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Improving Medical Payment Collection from the Top Down

Improving Medical Payment Collection from the Top Down

In previous years, providers primarily collected from payers. Today trends are transitioning and now we face higher patient responsibility with less payer responsibility. What does that mean to medical practices, which are trying to stay financially viable? Let’s first take a look at the data, and see how it will shape or influence what physicians do to stay afloat, or even thrive, financially.

High-deductible plans have increased from one million to 11 million since 2005, with the average single plan deductible being higher than $1,000. Since it can cost three to five times more to collect from patients than payers, patient collections are no longer something that can be ignored or put on the back burner.

It is estimated that 49 percent of healthcare providers do not know expected patient responsibility before the patient is treated. While 78 percent of a given provider's patients know their responsibilities, they do not commonly volunteer payments if not asked (reference: InstaMed Trends in Healthcare Payments Annual Report: 2012). In 2010, bad patient debt in the United States was estimated at more than $65 billion. National health expenditures are expected to increase to $5.5 trillion by 2023, with more than half falling into the laps of households and businesses.

With this being said, collection at the time of service should no longer be considered an option, but a necessity for the practice’s financial health.

When considering our patients cannot go to the grocery store, select a cart full of items and state “bill me” when they come to the checkout counter, why do they feel it is acceptable to do so at their provider’s office? What is the difference?

The answer is quite simple.

When a patient is grocery shopping, he or she can see the prices of items and know in advance what the financial obligation will be before standing in the checkout lane.

Patients do not purchase more items than they can afford, and if they put a $2.50 loaf of bread in the cart, plus a $3.75 gallon of milk, and a $12.25 hamburger, they know their balance is going to be $18.50 plus tax. When the checker is finished scanning the groceries, she states the amount owed and asks “how they would like to pay?” not “would you like to pay?” The patient understands that if the amount owed is not paid he will not walk away with the items selected. Seems pretty simple, so why do patients feel it is acceptable when they are treated at a medical practice to not pay at the time of service?

The answer is this: We have conditioned our patients to believe it is okay when it comes to their medical bills to not pay at the time of service. Most of the time, they have no idea what they owe other than their copayment. And let’s face it: Most practices are not even set up to accept payments online to make the payment process convenient, which is alarming when considering more than 62 percent of Americans pay their bills online.

So the question becomes, how can we recondition our patients to understand payment is expected at the time of service? It starts from the top down. All members in the practice have to be on the same page when it comes to patient collections and follow the same processes. The best method for office consistency is to have the proper policies and procedures in place.

Here are a few considerations for creating policies and procedures on patient collections:

1. Self Pay. Are payments required at the time of service or will you allow payment plans? If you allow payment plans, how many payments will you allow? How many statements will the practice send before the account is turned over to a collection agency? We suggest the following:

a.) First statement when the insurance payment is posted (day 0 of patient responsibility).

b.) Second statement at day 28 or 30.

c.) Collection letter at day 60 of patient responsibility.

2. Charity programs. Do you offer a charity program? If so, how does a patient qualify for the process? There are many resources for providers to utilize to create the criteria for a charity policy if needed. Most importantly, have a policy documented and in place.

3. Write-off policies. At what point do you write off accounts (i.e., small balances, death)? Remember the amount can be written off, but an alert can be set in the system to notify staff the patient owes a balance for the next time he or she is treated. This protects the practice from sending statements out for balances owed that are less than what it costs to send the statement.

4. Collection policies. When do you turn accounts over to a collection agency? Are patients terminated once turned over to the agency? Patient accounts should be reviewed 15 days after the collection letter is sent to determine whether they should be turned over to an agency. Once the patient is turned over to a collection agency the practice should decide whether they are going to terminate the patient (before terminating patients investigate state laws and your payer contracts to ensure you are compliant).

Once these procedures and policies are created, do not forget to explain and review each of them with the staff. Your staff should know the policies and be able to answer questions and explain and discuss each policy to the patients if needed. Once the policies and procedures are in place expectations can be set with patients as early in the process as scheduling.

 

 
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