Debt Collection: It’s All About the Info

Unless you collect 100 percent of charges billed at time of service (or delivery) people are going to owe you money. That’s a fact. How successful you are at getting paid is dependent on a number of factors (like the age of the debt). But without a doubt the most important thing you can do to improve the collectability of past due accounts isn’t some elusive collection strategy privy to only a few. It’s actually quite simple: get as much information as you can about the person (or company) before you provide service. 

I can’t tell you how often clients, especially the smaller sized ones, will send us placements for collection that are missing key pieces of information. I can’t stress this enough: The more information you provide, the more collectable the account will be.

To be fair, simple is not the same as easy. I understand that. Getting all the requested information will take some work. I know most of our clients already provide their customers with a form requesting the information.  But oftentimes simply asking for the information isn’t enough. It’s important to follow up to make sure the form is filled out in its entirety.

At first it might feel awkward asking customers to fill in the unanswered questions. But if you make the completion of the form a company policy it will make it less personal when you explain that everyone is required to do it.

Contrary to what you might have heard debt collection is a heavily regulated industry. There are certain pieces of information that we are required to have and others that will aid in the collection process.

Best practices include the following: 

Please note: * denotes information we are required by law to have or we cannot pursue the debt.

  • First and last name of debtor* – It might be hard to believe, but we have had clients send us accounts without the last name of the debtor. This is a must-have piece of information!
  • Address – We are required by law to send a debt validation letter on all accounts placed.  If you had an address that is no longer valid send it along as the last known address.  We can use it to skip-trace the account to find debtor’s current address.
  • Date of Birth and/or Social Security Number – Having this information makes finding the debtor’s current address easier. Also, we must have either a DOB or a SS number or we are unable to report the debt to the credit reporting companies (Experian, Equifax and Trans Union). Reporting debts to these agencies is a great tool we use to get debts paid.
  • Phone Numbers – Best practices include: home, cell and work. We use telephone calling campaigns as one of our collection tactics.  Lack of phone numbers prohibits this worthwhile tactic.
  • Amount Owed* – Many of our clients include late fees and interest on amounts owed.  Typically these fees are not collectable and should not be included in the amount owed. (There are some instances when fees can be collected, but only on certain types of debt that have a contract with the debtor such as a signed lease or signed financial agreement. Even then the fees must be expressly stated in the contract. And a copy of the signed agreement must be submitted when the account is placed.) Law requires us to be able to validate the debt. Balance forward pages do not fulfill this requirement. Accuracy is extremely important. We must be able to notify the debtor of the exact amount they owe. 
  • Last Date of Service* & Date of last Payment – There is a Statute of Limitations (statutes vary state to state) on how long we can pursue a debt for collection. To stay compliant with collection laws we need to have last date of service.
  • Employment – Name and address of employer.  This is a critical piece of information needed when considering litigation as a way to collect.
  • Spousal Information – Name/Address/phone numbers/employment information for spouse.  Sometimes (depending on the state and type of debt) the spouse of the debtor is also financially responsible for the debt.
  • Name of Creditor* – We must have both the legal name of your business as well as a DBA if it is different (or if you have more than one business) to validate the debt and when reporting to credit reporting agencies. 

I hope you found this list to be useful. Whether you partner with us or another reputable collection agency it is important to work together as a cohesive team so the money owed can be collected as effectively and efficiently as possible.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded innorthern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 14 years.

Health Insurance Claim Denied? Now What?

We pay a lot for our health insurance, too much if you ask me. So when we end up sick or injured and actually have to use it, nothing’s more frustrating than seeing a denial come through the mail.  Am I right?

I read in a 2017 study by HFMA (Healthcare Financial Management Association) that $262 billion in medical (read hospital) claims were initially denied in 2016. Another study by (Government Account Office) GAO, found the rate of denials varied significantly across insurance providers—from 6 to a whopping 40 percent.

The silver lining? The HFMA study also reported that 63 percent of the claims initially denied were eventually paid.  My family members and I have been the recipient of many, many medical insurance claim denials. Luckily, we’ve been able to get most of them paid. And if you follow some of these tips you should be able to get some of yours paid too.

First and foremost: Read your policy. A lot of problems (read denials) can be avoided when you understand what’s covered and what’s not.

  • Sometimes you think a procedure will be covered, but find in the fine print it is excluded. Finding this out before the procedure, especially if it’s an elective surgery, could save you from a big financial nightmare.
  • Is there a network that you must stay within? Using an out-of-network provider or facility can result in a denial or a reduction in benefit at the very least. Just because the doctor is in the network doesn’t mean the facility he is using for your procedure is. Always check ahead of time.
  • Does your plan require a referral or pre-authorization? Diagnostic tests like MRIs and CT scans often require pre-authorization from you insurance company.  Be your own advocate: ask the doctor ordering the test if they are going to be taking care of the pre-auth or obtaining the referral on your behalf. Don’t assume they are going to or you might end up being responsible for the bill.

Did they send the bill to the wrong insurance company?  Did your insurance change since the last time you saw this doctor?  Make sure the bill went to the correct company.  Sometimes families have coverage from two different policies.  If that’s the case then coordination of benefits (COB) could be the problem.  Depending on the circumstances, errors can occur when determining which insurance is primary vs secondary.

Transcription errors are often the culprit. Make sure names are spelled correctly and all important data like dates of birth are correct.  Typos happen more often than you think. Those claim can easily be fixed and resubmitted for payment.

The reasons for some denials aren’t as easy to identify or rectify as others. Don’t hesitate to call your insurance company (the customer service number is on the back of your insurance card or listed on your denial letter or EOB) or your medical provider if you don’t understand the reason for the denial listed on your Explanation of Benefits. Sometimes there are diagnosis or procedure coding issues, insufficient medical necessity or timely filing issues.

The two most important things to do when inquiring about a denial is to keep calm (emotions can run high during these circumstances!) and take lots of notes. Always ask for the name and title of the person you are talking to and jot down the time and date of the phone call. Before hanging up ask if there is a reference number associated with the conversation and be sure to write that down as well. There was a time when my son was having a procedure and I called both the insurance company and the surgery center prior to the procedure to verify it was in-network since I couldn’t find it listed.  Afterwards, insurance denied the claim saying the facility was out-of-network. It turned out the surgery center did not become an in-network facility until one week after his procedure.  Since I was able to provide the name of the person I spoke with, date and time of the call, along with the reference number provided during the conversation the insurance company paid the claim at the in-network rate.

If you don’t understand the reason for the denial ask questions until you do. Then if you still think the claim should be paid gather the necessary evidence you might need to get the claim paid: including referrals, prescriptions, or other relevant information. Also speak with your provider.  They want the claim paid as badly as you do.  See if there is anything you can provide to help with the appeal process.

Remember, appealing a denied claim takes time.  It’s important if you are working it out on your own to let the provider know what’s going on.  If you call them and tell them you are working with your insurance company trying to get it paid, they will oftentimes put the account on a hold, meaning they will not send it off to a collection agency.  These holds do not last forever so continual communication is a must if you want your account to stay in good standing.

The important thing to remember is just because a claim is denied doesn’t me you can’t get it paid and the three most important things you can do to move forward is communicate, communicate, communicate.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 13 years.

Welcome to the Wild Ride: The Debt Picture Heading into 2019

Do you ever feel like you have been put in a blender and someone hit the ‘frappe’ button?

Or as a good friend of mine is fond of saying, sometimes life feels like “being in a cow pasture in a tornado with a thimble for an umbrella.”  His language is a bit more colorful, but since this is a family blog, I have rephrased a bit to reach a ‘G’ rating.

At all events, if you are feeling like this you are not alone.  The last month or so has been a really wild ride in politics, finance, the economy, and consumer spending.  And then let’s just throw in the holidays for good measure!

If you are an investor, or even have your retirement savings in the stock market, you could not have missed the wild drop and subsequent swings in market value.  Rising interest rates and concern about trade policies and the impact on the world economy seemed to be the fundamental finger that hit the ‘frappe’ button.

And yet the consumer remains pretty confident.  While the most recent trends in consumer confidence have tempered a bit, they are still high and no doubt are reflected in the continuing record setting levels of household debt.

The Federal Reserve of New York released their latest report on household debt, this time for the 3rd Quarter of 2018, and noted once again we hit another record at $13.51 trillion (read the report here) Among some of the findings are:

  • This was the 17th consecutive quarter with an increase, up 1.6% from the second quarter of 2018.
  • Total household debt is now $837 billion higher than the previous peak in the third quarter of 2008.
  • Mortgage balances continue to grow and now stand at $9.1 trillion, an increase of $141 billion from the previous quarter.
  • New auto loans grew by $158 billion, which is the highest seen since 2004.
  • Credit card balances hit $844 billion (a $15 billion increase).
  • The aggregate credit card limit rose for the 23rd consecutive quarter, a 1.3% increase.

Of interest is that the median credit score for housing loans was 758 which the Fed suggests means that since the housing loans are primarily going to those with high credit scores, availability of mortgage loans is actually pretty tight.

In contrast, those with subprime credit scores were given a much greater percentage of auto loans.

There is some not so good news in the report, at least if one is concerned about the consumer’s ability to repay their debt:

  • Aggregate delinquency rates increased in the third quarter.
  • 7% of outstanding debt was in some state of delinquency, an uptick of .2%. While that does not seem like much, that was the largest uptick in seven years.
  • Of the $638 billion that is in delinquency, $415 billion is seriously delinquent.
  • Much of this shift is due to a large increase into delinquency for student loans.
  • That said, credit card delinquencies (greater than 90 days) have continued to rise, and have been doing so for more than a year. They remain elevated when compared to historic levels.
  • Auto loan delinquencies have continued to increase and have been doing so since 2012.

Some additional interesting data has been published recently in a blog by Wallet Hub.  Alina Comoreanu, writing “Credit Card Debt Study: Trends & Insights” for the company (read the blog here) points out the following:

  • Although the consumer has been able to repay their debts to this point, the rise in additional credit card debt has now countered these repayment efforts.
  • Debtors repaid $40.8 billion in credit card debt in the first quarter of 2018, but then accumulated $38 billion in new debt.
  • Wallet Hub says they also see an additional $70 billion in new credit card debt by the end of 2018.

Of particular interest is Wallet Hub’s observation that “Looking at the average credit card debt per household, it increased 2 percent from $8,107 in the third quarter 2017 to $8,284 in the third quarter 2018. The third quarter balance is approximately $177 from being ‘unsustainable’ for consumers…”

Things to worry about?  Certainly.  We always encourage vigilance by our valued clients, and in particular to take a few steps to ensure your outstanding debts are collected promptly:

  • Turn over your placements to us for collection at your earliest possible convenience. The old saying that ‘the older they are the farther they go’ is quite true.
  • Review your year-end receivables now and turn them over to us as soon as possible. With tax season fast approaching this is the optimal time to initiate collection activity.
  • If you do not have a consumer financial agreement in place with your customers, strongly consider using one. This type of payment agreement (where the consumer agrees to your terms for payment) is a powerful collections tool.  Put one to work for you.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 13 years.