We Know Fee-For-Service Healthcare Has Problems. But Would You Guess That It’s Hurting Patient Credit Scores, Too?

Mounting evidence shows that chaos in medical billing isn’t only affecting our nation’s health. It’s marring the financial reputation of many Americans. That’s because the bills themselves can take months to sort out, and medical debts can be reported rapidly to credit agencies, often without notification. Even small unpaid bills can severely damage credit ratings.


The fact is that there are few standards governing medical debts: In one case, a billing office might give you — or your insurer — 60 days to pay before they go to collection. However, someone else might let you pay the bill off over the course of a year. A lot of companies will sell the debt to collection agencies, which typically take a cut of the proceeds and then choose whether or not to report your unpaid debt to credit agencies.

But wait, debt? Yes, you’re fee-for-service medical bills are being classified as debts. And according to The Times, the problem’s accelerating for several reasons: Charges are rising. Insurance policies are requiring more patient outlays in the form of higher deductibles and co-payments. And while doctors’ practices traditionally worked out deals for patients who had trouble paying, today most doctors work for large professionally managed groups and hospital systems whose bills are generated far away, by computer.

To compound the problem further, we all know about the collusive chargemasters that can generate prices at will. Try this: Gene Cavallo, 61, is a New Mexico businessman who had always paid his bills on time. He had an excellent credit rating, that was until two years ago when he needed surgical excision of a melanoma on his shin. After over 60 bills were generated for the surgery and six months of follow-up visits, his amount due came to $110,000. The bills arrived sporadically and ranged from 18 cents to $17,000. His insurance covered about $70,000.

Various providers asked him to pay the remaining balance of $40,000. He then requested itemized bills and balked at absurd line items — $85 for tweezers and $20 for a box of tissues. He argued the bills down, line by line, and ultimately agreed to pay $25,000.

Fee-for-service healthcare is a mess. That’s why we pioneered our model of direct care. There is still and exchange of money, a payment of bills. But at least we can provide our service like an actual business. Not some secret entity in the sky that can charge what it will, and then hurt your credit score when you’re confused about what you actually owe.