Sent to collections while insurance is still processing? What to ask

If a bill went to collections while your insurance claim was still open, it is worth a few calls and some letters. This guide says what the federal rules we read do and do not say, how credit reports are a separate question, and what to ask the billing office. Only the provider, your insurer and the collector can confirm what happened to your account.

The short answer

In the federal rules we read, we did not find one that stops a for-profit provider from sending a bill to collections while a claim is still open. Some insurance programs and provider contracts may set their own limits. Do not read that as "it is fine". It means the protection, if you have one, usually comes from somewhere else: the provider's own policy, your state, your insurance contract, or the rules for nonprofit hospitals below.

Nonprofit (tax-exempt) hospitals do have a federal rule. To count as having made reasonable efforts to check whether you qualify for financial assistance, the hospital must, among other steps, tell you about its assistance policy and refrain from most extraordinary collection actions for at least 120 days from the date it provides the first post-discharge billing statement. The rule also covers how the hospital treats assistance applications, and it applies to care covered by the hospital's assistance policy. This is a rule for hospital facilities run by tax-exempt hospital organizations, and the text is in 26 CFR 1.501(r)-6, paragraph (c)(3).

Some states add their own rules, and we did not read each state's law for this guide. Your state insurance department or your state attorney general's consumer office can tell you what yours says.

The credit report is a different question, with its own rules. See the section below.

What counts as an extraordinary collection action

In the same federal text, paragraph (b)(1) lists the actions that count. The list includes selling your debt to another party and reporting adverse information about you to credit bureaus. It also includes actions that need a legal process, such as a lien, wage garnishment, or starting a civil action. One more item is deferring or denying medically necessary care, or asking for payment first, because of unpaid past bills.

Paragraph (b)(2) says a debt sale is not counted if, before the sale, the hospital has a legally binding written agreement with the buyer. The agreement must bar the buyer from extraordinary collection actions, cap its interest, let the debt be returned if you turn out to be eligible for assistance, and keep you from paying the buyer and the hospital together more than you would owe as an eligible patient. This is why one question below is whether the account was sold.

We read the text of the rule. We cannot tell you whether your hospital is a nonprofit, whether the rule applied to your care, or what your hospital did. The billing office can say which, and its financial assistance policy should name its collection practices.

Four things to ask the billing office

Ask on the phone, then send the same questions in writing and keep a copy.

1. "Please put my account on hold while the insurance claim is open." Ask for the hold to be noted on the account, and ask for the name of the person who noted it.
2. "Please note the open claim number on my account." Give the claim number from your insurer, or ask the office for the one it sent. If you have an EOB, say its date.
3. "Please confirm the date of the claim." Ask for the date of service and the date the claim was first sent to your insurer. A late or resent claim may explain why the bill came before the insurer's answer. Our guide on a bill that comes months later covers the clocks.
4. "Is this account still the hospital's, or was it sold or assigned to a collector?" If it went to an agency, ask for the agency's name, address and the date it received the account. If it was sold, ask who owns it now. Some states limit interest on medical debt held by a buyer: see interest and late fees on a medical bill.

Then ask for an itemized bill and the matching EOB, and compare them before you pay anyone. Our guide on how to request an itemized bill has the wording. If the answers do not add up, the steps in how to dispute a medical bill and what to do when the billing office says no come next. If the bill is hard to pay, ask about financial assistance too: see hospital charity care and financial assistance denied.