Physicians Practice Pearls: Deadbeat Serious

March 1, 2007

Another selection from our weekly e-mail newsletter. This issue: dealing with deadbeat patients.


You probably have at least one patient whom you know can pay you, but doesn’t. The patient continues to visit your office, saying “Just bill me.”

Now suppose you recently discovered that BlueCross BlueShield sent this patient a $10,000 check for a surgery you performed on him last month. Nevertheless, the patient refuses calls from your office staff. Your medical-legal risk may prevent you from dismissing this person. But even if you could terminate your relationship, he would still owe you money. What can you do?

Collections agencies - Practices have historically used collections agencies only sporadically, but they can effectively “up the ante” on a deadbeat patient. Most agencies take their cues from you regarding how much pressure to exert on your clients. When negotiating with a collections agency, make sure you outline directives that preclude harassment. Most practice managers report that the recovery rate of medical accounts through collections agencies is less than 15 percent; so don’t expect the majority of your accounts to be settled this way. The key? Submit accounts sooner rather than later.

Small claims court - Small claims court is regulated at the state level and often administered at the local level, so you’ll need to learn the rules for filing small claims litigation in your locale. Most such courts charge a small processing fee and require you to complete paperwork and present documentation of the debt. Many states have a maximum amount for a small claim - $5,000, give or take - but that typically covers most medical debts. The bad news? The court does not provide the means for actual collection.

The IRS - When patients refuse to turn over an insurance check they’ve received to cover services you’ve performed, you must first understand the assignment of payment. Most patients assign you the right to receive payment for services you provide to them. Explore such assignment rights with the insurance company involved to determine whether it will pay you directly and then go after the patients itself to retrieve its money. Failing that, call your state insurance commissioner to ask whether your state’s laws support your right to the assignment. If neither of these options works, report the misdirected payment to the IRS as income to the patient by submitting a 1099 Miscellaneous Income form. Some practices have tried this as a last-ditch effort to compel patients to submit payment.

When it comes to the inveterate deadbeat patient, these strategies may prove an effective method of demonstrating that although you’re a compassionate and flexible physician, you’re also serious about collecting for your services. So pay up, please.

Elizabeth Woodcock, MBA, CPC, is a professional speaker and consultant specializing in practice management. Elizabeth is a fellow in the American College of Medical Practice Executives and a certified professional coder. She can be reached at elizabeth@elizabethwoodcock.com or via editor@physicianspractice.com. Learn more about Elizabeth at www.elizabethwoodcock.com.

This article originally appeared in the March 2007 issue of Physicians Practice.