was helpful, contacted the hospital and told them to cut the crap! – Derek_6424246 Jun 23 '15 at 23:21
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    What state? Contact your state's insurance commissioner and file a complaint. In California, it's DMHC (dept of managed heath care). – mkennedy Jun 24 '15 at 18:59
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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.

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    It sucks because it's impossible to act responsibly. If I can't afford something I don't buy it, but how can I possibly know if I can afford health care if I don't know in advance how much it is really going to cost me? (To put it another way, if I had to assume my insurance was never going to pay I simply could not afford it and would have to die instead of getting care.) – Andy Jun 23 '15 at 23:52
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    I know, it's crazy. A friend of mine had the temerity to ask at a Dr. Appointment how much it would cost in advance and they essentially told him they couldn't provide that information as they only disclosed it to the insurance company. That's messed up. My personal opinion is that in the long run we would have a lot more affordable medical care if we got rid of all public and private health insurance and had people pay directly for everything. – JohnFx Jun 24 '15 at 16:14
  • It seems to me that single payer would definitely be the best option, however making that single payer be the person still seems to shift an unnecessary amount of risk to the individual (while on the other hand, some countries that have the government be the single payer are reported to have abysmal levels of care.) – Andy Jun 24 '15 at 16:47
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    @JohnFx John, we should definitely have price transparency, but if people only got the care they could afford directly, most people with any major medical problems such as cancer, broken legs, etc. would not be able to afford or receive care. As such, we currently subsidize each other based on the understanding that a lot of unplanned things could happen to any of us. – JAGAnalyst Jun 24 '15 at 18:06
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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.

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    We don't have the money to pay these bills, how can we pay a lawyer? – Andy Jun 23 '15 at 23:49
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    After a bit more research here, even if I find an attorney who offers contingency fees, now it appears that I have another level of potential responsibility: the contingency fee isn't owed until a judgement or settlement is reached, but that doesn't automatically mean I will receive any money. (sorry if I am sounding paranoid here...) – Andy Jun 23 '15 at 23:57
  • You'll have to shop around, find an attorney who specializes in dealing with medical insurance companies, and find out how their billing is handled. It depends on the firm, but I know that often times they will review your case, and if they think it has merit then they will work it for you and take their fees out of the settlement. – Derek_6424246 Jun 24 '15 at 21:57
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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.

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