Some Hospitals Auction Patient Debt Online To Collection Agencies To Help Recoup Unpaid Medical Bills

Main Category: Public Health
Article Date: 04 Jun 2008 - 8:00 PDT

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Some U.S. hospitals have begun "trying out a new tactic to recoup patients' debts" -- "auctioning the debt online" -- a "move that consumer groups say could increase pressure on people with unpaid medical bills," the Wall Street Journal reports.

According to the Journal, hospitals in the past have hired outside agencies to collect debts from patients, and those companies, as well as companies that purchase debts, have "begun participating as bidders in online auctions" that allow them to "buy the debt or provide guaranteed payments to hospitals for access to the unpaid accounts." Companies that participate in the auctions, which can "drive up the amount paid" for debts, have "more reason to aggressively pursue patients in arrears," as they "must recoup more money from patients to cover" their initial investments and "often get to keep all the money they collect," the Journal reports.

Many of the auctions occur on the Web sites ARxChange.com, operated by TriCap Technology Group, or medipent.com, operated by Medipent. Owners of the Web sites say they examine the debt collection practices of companies that seek to participate in the auctions, as well as their approaches to the needs and concerns of patients, to help prevent abuse. In addition, the Web sites say they seek to ensure that the companies adhere to hospital rules on debt collection. Hospitals have final authority on the companies that participate in the auctions, and the Web sites do not award contracts to the highest bidders in all cases.

The Fair Debt Collection Practices Act and some state laws also limit the debt collection practices that companies can use. For example, companies "aren't allowed to harass consumers or make false statements," such as "implying they will sue if they don't intend to do so," the Journal reports. In addition, many hospitals include provisions in contracts with the companies that allow them to help resolve patient confusion about bills and to recover unpaid accounts in some cases, such as when patients qualify for charity care (Rubenstein, Wall Street Journal, 6/3).

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