The Little-Known Texas Law That Can Save You From Medical Debt

Five years ago, Julie was taken by ambulance to the emergency room. “At that time I provided all my info including insurance information,” she wrote on the Credit.com blog. “One year later I received a threat from the ambulance company that my account was going to be sent to a collection agency. I immediately called my insurance company…(which) states they were never billed, and now the statute is up for filing a claim. What should I do?”

If Julie lives in Texas, she may count herself lucky. That’s because under Texas civil statutes, a health care provider must “bill a patient or other responsible person for services provided to the patient not later than the first day of the 11th month after the date the services are provided.” And that’s the longest they can wait to bill. In some cases they must bill even sooner, by “the date required under any contract between the health care service provider and the issuer of the health benefit plan.” (For example, if a provider is a participating provider in a health insurance plan that, by contract, requires them to bill the insurance company within six months, then they would have to bill within that time frame.) If they don’t? The Texas law goes on to say that providers who violate this law “may not recover from the patient any amount that the patient would have been entitled to receive as payment or reimbursement under a health benefit plan or that the patient would not otherwise have been obligated to pay had the provider complied…” Essentially, the patient will only have to pay what they would have had to pay had the bill been submitted on time. Julie isn’t the only person who has encountered this type of problem. A commenter named Sue says she was involved in an auto accident and although she gave the hospital her Medicare card, they never billed Medicare, and a collection agency is now trying to collect $20,000 from her. And Brenda wrote that she is also fighting a collection account where “my husband’s insurance company was never billed and (insurance) will not pay it now because it is so old.”

But patients who don’t live in Texas aren’t not necessarily out of luck, says attorney Richard Alderman, director of the Center for Consumer Law, University of Houston Law Center. “In my opinion you should have other redress or defenses if the doctor does not properly submit the bill,” he says. For example, patients who seek medical care from providers in their insurance company’s network may have additional protections. The contracts providers such as doctors or hospitals sign with insurance companies may require them to bill in a timely manner. If they do not, those contracts may prohibit providers from billing patients for amounts that would have been covered had the bill been submitted in a timely manner. And in the case of Medicare, under the Affordable Care Act, providers must generally submit Medicare fee-for-service claims within one calendar year of the date of service. If they fail to do so, Medicare guidelines state “the provider may not charge the beneficiary for the services except for such deductible and/or coinsurance amounts as would have been appropriate if Medicare payment had been made.”An Ounce of Prevention If you don’t want medical bill headaches down the road, try to head off problems initially by doing the following: Always double- (and triple-) check your insurance and personal information with the provider at the time of service, even if you’ve had the same insurance for some time. Policy or group numbers, may change, and can cause billing problems. Make sure your address and contact information are up to date as well. Don’t assume that no bill means no problem. After a visit to a medical provider you should receive an Explanation of Benefits (EOB) from your insurance company and/or a bill from your provider (if you have a balance due). Mark your calendar, and if you haven’t received either within 30 to 60 days after you received the service, contact the provider. If they tell you not to worry about it, take notes (and keep them where you can find them later, if needed.) This, of course, assumes you know how to contact your providers, which can prove difficult in the case of hospital or emergency room visits, where medical bills may come from various providers. Staying on top of these bills may allow you to appeal if your insurance company denies the claim, or to dispute a bill you believe is incorrect. The longer you wait, the more likely your bill will be turned over to collections and hurt your credit scores. Contact your insurance company or Medicare for help if a provider tries to bill you for a service that you believe should have been covered. If the provider does not bill the insurance company in a timely manner, you may want to consider paying the bill then submitting it yourself for reimbursement. This can be critically important in situations where you see health care professionals who are outside your insurance network. They may not be under the same obligation to bill promptly, as in-network providers are. If, despite your best efforts, a bill you don’t believe should have been sent to collections winds up there, you have 30 days from the initial dunning letter to dispute the debt and request validation. (It’s best to do so in writing with a certified letter.) If the collector responds that you owe the debt, but you don’t believe you do, consult a consumer law attorney. Medical debt that goes into collections can have a significant negative impact on your credit scores. You can pull your free annual credit reports from AnnualCreditReport.com to see if you have any debts in collection, and you can check your credit scores for free once a month on Credit.com to see how a collection account is impacting your credit.

Gerri Detweiler is Credit.com's Director of Consumer Education. She focuses on helping people understand their credit and debt, and writes about those issues, as well as financial legislation, budgeting, debt recovery and savings strategies. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.com.