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By Bob Sullivan / Credit.com
January 7, 2015

It’s lovely that the now-famous British couple who made the mistake of having their preemie baby born in the U.S. won’t have to pay their potential $200,000 in medical bills. That doesn’t help anyone else, however. America is teeming with unpaid medical bills. How do we know? The nation’s top consumer financial regulator just published a study showing that half of all unpaid bills that land on credit reports are medical bills, and a stunning one in seven Americans with a credit report have an unpaid medical bill as a blemish.

You don’t have to look far for stories of billing red tape or insurance confusion that causes lead life-threatening consequences. In fact, even while social media and European press rallied behind Lee Johnson and fiancée Katie Amos as they were stranded in the U.S. with their 11-weeks-premature baby, a grieving mother in Ireland warned that lack of health coverage in the U.S. killed her immigrant daughter, 31-year-old Katrina Hennigan. Katrina, who had lived in the U.S. since she was 11, was advised to see a cardiologist, but as a non-insured hospitality worker, she was unable to afford visits with a specialist. She was found dead in her Rhode Island apartment last month. Had Hennigan moved back to Ireland, as her mother had urged, her cardiology visit would have been free.

But stories of maddening red tape and confusion are even more common. In fact, the Consumer Financial Protection Bureau says that most unpaid medical bills are relatively small. The median amount is $200. And 15 million Americans with credit report blemishes have only unpaid medical bills on their reports. Those small bills can have major consequences, however. An unpaid bill of as little as $100 can lower a consumer’s strong credit score of 780 by as much as 100 points, according to the CFPB. Consumers should check their credit reports regularly to look for collection items or mistakes that could be dragging down their credit scores — they can do that for free once a year, and can get a free credit report summary every month on Credit.com.

Why do all these small bills with big consequences remain unpaid? One reason: Billing practices cause massive confusion. Patients frequently receive two, three or even four bills from different entities after a simple doctor’s visit.

Here’s an example provided by one reader:

“For one doctor’s visit I’d pay a copay, and then get billed separately by the doctor, the lab company, and the practice,” she wrote. “Often these bills came months after the original visit. And their accounting codes made it difficult to understand what was covered in each bill. Hospital visits were even worse. For a dislocated finger, I had separate bills from the hospital, the ER docs, the radiology team, the pharmacy, and the lab.”

The CFPB cited billing confusion as a major cause of unpaid medical debt in its report, blaming “indirect affiliation with the debt (that) introduces potential sources of error in collections reporting.”

And another reader put it more bluntly:

“I would love to know what percentage of those bills aren’t paid because the insurer and provider are fighting, with the insured member stuck in the middle. I know I have some of those, and it’s maddening,” he wrote.

Have you suffered a medical billing red tape nightmare? As part of our Debt Collection Files, we look at why bills slip through the cracks, and how even a small paperwork error can have major life consequences. Leave your comment below, on our Facebook page, or email me directly at [email protected]

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This article originally appeared on Credit.com.

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