Charging Interest

September 1, 2005

Are there any guidelines for physician offices charging interest on overdue patient accounts?

Question: Are there any guidelines for physician offices charging interest on overdue patient accounts?

Answer: The federal Truth in Lending Act requires you to inform patients in advance - when you provide treatment - if you plan to charge interest on a delinquent account. If you would like to do so, make sure you comply with all elements of the law, as well as with any relevant state laws.

For more information on Truth in Lending, visit www.ftc.gov/os/statutes/fdcpajump.htm.

Also, the American Medical Association offers this guidance:

"Although harsh or commercial collection practices are discouraged in the practice of medicine, a physician who has experienced problems with delinquent accounts may properly choose to request that payment be made at the time of treatment or add interest or other reasonable charges to delinquent accounts. The patient must be notified in advance of the interest or other reasonable finance or service charges by such means as the posting of a notice in the physician's waiting room, the distribution of leaflets describing the office billing practices, and appropriate notations on the billing statement. The physician must comply with state and federal laws and regulations applicable to the imposition of such charges. Physicians are encouraged to review their accounting/collection policies to ensure that no patient's account is sent to collections without the physician's knowledge. Physicians who choose to add an interest or finance charge to accounts not paid within a reasonable time are encouraged to use compassion and discretion in hardship cases."