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Reimbursement and Practice Management

Patient Collections

After reading this article you will know how to:

  • Identify 8 ways to effectively collect payments from patients throughout the revenue cycle

View related pearls

Patient balances have been notoriously hard to collect for most medical practices. That doesn't bode well for the future as insurers shift more financial responsibility for medical services to patients. Historically, medical practices relied on collecting copayments from patients as they present, but narrowing your efforts to focus only on that transaction merely keep you in business today.

Today close to a quarter of total annual patient revenues can be attributed to collections from patients in a medical practice, and that portion will likely grow as employers and other purchasers of health insurance look for ways to contain costs. Your practice's best response is to increase its focus on collecting throughout the entire revenue cycle, not just after a service is rendered.

Many medical practices are revamping their revenue cycle strategies by making more efforts to collect, including these tactics:

Set expectations. Train staff to use appropriate opportunities to remind patients of amounts they will owe (copayment, coinsurance and unmet deductibles for insured patients) or may already owe (account balances).The patient's initial appointment scheduling call is a worthwhile opportunity to set your payment expectation before the patient even arrives, and integrating expectations into the surgery or procedure scheduling process is business critical.

Request pre-payment for certain services. Request full payment at the time-of-service for non-covered and elective services. For those who cannot pay in full, state a minimum acceptable payment such as 50 percent — or a flat fee, for example, $200. For patients without insurance, establish a minimum deposit. There's no magical formula for the “right” deposit, but recognize that this is likely all the money that you'll ever see from that patient so set the amount wisely. For insured patients, request the allowable amount, but be sure to refer to the contractual adjustment as a "discount." Call the allowable you collect for the service the "discounted rate."

Offer payment plans. Propose to patients who cannot pay in full the option to make payments over time, following a down payment of, ideally, 50 percent of the balance. Don't stretch payment plans beyond six months, and only accept payment installments of $25 or more. Consider setting up twice-monthly payment plans. All of these options will work more smoothly for you and the patient if you can also offer automated withdrawal from the patient's checking account or credit card. These options will greatly improve the odds of getting full payment while ensuring that you don't spend an arm and a leg in staff time to administer payment plans.

Contract with a credit-card-on-file service. Use technology to securely retain patients' credit card data, whether it is for a one-time charge, or for regular installments on a payment plan. Once you and the patient decide on the parameters, they are keyed in the system and the card is debited each month. When payment is made, the vendor automatically transmits a receipt. Banks, as well as software companies, offer this technology at a minimal cost. Ideally, integrate the remittance process in your practice management system to post automatically. At minimum, offer online bill payment, ideally interfaced with your practice management system. Patients will appreciate the option to make payments via your practice website, and you'll save money by avoiding statement mailings.

Extend time-of-service discounts. Offer uninsured patients who pay in full at the time of service a discount for prompt payment, for example, 30 percent.

Ask for payment at check-in. Train employees to use effective collection techniques at check-in. For example, they can ask, "How will you be paying today, Ms. Patient?" or "Will you be paying by credit card, cash or check today, Mr. Patient?" The best time to request payment of an owing balance is after the patient hands over his or her credit card for the copayment. Once the credit card is in hand, your staff can simply say: "You have a balance on your account, Ms. Patient. Can I go ahead and run the card to clear up that balance as well?" Patients will often agree to pay for the full balance — or at least part of it.

Clean up statements. Remove insurance-financial-medical jargon from your billing statements. Clean up the visual presentation and layout of balance statements so it is does not appear a cluttered mess to patients. Use plain English and a prominent, brightly colored box to tell patients what they owe (e.g., "You owe this amount") and when payment is due (e.g., "Payment is due by: DATE".) Finally, transmit statements twice a month to coincide with the standard payroll process for employers.

Focus on post-service collections. For patients without insurance — and those with financial responsibility after insurance pays (which is now the majority of patients), a post-service collections policy is critical. Establish a process to send statements — the initial one as soon as it becomes due, and two or three subsequent statements — and then pursue internal collections for the amount that your practice has determined the patient owes. Place a telephone call to the patient, if staff resources allow, followed by a letter stating your intent to collect. Compress your internal collections efforts into 60 days or less, then allocate the attempts to collect to an outsider (i.e., collection agency). Right before the transfer, be sure to check Medicaid eligibility for all patients. Although Medicaid rates are abysmal, they are higher than that which you'll recover for that account from the agency.

Pearl: The Agency

If you are not satisfied with the recovery rate or the fee charged by your collection agency, shop around. For some reason, practices that shop aggressively for medical supply vendors remain tied to collection agencies for years. Your collection agency is one of your most important vendors — don't tolerate high prices or low performance. The great thing is that it's easy to check. Send 20 accounts to a new agency and see what it can do for you. If it can offer only the same performance and fees, stick with your current agency. But if the other agency is better, switch.

Pearl: The Ask

It can be hard for your employees to ask patients for money. Help by giving them a script. Print it on 3x5 cards and laminate them. Be sure to include a script for the initial collection, and what to say if a patient refuses to pay. It can also help to track time-of-service collections — and non-collections — and show the results to staff. It's easy for employees to be lax about collections if it seems like a $30 copay isn't a big deal. Show them how it adds up.

Pearl: Why Not?

Boost time-of-service collections with the "if not, why not?" rule. Employees should collect copays for every possible visit, and they should be expected to explain why each time they fail to do so. Use their actions — and inactions — as training. If you get the money up-front, you'll save a tremendous amount of staff time in the business office later.

Pearl: Know the Owe

Collect what patients owe you. Know what services are — and are not — covered. When something isn't covered, make sure your patients understand your expectations for their financial responsibility — and collect for your services. Maximize your time-of-service collections. And don't stop at copayments; if you can determine coinsurance and deductibles, collect them. Establish a consistent patient collections process. If patients think they can use your statements to wallpaper their kitchens, they're not going to pay. Send three statements and one letter — then send the account to collections. If you have tight front-end processes – and patients are educated about it — your patient collections shouldn't drag on.

United States