How Medical Bills Can Easily Damage Our Credit Records

Elisabeth Rosenthal, who has been writing a series on the cost of health care in the U.S., wrote a piece in the Times Sunday Review this weekend looking at how chaotic medical billing can affect our credit:

Gene Cavallo, 61, a New Mexico businessman who put his children through college, had always paid his bills promptly and had an excellent credit rating, until he required surgical excision of a melanoma on his shin two years ago. The more than 60 bills generated for the surgery and six months of follow-up visits — arriving sporadically and ranging from 18 cents to $17,000 — came to $110,000; his insurance covered about $70,000.

When various providers asked him to pay the remaining $40,000, he requested itemized bills and balked at some of the “ridiculously inflated prices,” such as $85 for tweezers and $20 for a box of tissues. He argued the bills point by point, and ultimately agreed to pay $25,000.

But during the negotiations some of the debt was sent to collection. Two years later, he no longer answers the daily robocalls from collection agencies and has had a couple of credit cards canceled because his score has fallen. “It was a scary thing to do because I own a business and dabble in real estate, so the ability to borrow has always been important to me. And now I have no ability, I assume, to borrow for any reason.”

Rosenthal points out that so many of us are vigilant when it comes to paying bills like credit cards, mortgages, car payments, and so on, but when we receive medical bills with charges for things we don’t quite understand and want to sort out, those bills often get sent to collections or are reported as “past due” to credit agencies before many people have a chance to negotiate.

In other cases, people feel pressured to pay without knowing why a procedure costs the way it does:

Consider Chris Sullivan of Pennsylvania, whose $2,770 bill for an echocardiogram offered a “prompt payment” discount of 20 percent if he wrote a check within 21 days — meaning a discount for not asking questions on a bill for a test he was told would be under $300.

Even worse, one mortgage initiator in Texas says that many applicants aren’t aware that they have medical debt (often in very small amounts) in collection. All the more reason to have easier access to our credit scores.

Photo: Lauren

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4 Comments / Post A Comment

Elsajeni (#1,763)

The combination of poorly-explained charges, or charges way out of whack with what you were told to expect, plus a very short window to pay — that’s just the worst. I think the angriest I’ve ever been about a bill was lab charges for a test I didn’t request and didn’t know the doctor was running, with the “payment due” date listed as about a week after I received the paper bill. ONE WEEK.

garli (#4,150)

Oh dude, I have so many medical bill horror stories. I had a fun period in my life where I broke my leg badly enough to require surgery (and 5 days in the hospital) and then more surgery after that and then I broke it again with more surgery and another overnight stay and then more surgery.

One of the bills that couldn’t be explained was a 7000 dollar bill from the anesthesiologist. (Side bar: insurance companies and anesthesiologists screw you over all the time – seriously their billing is totally bizarre). Anyway I paid it because I had the money and was trying to save up to buy a house so I didn’t want my credit f’ed over.

About 9 months later I got another letter from the anesthesiologist. It took me about 3 weeks to open it and and looking at it made me want to barf. When I finally opened the thing? It was a letter saying “Sorry we messed up your bill, here’s 6500 dollars back” With a check. WTF?

bgprincipessa (#699)

Yes, this is all so true. And it’s difficult because of course you don’t hear anything about it when you’re actually at the doctor. You get a bill later, and then you’re left to decipher what everything means. I had a bill for about $25 go to collections, which was the first I ever heard of it. I had no idea I owed anyone until the collectors started calling.

arrr starr (#69)

I had a medical provider (in an ER situation) take down our address wrong. The bills did not get delivered, we were not able to provide updated insurance information, and the bills went to collections before I even heard we owed anything. Fortunately, I’m pretty insurance-literate and was able to spend a lot of time on hold getting the providers to bill insurance, insurance to pay the bill, and and the providers to pull back and cancel the collections agency accounts. But it took at least 10+ hours of my time. I was livid especially since the hospital took down our address wrong and that’s what caused the whole mess.

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