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Medical Debt Collection Laws And Collection Best Practices

Published: Dec 9, 2021

Medical debt collection laws are becoming stricter every passing day, while medical debt is the top reason debt collection agents are contacting consumers. Medical debts are the leading reason for bankruptcies in the US, ahead of credit card bills and mortgages. 

Collecting medical debt is a sticky situation because a majority of debt is owned by people who cannot afford to pay it back, and therefore hard to collect. Here are crucial aspects a debt collection agency needs to think about when trying to recover medical debt:

  • Moving ahead with empathy while still trying to recover the debt.
  • How to stay in constant contact with debtors.
  • Staying compliant with medical debt collection laws and keeping up with new updates.

While each agency has its own strategy to recover debt, we’ve compiled medical debt collection laws to serve as a reminder checklist. Rules might vary from state to state, but our list covers the main pointers that are standard for everyone.

Laws for medical debt collection

Medical debt collection laws are framed keeping in mind the consumer’s well-being. 

  1. When negotiations between a doctor/hospital and an individual fail, the individual’s debt may be sent to collections. Post this, the individual will work exclusively with the debt collection agency. 
  2. The individual needs to receive a 30-day advance notice from the hospital if sent to collections.
  3. Under Federal Law, an individual has the right to receive a written notice of outstanding payment, containing the following information:
  • The amount owed
  • The name of the creditor
  • What action they can take if they do not think they owe some or all of the bill. 
  1. When you first contact someone to collect a debt, you need to provide specific information about their rights. In the case of ‘charged (written) off’ debts, provide detailed information about the debt you are attempting to collect.
  2. An individual cannot be contacted unless they expressly consent to be reached by email, calls, text messages.
  3. Debt collectors cannot contact a customer before 8 a.m. or after 9 p.m. unless agreed upon. You also can’t reach someone at work if they tell you they’re not allowed to get calls there.
  4. You cannot sue a debtor for a debt whose statute of limitations has expired. For medical debt, the statute of limitations is anywhere between 3-15 years, depending on the state you live in.
  5. You cannot contact a debtor more than seven times a week. 
  6. Medical debts cannot be sent to collections until 120 days after the patient has received the original medical bill.
  7. A debt cannot be disclosed to a third party apart from the person who owes them money and their spouse.
  8. If a client disputed a debt, an agency cannot make efforts to collect the debt unless they share a written verification of the debt, like a copy of the original bill for the amount the client owes.
  9. Collectors cannot repeatedly call a client, use obscene language, or threaten to hurt a client.
  10. Collectors also cannot lie to clients about the amount owed, falsely claim to be an attorney or from the government, threaten to have them arrested, or threaten to sue a client if they really aren’t going to.
  11. Lastly, collectors cannot use unfair practices such as collecting more money than owed unless stated in the contract or depositing a post-dated check early.

While these are not the sum total of all medical debt collection laws mandated by different states, this is a pretty good reflection of how stringent regulations are. What best practices can you implement to recover a debt with such strict mandates? Let’s find out.

Medical debt collection best practices

As a debt collection agency, you can implement some or most of these best practices that we’re listing to improve collection:

The first step to beginning your debt collection process needs to be receiving consent to reach out to and communicate with clients.

There are a few easy ways in which you can receive consent to communicate via different methods:

  • Receive permissions when the patient is admitted, discharged, or going through the billing process by including a permission form.
  • You can share your registered phone number and an SMS shortcode such as ‘INFO,’ ‘COLLECTION,’ ‘BILLING,’ or anything else which suits your purpose. When a client texts you this code, they would have opted into your SMS service.
  • You can add a chat feature on your website through which clients can contact you on their own, and you can share information.
  • Add a ‘subscribe’ button to your website through which clients can subscribe to email and newsletter correspondence.
  • Receive written permission for direct mail correspondence when you deliver notices about the amount owed, delayed payment, etc.

Send reminder texts

Reminder texts work to bridge the communication gap between you and a client. Medical debt collection laws mandate that you can contact a client per week only a fixed number of times, and this number varies from state to state.

Find out what the mandate for your state is, and share regular reminder texts with clients. You can share a monthly reminder about payment due, the amount owed, etc. Get creative with your reminder texts.

You can schedule reminder messages for all your clients at once and use text messaging software to send out this campaign all at once. Worried about mixing up details? You can personalize your message to each contact using merge tag features, and everyone will receive notifications personalized to them. 

You can use advanced text messaging tools such as peer-to-peer texting to engage in two-way personalized conversations with debtors and answer their questions.

Send friendly emails

Yes, it is almost always annoying to receive a debt collection email – it is no secret. However, you can turn it around by sending friendly emails, saying these things:

  • Introducing yourself
  • How you can help them make a payment plan
  • What medical debt collection laws do they need to be aware of

Adding value while also working as a collaborator with debtors might encourage them to create a payment plan faster, not avoid your calls and continue to be responsive – a win-win situation.

Personalize your communication

Personalizing conversations is guaranteed to increase your response rate. A generic text message or call script can communicate what you want and serve its purpose. However, a more personalized approach drives a sense of urgency because it feels like it is sent out specifically for the recipient.

There are two ways in which you can personalize your communication:

  1. Add merge tags as mentioned previously to add fields such as first name, last name, the amount owed, agent name, company name, etc.
  2. Personalize communication by setting up automated responses when a client sends you a specific shortcode. For example, when a client sends you a shortcode you’ve chosen, such as ‘LAWS’, you can send them a relevant response by sharing medical debt collection laws with them. However, if they send you a different shortcode, such as ‘FAQ’, you can set up the autoresponder to respond with common FAQs and their answers.

Work with a prevention mindset

Defaulting on payments can occur for many reasons. However, preventing defaults before they occur is also a possibility to explore. Digital debt collection tools allow you to generate reports and build behavior tracking models that can help you predict if a client will be in trouble for missing payments.

Working with a prevention mindset can also involve other more straightforward techniques. Here are a few you can implement:

  • Send regular reminder texts so that clients do not miss payments.
  • Share emails, text messages, or voice broadcasts about the downsides of missing payments, sharing information about medical debt collection laws, etc.
  • Share resources via email about how clients can construct a payment plan easily. 
  • Work towards negotiating good payment deals with clients.

Offer different payment methods

Studies have shown that online payment methods are gaining popularity all around the US. The Millennial and Gen-Z population prefer mediums such as Venmo, Paypal, etc., to make payments. A cashless, digital economy demands that different payment methods are available to people.

You can speak to clients individually and understand what kind of payment methods best suit them. If cash or cheques are still preferred, provide it as a payment option. If they choose digital payments, so be it.

A convenient way to use your text messaging services is to share payment links via text messages. CallHub’s link shortener features help you share payment links more concisely. 

Encourage reaching out to you

When clients feel welcome, they are more likely to be responsive. Constant follow-ups are not fun, we know. But if you can still strike a balance between pushing for collecting debts and actively encouraging clients to reach out to you if they face issues, then you are winning.

Encouraging clients to reach out to you allows you to listen to them and come up with solutions together. When communication is severed, it becomes difficult to reach a point of negotiation – and that’s not a point you’re looking to reach.


Debt collection, especially for medical bills, is not easy. Medical debt collection laws are stringent and driven towards protecting the consumer’s interests. While that is fair, collecting medical debts is vital for a medical practice to sustain and a collection agency to function.

If you want more resources for debt collection strategies, you can check out our article: Your Guide To Digital Debt Collection And Collection Tools

Featured Image Credit: Nataliya Vaitkevich


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