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Why Past Due Revenue Recoveries are Declining
Advancements in Technology
Need for FDCPA Reform
Consumer Awareness
Economical and Political Influences
Escalating Medical Costs and a Higher Percentage of Uninsured
Revised Bankruptcy Law
Many factors and variables determine the outcome of the past due recovery process. Below, you will find informational data that will provide a better understanding and overview of the ever-growing trends that represent obstacles and hindrances to the modern day collection process.
- Advancements in wireless communication, i.e. cell phones, are replacing the standard landline phones. Did you know federal laws prohibit third party billing and collection agencies from contacting a patient/consumer by any means that will incur the patient/consumer an additional expense, without their written or verbal permission? This is why third party billing and collection agencies must provide a toll free call back number when patient/consumers are calling to discuss their past due account. Cell phones generate yet another obstacle, i.e. the inability to determine the physical location of the patient/consumer when a call is placed to them. The Fair Debt Collection Practices Act (FDCPA) governs calling time between the hours of 8:00 a.m. and 9:00 p.m. - any calls made outside that time zone causes a violation that can lead to a lawsuit. Past due billing and collection practices are also governed by state specific laws, and if a patient/consumer travels into a state that the agency doesn't hold a license, bond, or certificate of authority, then that agency may run the risk of lawsuit, fines imposed, and/or criminal charges. To make matters even more complicated, toss in a modern day hypothetical that is highly probable, i.e. (a) agency calls patient/consumer's residential landline; (b) agency is calling into a state in which they comply with all regulatory laws in that state; (c) agency is calling during the FDCPA allowable timeframes; (d) patient/consumer uses 'call forwarding' feature on their landline phone and routes the calls to his/her cell phone; (e) agency now runs the risk of violating several federal and state laws, depending on the location of the patient/consumer when the call is received. An agency may be successful in arguing that there was no intent to violate the law, and they may win - but going through the legal battle and paying the attorney fees - leaves an agency victorious at a high financial cost. The Federal Trade Commission must achieve reform in the near future, or past due receivables will continue to decline.
- Advancements in the Internet, i.e., multiple sample letters formatted for patient/consumers to send to a collection agency, whereby exercising their rights under the Fair Debt Collection Practices Act (FDCPA), by demanding a halt to any and all communications to them from the agency. The Internet also offers 24/7 educational resources to patient/consumers, teaching them how to specifically avoid paying past due bills.
- Negative media exposure from television talk shows, and the promotion of books that teach patient/consumers how to stop collection agencies from communicating with them. The FDCPA was established in the late 1970's as a federal law to govern the actions of collection agencies and third party billing offices that attempt to recover past due receivables; unfortunately, this law is in dire need of reform, i.e., it's intended purpose was to discourage unethical and harassing recovery methods, and it has been exploited by patient/consumers for the sole purpose of 'repayment avoidance'. More specifically, when a patient/consumer communicates in writing to the third party agency to cease and desist any and all communications to them, the agency MUST comply and has NO other means to discuss repayment with them. Hence, the extreme value of reporting debt to the (3) national consumer credit bureaus.
- When providing products and professional services without receiving immediate payment, many office staff members are not obtaining adequate and/or valuable information to assist in the recovery process. Taking this a step further, said information should be verified for accuracy and authenticity. Be 100% certain that the person receiving products/services is the person they say they are. Obtaining social security numbers is critical. Many times, an account without a SS# is unable to be placed on the patient/consumers credit report, i.e. resulting in the LOSS of a valuable recovery tool. Individuals have the right to refuse to provide a social security number. However, you should have knowledge of your rights as a creditor. Can you refuse products and/or withhold services if the SS# is not provided? Since filing insurance is a courtesy in most instances, can you refuse to file insurance on the patients behalf if the SS# is not provided? Know your industry specific laws and regulations. You may be surprised how easy it is to achieve your objectives, while remaining in full compliance. Failures at this level continue to hinder the recovery process once it's outsourced to a professional agency.
- Advancements in technology have put PC's in the workplace, whereby software programs are making it enticing for businesses and medical practices to perform in-house billing and lengthy pre-collect efforts. Readily available hardware, software, and Internet consumer locating resources is only a small element of a successful recovery plan. The experience of a highly trained receivable management specialist is key. The longer ineffective in-house recovery efforts are performed, the older the past due account becomes, and revenue recovery is adversely affected.
- Economical influences: escalating gas prices; insolvent companies causing unemployment; rising insurance premiums are causing many small businesses to stop providing group insurance to their employees; rising local and municipal taxes, America's participation in the Middle East hostilities; rising inflation and interest rates; credit card debt and new regulation requiring a larger minimal monthly payment; the past several years of declining interest rates has created an influx of young first time home buyers who are now finding themselves over extended with household expenses they did not have as a renter; many mortgage loans were obtained with the lowest and most attractive adjustable/variable interest rates that are now starting to increase. Many of these variables are obvious to us all on a daily basis, but rarely do we stop to consider the overall cumulative and compounded affects on a patient/consumers disposable income.
- Revisions to the Federal Bankruptcy Laws caused a dramatic surge in patient/consumers filing bankruptcy. Year ending 2004 recorded 1,597,462 bankruptcy filings. Year ending 2005 recorded 2,078,415 bankruptcy filings, i.e. the largest number of petitions ever filed in any given year, and attributed to the consumer rush to beat the new tougher bankruptcy laws that went into effect on October 17,2005. (www.bankruptcyaction.com). However, the legislative purpose/intent for these revisions, should have a long term benefit in the recovery process, i.e. it has become more difficult to qualify for Bankruptcy, forcing people to honor their financial obligations, and requiring them to participate in consumer debt counseling services.
Diminish the Impact of Revenue Recovery Obstacles
To learn how e-Recovery Solutions can Diminish the Impact of Recovery Obstacles for your company, please complete our inquiry form or contact Crystal Cultice.
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