Getting Money in the Door: Streamlining Patient Collections

August 22, 2014

Small unpaid claims can add up to big problems for your medical practice. Here's how to find the best partner to collect what's owed for your medical services.

My work has allowed me to meet many physicians in the small and midsize practice space over a number of years in a variety of specialties. In my experience, they all have very specific things in common including that they studied medicine, not business. Additionally, these practice owners all have operational headaches. Healthcare is a business, after all, and no physician's practice is immune to the challenges that running a small- or medium-sized business presents.  While many physicians make great business owners, the back office is not where they want to focus their time, so finding smart solutions to help is the key.

Working Smarter, Not Harder

We can pinpoint two very specific areas where physician's practices most often "leave money on the table," as we say, or rather, where money goes uncollected:

1. Denied or unpaid insurance claims; and

2. Patient copays or remaining balances.

When it comes to unpaid insurance claims, relentless outreach to insurance companies can cost physicians and their staff precious time and money, and take a considerable toll on productivity. Instead of giving up on the collections, or putting too much time to the process, the third choice is to work smarter, not harder.

Four Characteristics of an Ideal Collections Partner

One solution is outsourcing collection to businesses knowledgeable in the space. If you do your homework and find a company that you're willing to work with on accounts receivable specifically in regards to insurance claims, there are a few things you should look for:

Do they handle electronic and paper/HCFA claims? As paper claims seem to taper off with the speed of technology adoption, be sure that whatever company you choose to spearhead your accounts receivable follow up can handle both appropriately.

Are they speedy? Electronic claims should be followed up on no less than 10 days after they are submitted to the insurance company. Any less time, and it's likely the claim hasn't been reviewed and filed appropriately. Any more time, and the likelihood of the claim getting "lost" or being perhaps incorrectly denied increases greatly.

Do they have numerous avenues for follow up? If the company doing follow up only has one way of contacting the insurance company, do you think they will be aggressive in collecting what is owed to you in a speedy fashion? Probably not. There should be online, phone, and other interactive ways of reaching insurance companies to get to the bottom of why a claim has been denied or unpaid.

Once a claim is addressed, yet still unpaid, can this company do what is needed to achieve a positive end result? Can the company fix an error or modify a claim and resubmit? Can they also address the patient's responsibility owed for in-network deductibles or non-covered benefits?

Once you've settled with the insurance company, collecting past-due balances from patients is an important component of the revenue cycle that physician practices must actively manage. Much easier said than done, efforts dedicated to collecting money due from patients is time consuming and labor intensive and only a relatively small percentage of efforts result in successful collection.

Back-office staff can take measures such as reporting debts to credit bureaus and taking legal action. But every dollar spent trying to gather owed money is one less dollar of profit for a practice. Not to mention, quite often the cost invested in gathering owed funds can exceed the past-due balance. If practices decide to forgo such collection measures, even small amounts owed can add up to hundreds of thousands.

Outsourcing Your Collections

If you’re looking to outsource such services, look to companies that will accomplish or offer the following:

• Efficiency. Not unlike in insurance company follow-up, the longer a claim sits unanswered with a patient, the lower your chances are of collecting money owed. Don’t wait until it’s too late to engage a helping hand in this arena of your practice.

• Persistent, not pestering follow-up. Collection is all about balance. It’s imperative that you collect money owed to you, but not at the cost of a perturbed patient, a damaged reputation and lost potential referrals.

• Knowing how to reach patients. Knowing the best way to reach your patients will pay off big when it comes to collecting owed money. You will better your chances of a successful collection if you reach that patient on their terms. Is it via text? Perhaps e-mail and voicemail?

By implementing outsourced collection processes, not only will physicians stop "leaving money on the table," and enjoy greater financial reword, but they can also focus on patient care and not on back office paper work.