Five Tips to Manage Patient Collections Accounts

April 18, 2015

Having a great collections management policy in place at your practice can serve you very well, and keep your accounts receivable on track.

I have spoken with many different physicians in varying areas of practice and have found one common denominator with regard to patients who have been placed into collections. It doesn't happen soon enough, and the collection accounts rarely get paid, resulting in lost income for the practice.

That said, here are some quick tips for placing and managing these accounts:

1. Have a solid and unwavering collections policy in place.

One we have found that works really well is to send the patient three statements in a row. If no contact has been made, send a "15-day pay or collections" letter. We have found that 75 percent of patients reach out to us and either pay immediately or set up a payment plan. Either one works, either way, you get all of the money owed to you.

2. Assess administrative fees for accounts placed in collections.

Once you have determined a patient is not going to reach out to you, and you want to place them into collections, you are allowed to add a reasonable administrative fee to the total collections amount. We use $25 to cover the costs of reviewing the account, sending the letter, following up again on the account, and the time that is spent passing an account into collections. You should inquire with your third-party billing company what fee they charge if you are unsure.

3. Continue to monitor patient accounts after they are placed in collections.

Once a patient is in collections, resist the urge to "wipe your hands clean" of those accounts. Just because you have placed a patient into collections with a third-party agency, does not mean you do not need to follow up on those accounts. We used to use a different collection agency that would deliberately allow accounts to roll into the 120+ days category, allowing them to aggressively call the patients and demand payment (they would end up with 50 percent of whatever was collected), rather than a smaller percent if collected sooner. This is still your money, watch it like a hawk.

4. Routinely reconcile practice and collection agency accounts.

Once a patient makes a payment or pays in full, be sure the collection agency is aware and the accounts are updated in their system. Oftentimes, patients will turn around and send money to your practice instead of the collection agency's address. If the two systems do not match, things could get a little hairy with patient phone calls. It's bad enough they had to go into collections, making that a more painful process could only cause resentment and potential bad reviews of your billing practices.

5. Create a template "All Debt Paid" letter for patients.

Have a simple "all debt paid" letter template available to fill specific patient information in, if the patient calls and requests one to send to the credit reporting agency. It could be as simple as, "PATIENT NAME paid balance in full, in the amount of $______ on DATE. If there any questions surrounding this debt, please feel free to call our accounts receivable office at PHONE NUMBER."

Remember that bad collection debts can stay on a patient's credit report for seven years, even after the debt has been paid. The "all debt paid" letter is mailed to the patient, who then sends it in to the credit reporting agency. The credit reporting agency will place it on the credit report as a caveat to the debt so potential employers, banks, etc., can see the patient made good on the debt. It may or may not help, but it's a courteous customer service action you can provide at very little cost to your practice.

Managing your accounts receivable and collections accounts can be tedious and sometimes very frustrating. By having a solid plan in place, it really takes a lot of the emotion out of the management, keeps you on track, and gets you paid.