Collection Agencies

Title: Collection Agencies
Standard #:


Issued: 10/11/2005 Reviewed/Revision Date:


Assignment of a patient account to a Collection Agency must be in accordance with this standard.  For purposes of this standard, a Collection Agency means any person or entity who engages in the practice of collecting delinquent consumer debt.


A. Assignment of Debt to Collection Agency.  Practice Plans/Departments may not assign a patient account to a collection agency except as follows:

  1. Patient Account remains in IDX System – An account may be assigned to a Collection Agency provided all third party money has been collected and is posted to IDX, the account history remains in the IDX system while the remaining balance is pursued by the Collection Agency and;
  2. Account Determined Un-collectable.  An account may be assigned to a Collection Agency if the Group has made a reasonable determination that the account is uncollectible.  An account may be considered uncollectible if (a) the account is at least 120 days old; or (b) the Group can demonstrate, based on statistics relating to the Group’s patient account collection efforts from the [last two full fiscal years] [previous academic year] [most recent full eight calendar months], that the likelihood of collection is less than ten (10) percent.

B. Standards for Collection Agency.  The following is required in connection with the assignment of accounts to, and the retention of, a Collection Agency:

  1. Group Policies.  The Group must have policies which identify when, and under whose authority, patient debt is assigned to a Collection Agency.  Such policies should be structured to ensure that patient accounts are assigned fairly and consistently.
  2. Compliance with Law.  The agreement with the Collection Agency must require the agency to represent and warrant that its collection practices are, and will remain during the term of the agreement, in compliance with the California Rosenthal Fair Debt Collection Practices Act, California Civil Code §§1788-1788.32; and the federal Fair Debt Collection Practices Act, 15 U.S.C. §§1692-1692o, Pub. L. 95-109, as those laws, and the regulations promulgated there under, may be amended from time to time.
  3. Policies and Procedures.  The Group must obtain copies of the Collection Agency’s policies and procedures which are designed to ensure compliance by its employees with the state and federal laws governing collection agencies, identified in Paragraph B.2 above.  Such copies must be provided by the Group to the USC Office of Culture, Ethics and Compliance for review at least 60 days before the effective date of the agreement between the Group and the Collection Agency.
  4. Accounts of Low-Income, Uninsured Patients.  The agreement with the Collection Agency must prohibit the agency from using wage garnishments or liens on primary residences as a means of collecting the unpaid debt, where the debtor has provided documentation to either the Group or the Collection Agency reflecting he/she is uninsured and has an annual income of less than [twice the federal poverty level].

C. Payments.  Accounts assigned to collection agencies under the conditions described above must remain on the IDX system but may be adjusted to a zero balance by utilizing the Collection Agency Write Off –Pay Code 593.  Subsequent payments received from the Collection Agency must be posted to the patient’s account utilizing Collection Agency Payment–Pay Code 271.