Improving Patient Collections

Improve your collections, improve your bottom line. Unpaid patient bills are accounting for an increasing share of physician accounts receivable. This is because many employers have increased patient co-pays and deductibles, and more people are enrolled in high-deductible, consumer directed health plans. It has been exacerbated by the recession. 

Many physician practices have not focused significant back-office efforts on patient collections primarily because in the past, health insurer reimbursement constituted a large majority of reimbursement and accounts receivable. In addition, most people are in the habit of placing a low-priority on paying medical bills and some just assume the practice will write-off the amount due.

However, keep this in mind: According to McKinsey & Co., once a patient leaves the office, physicians typically collect about half of what is owed. If the patient is uninsured, that figure drops to between just 10 percent and 20 percent.

Steps Your Practice Can Take to Help Improve Patient Collections:

This is especially important during this recession when so many people have lost jobs and are electing to continue coverage through COBRA. If a person fails to make his/her monthly payment under COBRA, coverage is terminated and you will be stuck billing a patient at a time when he/she has no or limited income.

The policy should be posted at the registration desk, and new patients should be required to sign a copy of the policy at their first visit.

You can provide discounts off of this fee schedule. For example, for self-pay and out-of-network patients, some practices will provide a discount for paying-in-full in cash at the time of service.

If the front office staff is not collecting 100 percent of co-pays at the time of service, you need to correct this immediately and educate your front office staff on the importance of time-of-service collections. Co-pays are easy to calculate – they are spelled-out on the patient’s insurer ID card. Amounts past due are also easy to determine prior to or at the time of the visit. Ideally, the practice would request credit card payment for past due amounts at the time the appointment is made.

You want to shorten the time lag between the patient visit and sending the patient your bill. This means getting the claim to the health insurer in an expedited manner. Optimally, the claim would be out the door that day or within 24 hours, and some practices do this. At minimum, electronic submissions have made this something to shoot for.

  • Note: Any error on the claim will delay both your payment process.

The odds of collecting the full amount will decrease the longer you wait to send the bill to collections. This is especially important for large bills, such as for patients who have had a surgical procedure and are covered by a high deductible plans.

While this may sound harsh, it is important to change the mindset that a medical bill can simply be ignored. The practice can authorize the collections agency to create a payment plan if the patient is having financial difficulties.

If you accept self-pay and/or out-of-network patients, you need to be very clear up-front on payment policy. You are not obligated to accept assignment of benefits for out-of-network patients. If you do not accept assignment, you may and should require 100 percent of payment at the time of visit. Front office staff must enforce the policy.

It is entirely appropriate to offer a cash discount to self-pay and out-of-network patients.

Payment plans are also appropriate for some self-pay patients, especially those who have having more expensive surgical procedures.

Charity care is care given without any expectation for payment; it is treated as a write-off. Charity care is typically reserved for low-income patients who are not eligible for Medicaid and are either uninsured or under insured. Practices should develop a policy on charity care, addressing two elements:

  1. under what circumstances you will provide charity care; and 
  2. what is the total amount of charity care you are willing to provide in a given year.

ACFAS recognizes that our members’ primary interest is treating patients and that they also want to support their patients during tough times. But, with patients assuming more responsibility for payment, practices must have honest and open conversations with patients before services are provided.