Should a Practice Send Old Patient Balances to Collections or Write Them Off?

When a small balance is not worth the staff time

A small balance is not worth chasing when the next step costs about as much as it is likely to bring in. That cost is the practice’s own and can be counted: the printed and mailed statement, any payment-link fee, and the minutes spent on the call, the note and the posting.

Illustrative example: a practice pays $1.20 to print and mail a statement and $24 an hour to the person who makes balance calls, and a call with its note takes ten minutes. Three statements cost $3.60 and two calls cost $8, so sending a $15 balance through the full sequence costs $11.60 before anyone answers the phone. On those numbers, $15 is a reasonable threshold; a practice that emails statements would set it lower. The written rule holds:

• The threshold in dollars, and whether it applies after the first statement, after the full sequence, or both.
• Who approves each write-off, posted under its own adjustment type, separate from insurance write-offs and courtesies.
• That it applies to every patient the same way, with no exceptions made at the front desk.
• The date it was set, and the date it is checked again against the practice’s costs.

Two limits shape the number. The first is the rules on waiving a patient’s share. For Medicare and Medicaid patients, a federal penalty statute counts “the waiver of coinsurance and deductible amounts” as remuneration; its general exception requires that the waiver is not advertised, that “the person does not routinely waive coinsurance or deductible amounts,” and that the practice either finds financial need in good faith or “fails to collect coinsurance or deductible amounts after making reasonable collection efforts.” For dental plans, the ADA’s code calls it overbilling when a dentist accepts a plan’s payment as payment in full “without disclosing to the third party that the patient’s payment portion will not be collected.” A threshold applied after statements and calls reads differently from one applied at checkout, and payer contracts can add terms, so the attorney reviews the rule first. The second limit is practical: the CFPB reported in 2023 that, from April 11 of that year, the three nationwide credit reporting companies stopped including medical collections under $500 on credit reports. Under that policy, a balance below $500 sent to an agency brings letters and calls, not a line on a credit report.

What happens before an account goes to a collection agency

The steps belong in the financial policy the patient signs, with days counted from the first statement after insurance has paid, and one named person who works them. For example:

• Day 0: the first statement, once insurance has paid or denied and the patient portion is final.
• Day 30: a second statement, marked past due.
• Day 45: a call from the practice, logged with the date, the caller and the answer. A text about a balance falls outside the federal healthcare exemption for texts, so it waits on whatever consent the practice’s counsel approves.
• Day 60: a third statement and a second call, with an offer of a written payment plan.
• Day 75: a final notice by mail with the amount, the date the account will go to an agency, and how to pay or set up a plan before then.
• Day 90: placement, approved by name by the owner or office manager, after the three checks below.

The days are an example; what matters is that the policy fixes them and the log shows they were kept. Three checks come right before placement. Billing disputes: an uninsured or self-pay patient billed at least $400 above the good faith estimate can start the patient-provider dispute resolution process within 120 calendar days of receiving the first bill, and while it is pending the provider “must not move the bill for the disputed item or service into collection or threaten to do so.” Treatment: if placement also ends the relationship, the ADA’s code says a dentist should not stop a course of treatment “without giving the patient adequate notice and the opportunity to obtain the services of another dentist,” and the AMA’s Opinion 1.1.5 says a physician withdrawing from a case must give notice long enough for the patient to secure another physician. Records: the ADA’s code says the duty to furnish copies of records for future treatment “exists whether or not the patient’s account is paid in full.”

What federal rules say about collecting and credit-reporting medical debt

The Fair Debt Collection Practices Act covers collectors of debts from transactions “primarily for personal, family, or household purposes.” Its definition of a debt collector leaves out a creditor’s own employees collecting “in the name of the creditor,” so the practice’s staff, calling in its name, sit outside that federal definition as written. Two clauses bear on a practice anyway: a creditor collecting under “any name other than his own which would indicate that a third person is collecting” is pulled back in, and a separate section makes it unlawful to design and furnish forms meant to create the false belief that a third party is collecting “when in fact such person is not so participating.” State law can reach further: Florida’s statute, for example, opens its list of prohibited collection practices with “In collecting consumer debts, a person may not,” words that are not limited to agencies. A letter series bought under an agency’s name, with no agency work behind it, is a question for counsel, as is the practice’s own state law.

Regulation F, the CFPB’s rule under that law, says a collector “must not furnish to a consumer reporting agency” information about a debt until it has spoken to the consumer, or has mailed a letter or sent an electronic message and waited “a reasonable period of time to receive a notice of undeliverability.” The same section bars a collector from selling, transferring or placing for collection a debt it knows or should know “has been paid or settled or discharged in bankruptcy.” A payment taken at the front desk after placement is news the agency needs the same day.

The federal rule that would have kept medical debt off credit reports no longer stands. The CFPB issued it on January 7, 2025; on July 11, 2025 the U.S. District Court for the Eastern District of Texas vacated it in Cornerstone Credit Union League v. CFPB, at the request of both the CFPB and the plaintiffs. What remains at the federal level are the credit bureaus’ own policies, as the CFPB described them in 2023: Equifax, Experian and TransUnion had removed paid medical collections, were waiting a year from the visit before medical debt could appear, and had stopped reporting medical collections under $500. Those are company policies, not a federal rule, and state law may add its own limits, so ask the agency in writing what it reports, to which bureaus, and when.

HIPAA allows the work and sets its terms. The Privacy Rule’s definition of payment includes “billing, claims management, collection activities,” and lists what may go to consumer reporting agencies: name and address, date of birth, Social Security number, payment history, account number, and the provider’s name and address. A person who receives protected health information to do billing or provide financial services for a practice fits HIPAA’s definition of a business associate, and the practice must first obtain “satisfactory assurance” that the information will be safeguarded. The minimum necessary standard applies to what the agency receives. This is a plain reading of rule text, not legal advice.

How to choose a collection agency, and what the contract should say

Check the agency before the contract: whether it is registered where the state requires it, how it answered complaints in the CFPB’s public Consumer Complaint Database, and its letters and call scripts, since those words will reach the practice’s patients. The general checklist for any agency agreement, including direct payments, remittance and how calls are counted, is in the guide to AR consultants and collections agencies. For patient balances, the contract also needs, in writing:

• A business associate agreement, signed before any account is sent, and the list of fields the agency receives.
• Credit reporting: whether it reports at all, to which bureaus, how long after placement, and whether the practice can stop it on a given account.
• Lawsuits and settlements: no suit and no settlement for less than the balance without the practice’s written approval for that account.
• Recall: the right to take an account back at no charge, for example when insurance pays late, a billing dispute opens, or the owner decides to close it.
• Complaints and exit: how fast the agency reports a patient complaint, and what happens to open accounts and the practice’s data when the contract ends.

This guide quotes no market rates for agency fees, because the published ones come from agencies. An agency paid only a share of what it collects gains most from the accounts easiest to collect, so compare what lands in the practice’s bank after that share with what the practice’s own calls would have brought in on the same accounts.

In-house or agency: the practice’s own balances, and reviews

The choice is not one decision for the whole practice; it is a sort of one list. Pull every patient balance older than 90 days from the aging report, one row per account: balance, statements sent, calls and answers, last payment, payment plan, insurance status, future appointment or treatment in progress, and flags for disputes, hardship requests and returned mail. Then sort it into four groups:

• Below the threshold: written off under the policy, by its approver.
• Not ready: insurance open, a credit elsewhere, or a dispute. Back to the owner of that step.
• In-house: the patient has paid before, answers the phone, is still in treatment or can take a plan. These stay with the practice’s caller.
• Agency: correct, undisputed, past the final notice, and silent. These are placed.

Illustrative example: a practice pulls 140 patient balances older than 90 days, $38,000 in all. Fifty-five are under its $15 threshold and total $700. Thirty-two, worth $9,500, still have insurance open or a credit on a family member’s account. Twenty-eight, worth $11,800, have a payment plan or answered a call in the last 60 days. Twenty-five, worth $16,000, are correct, undisputed, past the final notice and silent. The agency question is about 25 accounts and $16,000, not 140 and $38,000. Reviews are the cost outside the list. A placed patient may post one, and HIPAA governs the reply: a covered entity “may not use or disclose protected health information, except as permitted or required” by the rules. Elite Dental Associates in Dallas agreed to pay $10,000 to HHS’s Office for Civil Rights and adopt a corrective action plan after OCR found it had disclosed patients’ protected health information in replies to Yelp reviews. Any reply to a review about a bill goes through the practice’s privacy officer before it is posted.

The weekly check, and where the Review fits

One person owns patient balances and reads out the same lines every week, with last week beside them:

• Balances by stage: first statement, past due, final notice sent, ready to place. Count and dollars.
• Final notices whose placement date falls this week, and the checks done on each.
• Accounts placed and write-offs posted this week, by adjustment type, each with its approver.
• Payments received on placed accounts, and the date each was reported to the agency.
• Open disputes, hardship requests and recalls, each with a next date.

If the lists are short, every placement has a name on it, and the agency’s statements match the practice’s records, there is nothing here to buy. An outside look earns its fee when nobody can say how much of the patient aging still waits on insurance, or why write-offs rise. The Revenue Review takes two weeks; its first pass reads aggregate exports, such as patient aging by bucket and adjustments by type, not patient names, and it ends with a written report that prices each finding. Lumina is not a collection agency, works no accounts and gives no legal advice. The free 20-minute call is where we say whether the Review fits, including when it does not.