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Paying your medical bills is more complicated

A collection agent in the ER? That can be avoided

In general, out-of-pocket costs for patients have been rising.

Julia Cumes for the Globe /File 2013

In general, out-of-pocket costs for patients have been rising.

It used to be that if you could not afford to pay a big medical bill, your doctor or hospital might let you pay it over time, a little bit each month.

Holston Medical Group, for instance, a large, multispecialty physician group in Tennessee, had one plan with such low payments that it would have taken the patient 115 years to pay a bill off.

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But the days of such informal arrangements may be numbered. You can still find installment plans, but now they are often more structured agreements, managed by a company hired to oversee your account.

Hospitals say they are turning to such businesses because, as insurance plans shift more costs to patients, providers are stuck trying to collect money they are owed. (Hospitals provided about $41 billion in uncompensated care in 2011, according to the American Hospital Association.)

Some hospitals have even come under fire for heavy-handed practices like putting representatives of collection agencies in emergency rooms to get patients to pay upfront.

Enter services like CarePayment and ClearBalance, which promote no-interest payment plans to hospitals and patients as flexible and “patient friendly.”

“Hospitals are very sensitive to the fact that out-of-pocket costs for patients are increasing drastically,” said Craig Froude, chief executive of CarePayment. “They’re trying to figure out how to adapt.”

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Details vary, depending on the terms negotiated between the hospital and the payment company. In some cases, hospitals offer the plans as an option. Other hospitals automatically enroll patients who do not pay a bill within 90 days. Typically, the companies offer plans of as long as two years, and sometimes as long as five years, with no interest or fees for patients. Payments are usually based on a percentage of the total bill, with minimums around $25 a month.

The hospital pays a fee to the company in exchange for getting its payment upfront. The company then collects the payments.

Some offer automatic deductions and let patients check their accounts online.

The benefit is that hospitals may get more of the money they are owed than they would otherwise, even after factoring in fees to the outside firm.

The patient gets time to pay a big bill and avoids the damage to a credit record that would occur if the debt were sent to collection. That can still happen. If the patient does not pay, the company sends the account back to the hospital for review.

A patients who uses such a plan may receive a card bearing the names of the hospital and the payment firm, but it is not a credit card. The companies say they may conduct a “soft inquiry” on a patient’s credit report, which does not affect the credit score. A patient whose score falls below a certain level will still be put on a plan, but the company will not pay the hospital until the patient has made a few payments on time.

A patient’s payment record generally is not reported to credit bureaus. Mitch Patridge, chief executive of CSI Financial Services, which is based in San Diego and offers ClearBalance, said it gave patients the option of having their payment history reported to credit bureaus if they chose, to help build credit.

Jeff Costello, chief financial officer at Beacon Health System in South Bend, Ind., said it tried offering short-term payment plans and even low-interest loans through a local bank, but “patients didn’t like paying interest for medical bills.”

The system began using CarePayment’s no-interest plan in 2009 and it has been well received by patients, he said; some who use it once ask for it upfront when seeking additional care. Patients can add new bills to the account, he said, and have their monthly payment recalculated.

Here are questions to ask about medical installment plans:

 Will I have to pay interest if I don’t pay off the bill by a certain date?

Some providers, including dentists and eye care outlets, offer true credit card financing. They may offer zero-percent rates, but the rate can skyrocket if you are late or stop paying. Hospitals say their plans are different and offer no (or, in some cases, very low) interest. But make sure you understand the details of any plan you accept and get a copy of the agreement in writing, so you know what happens if you cannot pay.

 Can I still get financial assistance if I agree to a payment plan?

You should always ask first about financial help, to reduce your overall bill, said Mark Rukavina, a specialist on medical debt. Under the Affordable Care Act, nonprofit hospitals will have to develop written policies on their “charity” care and collection practices. Many for-profit hospitals have written policies, too. You should ask.

 Should I use a no-interest plan, even if I can pay in full?

Some providers offer significant discounts if you pay in full within 30 days. If you can do so, that might be a better option.

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