Medical Debt Collection Demand Letters
🏥 Medical Debt and Collection Demand Letters
Patient Rights & Provider Collection Compliance
⚖️ Legal Framework for Medical Debt
Medical debt is governed by overlapping federal and state laws that provide unique protections not available for other consumer debts.
Federal Laws
- FDCPA (15 U.S.C. § 1692): Applies to third-party collectors collecting medical debt
- FCRA (15 U.S.C. § 1681): Regulates credit reporting of medical collections
- HIPAA Privacy Rule: Limits what medical information collectors can disclose
- No Surprises Act (2022): Protects against surprise out-of-network bills
California Medical Debt Protections
| Law | Protection |
|---|---|
| Health & Safety Code § 127400 | Hospitals must have fair pricing policies and charity care programs |
| HSC § 127425 | Limits on selling patient debt to debt buyers |
| AB 1020 (2023) | Restricts liens on primary residences for medical debt under $25K |
| SB 1061 | Limits interest rates on medical debt |
Credit Reporting Changes
As of 2023, the three major credit bureaus removed:
- All paid medical collections
- Medical collections under $500
- Medical collections less than one year old
CFPB Medical Debt Ban: The CFPB’s 2024 rule attempting to ban all medical debt from credit reports has been challenged and halted under the current administration. The future of medical debt reporting remains in litigation.
🏥 Patient Rights: Challenging Medical Bills
Right to Itemized Bills
You have the absolute right to receive an itemized bill showing:
- Each service, procedure, test, and medication
- Date of each service
- Provider who performed each service
- Cost and billing codes for each item
- Insurance payments and adjustments
Common Medical Billing Errors
| Error Type | How to Spot It |
|---|---|
| Duplicate charges | Same procedure billed twice |
| Unbundling | Separately billing items that should be bundled |
| Upcoding | Billing for more expensive service than provided |
| Services not rendered | Charged for tests/procedures you didn’t receive |
| Out-of-network surprise bills | Provider you couldn’t choose bills out-of-network rates |
Financial Assistance and Charity Care (California)
California hospitals must:
- Screen patients for eligibility for Medi-Cal, charity care, or discounted care
- Provide charity care to patients with incomes ≤ 400% of federal poverty level
- Limit charges to uninsured patients to amounts generally billed to insured patients
- Not report to credit bureaus or sue while charity care application is pending
Retroactive Charity Care: Even if you’re already in collections, you can apply for charity care retroactively. If approved, the hospital must recall the debt from collections and forgive it.
No Surprises Act Protection
The federal No Surprises Act (effective 2022) protects against surprise bills for:
- Emergency services at out-of-network facilities
- Non-emergency services at in-network facilities where out-of-network provider is used without your consent
- Air ambulance services
Patients pay only in-network cost-sharing amounts. Providers cannot balance-bill the difference.
📋 Provider Collections: Compliance Requirements
California Hospital Collection Restrictions
Before aggressive collection (reporting to credit bureaus, selling to debt buyers, lawsuits), California hospitals must:
- Screen patient for financial assistance eligibility
- Provide application for charity care or discount payment plan
- Wait 150 days after initial billing before extraordinary collection
- Send written notice of financial assistance availability
- Obtain debt collection policy approval from governing board
Prohibited Practices
| Prohibited Action | Law |
|---|---|
| Placing lien on primary residence for debt under $25,000 | AB 1020 |
| Selling debt to debt buyer before offering charity care | HSC § 127425 |
| Charging uninsured patients more than Medicare rates | HSC § 127400 |
| Reporting to credit bureaus while charity care application pending | HSC § 127405 |
HIPAA Compliance in Collections
Medical providers and collectors must not disclose protected health information (PHI) beyond minimum necessary for collection:
- Cannot disclose diagnosis or treatment details to third parties
- Can disclose: dates of service, amounts owed, patient name/contact
- Cannot discuss medical details with family members without patient authorization
📄 Sample Letters
Patient: Dispute Medical Bill for Coding Errors
[Your Name]
[Address]
[Date]
[Medical Provider/Hospital]
[Billing Department]
[Address]
Re: Dispute of Medical Bill
Account Number: [Number]
Date of Service: [Date]
To Whom It May Concern:
I am writing to dispute charges on the medical bill dated [date] for services provided on [date].
DISPUTED CHARGES:
1. [Procedure code] – [Description] – $[Amount]
Reason: This procedure was not performed. I received [describe actual service].
2. [Duplicate charge]
Reason: This service appears twice on the bill (line items [X] and [Y]).
I request:
1. Itemized bill with CPT codes and descriptions
2. Medical records supporting each charged procedure
3. Corrected bill reflecting actual services rendered
4. Removal from collections if account has been referred
Do not report this disputed bill to credit bureaus while the dispute is pending.
Sincerely,
[Signature]
[Name]
Patient: Request for Charity Care (California)
[Your Name]
[Address]
[Date]
[Hospital Name]
Financial Assistance Office
[Address]
Re: Application for Charity Care
Account Number: [Number]
Dear Financial Assistance Office:
I am requesting consideration for charity care under your hospital’s financial assistance policy and California Health & Safety Code § 127400.
My annual household income is $[amount], which is [X]% of the federal poverty level for a household of [number]. I am [uninsured/underinsured] and cannot afford the bill for services provided on [date].
Enclosed please find:
1. Completed financial assistance application
2. Proof of income [pay stubs, tax return, etc.]
3. Proof of household size
Pursuant to HSC § 127405, I request that you:
1. Cease all collection activity while this application is pending
2. Do not report this account to credit bureaus
3. Recall this account from any collection agency
I will cooperate fully with your review process.
Sincerely,
[Signature]
[Name]
Enclosures: [List documents]
Provider: Pre-Collection Demand Letter
[Provider Letterhead]
[Date]
[Patient Name]
[Address]
Re: Outstanding Balance
Account Number: [Number]
Amount Due: $[Amount]
Dear [Patient Name]:
Our records show an outstanding balance of $[amount] for services provided on [date]. Despite previous billing statements, this balance remains unpaid.
PAYMENT OPTIONS:
We understand medical bills can be challenging. We offer:
1. Payment in full by [date]
2. Payment plan: $[amount] per month for [X] months
3. Financial assistance: If you are experiencing financial hardship, you may qualify for our charity care program or discounted payment plan
TO APPLY FOR FINANCIAL ASSISTANCE:
Contact our Financial Assistance Office at [phone] or visit [website] to complete an application.
If we do not hear from you within 30 days, we may refer this account to a collection agency, which could affect your credit.
We prefer to work with you directly. Please contact us at [phone] to discuss payment options.
Sincerely,
[Name]
[Title]
💡 Strategic Approaches
For Patients: Negotiation Tactics
- Request itemized bill: Always get detailed billing before paying or negotiating
- Check for charity care eligibility: Many hospitals have generous thresholds (up to 400% FPL in CA)
- Negotiate cash discount: Providers often accept 30-50% of billed charges for immediate cash payment
- Payment plan: Most providers prefer payment plans to selling to collectors
- Challenge insurance denials: Appeal if insurance wrongly denied coverage
For Providers: Collection Best Practices
- Screen for financial assistance before collections
- Document all patient communications
- Offer realistic payment plans
- Use in-house collections before selling to debt buyers
- Ensure HIPAA compliance in all collection communications
💼 How I Help with Medical Debt Disputes
I represent both patients challenging medical bills and providers navigating compliant collection practices.
For Patients:
- Review bills for coding errors and overcharges
- Apply for charity care on your behalf
- Negotiate settlements with providers and collectors
- Sue for FDCPA/FCRA violations in medical debt collection
For Providers:
- Draft compliant pre-collection notices
- Review financial assistance policies for CA compliance
- Train staff on HIPAA and FDCPA compliance
- Defend against patient disputes and regulatory complaints
Medical Debt Assistance
Whether you’re a patient facing unfair medical bills or a provider navigating collection compliance, I can help.
Email owner@terms.law
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