Over the years there has been a marked increase in medical collection problems. A recent controversial case involves an attempt by the Aargon Collection Agency to recover more than half a billion dollars written off as bad debts by UMC. According to news reports, UMC sold their half a billion worth of bad debts to a third party called Orion Portfolio for $8.5 million. Orion in turn hired Aargon, a professional collections agency, to collect the debts from the patients. The controversy has since generated threats of a class suit, multitudes of complaints and a closer examination of the medical collection practice.



The heart of the problem, as pointed out by experts and former patients, is the ineffectual billing practices of UMC and other hospitals. In the case of UMC, the hospital failed to bill the insurance and HMO companies of their former patients. To make matters worse, they included these neglected bills with their bad debts which they sold to a third party.

Another reason for the growing medical collection problem is the ambiguity of the coverage of certain insurance and HMO policies. Clients take out a policy not having a clear understanding of their coverage. This lack of understanding can be attributed to the clients' negligence, over zealousness of the agent to make a sale or both.

A third reason is in the hierarchy of bills, medical bills are most like to take the backseat in the face of mortgage, auto, credit card and utility bills.

A fourth reason is that medical collection records appear only on reports requested by the debtor for his or her personal record. Credit reports sold to third parties mask or block medical collection history. This protects the debtor against discrimination based on his or her medical condition. At the same time, it serves as a disincentive for the debtor to satisfy the debt.

A fifth and perhaps most obvious reason for medical collection problems is poverty due to unemployment or underemployment. Medical care costs are at an all-time high and can be extremely prohibitive to a minimum wage earner. Coupled with the reality that most unemployed or underemployed patients do not have HMOs or if they do, they have limited coverage; it is no wonder that these patients, if they do receive treatment, are not in a position to pay even if they wanted to.

The rise in medical collection problems can be attributed to several factors within the medical and insurance/HMO industry. The current employment and poverty levels play key roles as well. Then there is the questionable practice of selling bad debts to third parties at a discounted rate. In this light, it seems no longer important to point a finger to the party at fault since no single party can be said to be solely responsible for the problem.