As the great global recession drags on, legions of financially over-extended Americans are trying to stretch household cash flow by delaying payments to service providers, including their physicians. The problem of late or no payments from patients – always a concern for physicians and other health care providers – is made worse if you’ve allowed your collections cycle to get out-of-shape and become ineffective.
It should come as no surprise that a sizeable segment of patients put physicians and other health care providers at the end of the line when prioritizing which bills to pay. After all, your service has already been delivered and cannot be repossessed for nonpayment. If, like many physicians, you’ve hesitated to bulk up your collections efforts, then this second-tier status for getting paid will never change.
The cost of a flabby collection cycle hits your bottom line in many ways; most notably, you end up spending more staff time to collect less. The industry average for the cost of collection is approximately $7 per patient encounter. It climbs to a much higher amount when you must chase after the patient to collect the funds. Indeed, my research shows that it costs you twice as much to attempt to collect a dollar from a patient as it does from a payer.
Faced with these challenges, it’s time to tighten up your practice’s protocols for patient collections.
Require a minimum deposit. Ask for deposits from patients who present with no insurance – or those who have insurance with which you do not participate. Don’t seek an unattainable amount, like $500; instead, opt for a $50 or $100 deposit. If you serve a patient population with significant financial hardship, even a $5 deposit is still a good idea. Is it worth the effort to ask for and collect the $50 deposit, or the $5 one for that matter? Yes, it is. If you don’t agree, then take a look at your track record for collecting from uninsured patients after a service is rendered. That $50 or $5 deposit may be the only remuneration you’ll ever see from some patients.
Collect more at time of service. Insured patients will owe you money, too, so why not collect it upfront? Review your payer contracts to determine whether you can collect coinsurance and deductibles at the time of service. This may increase the transaction time at check-out, but gearing up to do so will be worthwhile– it may even lead to efficiency improvements. Quick aids to speed up transaction time may include developing a simple spreadsheet to show major health plan’s allowables for your most common office visit codes. Assigning these time-of-service collection tasks to the right staff member will help, too. Look for someone with basic math proficiency (calculating simple percentages of a dollar amount, for example). Even if you narrow your office collection effort to the 10 most common codes – 99201-99205 and 99211-99215 – you’ll capture a significant portion of the patient financial responsibility. You are due to receive this money anyway, so why not get it sooner instead of later? To further streamline the process, consider investing in contract management software – it may pay off faster than you assume. Don’t forget to also shop around for the best credit and debit card processing rates, a move that will reap significant benefits as you increase your time-of-service collections.
Condense the collections process. Are you in the habit of sending 5, 10 or more statements to patients before getting serious about collections? If yes, you’re supporting the United States Postal Service but certainly not helping your practice’s bottom line. Send three statements – at 0, 30 and 60 days – followed by a letter at the 75-day past-due mark to announce the account is going to collections unless it is paid or other arrangements are made. (Be sure to include a due date on your statements, especially the 75-day past-due letter.) If you believe three statements is too few before threatening collections, then send more statements but do not add any time to the cycle. Instead, send statements twice a month, thus doubling the number of patient “touches” without increasing the time outstanding.
Collect due balances. Don’t concentrate your efforts solely on collecting past-due balances. If a balance is due, your reception staff should know what the amount is and ask for it during the patient arrival process. Better yet, when patients with past-due balances have upcoming appointments, call them a few days in advance to ask for a credit card payment. Emphasize the convenience of not having to do that extra paperwork when they come in for their visit in a few days.
Develop financial hardship protocols. As more Americans experience financial troubles, it’s important to be supportive of those who truly do have a need. Instead of forgiving everyone’s debt, or doing so haphazardly, develop a financial hardship policy to identify those patients who truly deserve a break. Put your policy in writing and tie discounts to a percentage of the federal poverty guidelines, which are updated annually in the Federal Register by the Department of Health and Human Services. Decide what documentation you’ll require from the patient to support your decision – a tax return, for example. Alternately, you may want to piggyback on the decision your local hospital makes regarding the patient’s financial hardship status.
Verify insurance. If it survives court challenges, the Affordable Care Act will increase the availability of health care coverage, adding many more Americans to insurance plans. Consider the prospect of a surge of patients with new coverage. You will need to do a better job of checking for any insurance eligibility your patients may have. Make verifying insurance coverage, checking benefits eligibility and confirming financial responsibility a standard three-step financial clearance process conducted before, or at, each patient’s appointment. Don’t force one of your employees to toggle between your billing system and a payer’s eligibility website. Increase staff productivity by installing dual monitors on their workstations. Your small investment will pay off in huge dividends.
Verify all sources of insurance. Place charges for services to patients identified as Medicaid eligible in a pending file for a week or two. Often, hospitals will admit patients under a “Medicaid pending” financial class but it may take a few days – or weeks – for eligibility to be confirmed. Don’t bill these patients as self-paying unless you must; instead, check your Medicaid pending file daily to determine if those patients have been granted Medicaid eligibility. Before you send any self-pay accounts to a collection agency, check each one for Medicaid eligibility.
Each of these efforts will take a little more time and, as we all know, time is money. But it will be worth your hard work and investment if even a minority of these efforts collect dollars you would not have otherwise received. Without a focused patient collections strategy and active management of your collections cycle, your practice’s bottom line can quickly erode.
