Turning Red to Black Blog

Turning Red to Black Blog

Turning Red to Black Blog: Discussing Topics Related to Revenue Cycle Management, Debt Collection, Debt Recovery, Debt Management, Billing Operations and Billing Procedures

What the New FICO Formula Means for You

According to insideARM’s analysis of FICO’s announcement last Thursday that it will recalibrate its FICO Score formula, the debt collection industry will have to adjust to these new measures. But it seems that this will affect medical billers as well. FICO will essentially begin to separate medical collection accounts from all other collections by minimizing the risk to lenders that medical collection accounts represent. While this is somewhat understandable for lenders, it still pushes medical professionals into a corner. Lenders are basically telling consumers we don’t care much if you don’t pay your doctor as long as you pay your mortgage, car lease or credit card bills. Why do medical professionals continually get the shaft?

It is certainly understandable that if someone gets sick or injured and cannot afford the care they received that this circumstance could have jeopardized their credit and purchasing power. Now, not so much. And why? Isn’t it risky for a financial institution to give this person a substantial loan before they can finish their recovery and demonstrate their ability to make proper arrangements to pay for it? In most cases, if the patient wished to protect their credit in order to obtain financing they could very easily workout a payment plan with their medical provider and make a phone call to their insurance company to clarify any coverage that may be missing or withheld. Additionally, there is a huge difference between this example of a serious injury or illness and someone skipping out on a preventative care bill. But FICO Score 9 won’t differentiate between the two. So for some reason, skipping a credit card payment will be much more harmful to your credit than skipping your teeth cleaning bill.

It appears that this latest action influencing the medical industry won’t be the last. Several measures have come before Congress to additionally address the growing number of medical bills that end up in collections. Two of these sound reasonable in their premise but will affect the way medical billers handle their accounts. The “Medical Debt Responsibility Act” would require the deletion of any medical collection account appearing on the patient’s credit report within 45 days after it is resolved. Generally this makes perfect sense, especially for those who are able to make a quick resolution. They should be treated just as quickly with regard to restoring their borrowing power. Another bill, introduced last year, would give a patient 120 days to resolve the matter with a collection agency before it can be shown on their credit report. This means that medical providers will be better off getting these accounts to collection agencies much sooner than they may have previously. Especially if the “120 day clock” can only be started once the account is actually placed with a collection agency. Of course neither bill has passed yet because Congress can’t seem to get anything done these days except escaping for summer recess.

The bottom line is that while the dysfunction in Congress mirrors that of American Healthcare Policy as a whole, it isn’t fair to continually punish good medical practitioners for billing their patients and collecting on income that is owed to them.Lest we forget, in this great country of ours, any and every professional is guaranteed the right to earn a fair and equitable living.When did it become policy to separate collection accounts based on what was purchased?

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