Patient Collections: 5 Mistakes Your Practice Can Avoid

April 3, 2012

Many practices make common collection mistakes that when left unattended can sap revenue. Here's what you can do to improve your collection process.

Many practices experience common accounts receivable (A/R) mistakes that when left unattended result in the nightmare of watching A/R soar and, sometimes, become unmanageable. Managing practice collections begins before the first patient visit and ends with a zero balance; all the while monitoring the key processes involved.

Mistake #1

It starts with the collection of insufficient or inaccurate financial data. This is an ongoing complaint from the billing and collections department. I hear everything from "the schedulers didn't obtain the right information when they scheduled the visit" to "no one verified benefits" to "it's errors with data entry." All of these things are likely to lead to problem accounts and rising A/R, and may be an indication of a failure to provide employees with sufficient training, and a failure to monitor performance.

If your front-line staff is slipping, you can't ignore it. You must counsel them and provide additional training if necessary and hold each person accountable to a specific standard. It is also important to evaluate work flow - deciding what type of workload is reasonable for each person to manage, while producing quality output. This aspect of performance should count when it's time for annual performance reviews.

Mistake # 2

Garbage in, garbage out! Collecting accurate demographic and billing information should not be limited to new patients. Update patient information and insurance information at each visit. If a staff member fails to do this, hold him accountable.

You can use this chart to help your staff probe for and collect the right data when scheduling appointments, or at the beginning of each patient visit.

Mistake # 3

Another headache for practices is monitoring patients with aged balances who keep coming in for additional services. It's mind-boggling for staff to discover patients who fail to pay coming in for additional care and running up larger balances that will make it even harder to collect. The front desk needs to be trained and empowered to assist with collecting patient balances. Set up a system whereby accounts are reviewed one day before the patient visit; when there are existing patient balances, determine processes to support payment.

Begin by checking the account balance when a patient is scheduled, and let her know that payment is expected at the time of the visit. Follow up by reminding the patient again, when you make the reminder phone call a day or two before the visit. There should be no excuse for the patient not being prepared to pay. It's your staff's job to "ask" the patient for payment when she arrives at the office.

Receptionists and schedulers need to be trained on how to audit a patient's account and to know when it's time to have the patient meet with someone in the billing department. Determine the specific parameters for your staff so they can do the job you want and support each other. It takes a team!

Mistake # 4

Untimely submission of insurance claims and poorly designed patient statements will thwart collection efforts. It is also important to generate charges in "real time," so charges are posted and electronically sent to the payer within 24 hours. Take a critical look at your patient statement to make sure it is easy for patients to understand what they should pay, as opposed to what is pending from the insurance company. This will expedite payment - and if patients can pay "online" so much the better.

Establish specific billing targets, such as:

• Charges must be submitted the day the service is rendered.

• Charges must be posted and insurance claims generated within 24 hours. (You might establish a longer time frame for surgical claims if you have a coder review the physician's op notes before submission.)

• Send patient statements within 10 days of service, and immediately following insurance payment.

• Statements should also include an aging of the balance and a dunning message for delinquent accounts. Most billing software allows you to customize your dunning messages and determine the criteria for when they should be placed on the patient statements.

Mistake # 5

Failure to analyze collection performance can be a major headache. Too often the staff is focused on getting the billing off their desk and the claims submitted, but have little time to follow up on receivables, analyze the practice's financial performance, and improve collections.

Monitoring overall performance requires consistently reviewing month-end reports and analyzing collection performance. There are reports that will reveal trends and help you identify where there are problems on the horizon:

• Unpaid claims
• Aging reports
• Aging by payer class
• Patient balance reports
• Payer performance reports

After analyzing collection performance ask yourself some key questions:

• Should we change what we are currently doing?
• Can we increase automation?
• Should we use a collection agency?
• Does outsourcing make sense, and if so, to what degree?
• Should we cancel "bottom feeder plans"?

Finally, develop written financial policies. These policies should represent your philosophy and collection goals. The goals should be specific and identify employee responsibility. By including the entire staff in development and implementation of the policies, you get their buy-in, which is essential to achieving the desired results.

Judy Capko is a healthcare consultant and author of the popular books "Secrets of the Best Run Practices,"2nd edition, and "Take Back Time." Based in Thousand Oaks, Calif., she is a national speaker on healthcare topics. She can be reached at judy@capko.com.