What Must Health Care Practices Consider When Entering A Debt Collection Service Agreement?
When hiring a third party collection agency to recover receivables due for unpaid health care services, health care practices tend to focus on fees and commissions and often lose sight of other equally important issues. Below are a few key questions that health care practices are encouraged to ask and evaluate before entering a Debt Collection Service Agreement in order to avoid the common pitfalls associates with these types of transactions.
1. Will we need to disclose Protected Health Information (“PHI”) when working with the collection agency? If the answer is “yes,” the practice will need to enter a Business Associate Agreement that is compliant with The Health Insurance Portability and Accountability Act (“HIPAA”) and The American Recovery and Reinvestment Act of 2009 (including its expansion of the HIPAA rules and regulations) and must contractually require that the collection agency protect the privacy of the PHI. There may also be State mandated privacy regulations that are more restrictive than HIPAA and ARRA that must be taken into account.
2. What method of practice does the collection agency utilize? In addition to conducting itself in accordance with the Fair Debt Collection Practices Act and Fair Credit Reporting Act, State laws governing collection agencies and collection methods must be reviewed and incorporated into the Agreement to insure that the collection agency is complying with State specific rules and regulations when collecting debt for the health care practice.
3. How will the health care practice monitor the collection agency’s activities? It is important to incorporate language that will enable the health care practice to monitor the collection agency’s activities during the debt collection process, including: patient communications, complaints, requests for information, debts collected and/or settled, legal actions, judgments and garnishments. The practice will also want to include language establishing when and how this information will be obtained. A consistent system of monitoring and reporting is especially critical in the event that the relationship is terminated and the health care practice is left to pick up where the collection agency left off.
4. What are the health care practice’s options and obligations when terminating the Agreement? Can the health care practice freely stop working with the collection agency or does the Agreement incorporate restrictive language? How will existing collection accounts be handled upon termination of the Agreement? These questions are easily overlooked yet often become obstacles in terminating relationships and retrieving crucial information.
