With the lingering economic recession, the challenges to your collections process continue to mount. At the same time that patients have less income to pay their bills, employers are putting additional financial responsibility into the hands of employees, and more Americans are joining the ranks of the uninsured. It’s the perfect storm – and your medical practice is right in the middle of it.
To get shelter from the storm, try these proven strategies to strengthen the outcomes of your collections process.
Secure financial clearance. Collections, once considered the ultimate “back-end” process in a business office, is now firmly entrenched as a “best practice” at the front end of a high-functioning revenue cycle. Before the patient presents, perform a three-part financial clearance consisting of:
- Verification of active insurance coverage
- Confirmation of eligible benefits (if applicable to the services that will be rendered)
- Validation of unmet deductibles
If possible, use technology to perform the clearance process automatically and document the results for each patient. While you can perform financial clearance at any time, the best opportunity is 36 hours in advance of the appointment – close enough to the date of service to get accurate and timely feedback about the patient, but still enough time to research and resolve problems discovered in the clearance process. Be sure to pull a record of balances for all established patients before the appointment so your staff can request payment with fresh, printed proof of the balance in hand.
Achieve time-of-service collections. Armed with the data gathered during the financial clearance process, your reception staff can request payment of time-of-service balances. These may include copayments and due balances from past services (no matter how old – one, 11 or 111 days!), as well as minimum deposits from uninsured patients. In addition to payment, the staff should request a copy of the patient’s insurance card and driver’s license. Although the exchange of information can be exclusively verbal, it pays to arm your reception staff with one – or all – of these documents:
- Results of the financial clearance process confirming the patient’s coverage, benefits, and unmet deductibles
- Ledger to show the patient’s balance
- An explanation of benefits, if applicable, showing any financial responsibility the insurer assigned to the patient
It also pays if your staff knows how to request payment. You won’t get anywhere if they ask the patient: “Would you like to pay today?” Instead, instruct them to make eye contact with the patient, and politely state: “How would you like to take care of your charges today?” If you can calculate the patient’s charges by the time he or she checks out, you’ll be in the best position to request and collect both coinsurances and unmet deductibles. For more tips, see my recent post on seven strategies to improve your time-of-service collections.
Refine payment plans. A certain percentage of patients will ask to pay what they owe over time. Take care that these requests, which can occur at the time of service or long after the balance is due, do not lead to problematic payment plans. Many times, the problems are rooted in how the plan is established. When patients ask for payment plans, resist suggesting an acceptable payment; instead, ask the patient: “How much can you pay today?” Next, let the patient drive the discussion of the plan’s parameters by asking open-ended questions, such as: “How much more time do you need?” Typically, patients will present a plan with a shorter timeframe than we would have presented to them! If the patient’s payment timeline is unreasonably long, ask for a shorter period. Ideally, the outer boundaries should be six months, with payments of no less than $25 per month.
Thanks to recent changes in credit card processing regulations, medical practices have another payment option to offer: storing the patient’s credit card information and processing the payments as they come due. Consider contracting with a vendor that can perform these tasks securely and conveniently – for you and the patient. Another payment plan option – one that a few vendors, including your local bank, might offer – is the medical services loan. These plans are still few in number and the terms must be scrutinized carefully. If you establish an internal payment plan, as many practices do, get everything in writing and issue receipts when payments are received.
Compress the statement cycle. Mail patients their first statements as soon as the balance owed is determined. Do not wait until the right “cycle” rolls around – you’ll just inflate your aging accounts receivables. To ensure that patients get your invoices in a timely fashion, train the staff member who posts payments in effective collections techniques. It is this employee who is the first to see the charges applied to the patient’s responsibility – these come in the form of copayments, coinsurance, and deductibles. Batching that information to process at a later date won’t get you anywhere but into a bigger problem because the longer an outstanding amount goes uncollected, let alone unbilled, the lower the chances of collecting. As soon as the insurer alerts you that the responsibility is the patient’s, transfer it.
Does it seem that you send bushels of statements to each patient? Stop the paperwork barrage: mail just three statements – four at most – before beginning the collections process. If you want to send more statements, mail them semi-monthly to coincide with the typical frequency of most workers’ paychecks. Regardless of the specific tactics you take, do not allow more than 60 days or three statements (e.g., the first at 0 days, the second at 30 and the third at 60) to go by with no response. If it does, move to the next step: collections.
Upgrade collections efforts. When patients don’t respond to your mailed statements, up the ante by calling them. If, as so often happens, you get their voice mail, leave a message requesting a return call to the practice in reference to his or her account. Immediately after the conversation (or leaving the voice mail) send a letter to the patient outlining his or her financial responsibility. This final notice of collections letter should also state a specific due date and options for payment.
Often, practices will send two of these final notice letters 15 days apart. If you send your initial collections letter on regular practice letterhead, try something different for the subsequent one: print it on orange paper cut to fit a non-business-size envelope. Use your practice’s initials on the envelope’s return address (M.P.A., for example, versus Medical Practice Associates), handwrite the patient’s name, and use a regular first class postage stamp. Why these seemingly peculiar efforts? Distinguishing this letter from previous attempts will improve the odds that the patient will actually open it. Use the same content as the first letter, although you can display more urgency in your request by printing an alert that this is the final notification prior to transferring the balance to a collections agency. Again, set a firm due date for payment, mail the letter, and place one final telephone call a few days later. If there’s no response after these two “final” letters and two telephone calls over a period of 30 to 45 days, it’s time to move the effort to an external collector.
Engage collections help. The reality is that collecting stubborn accounts is challenging – whether it’s you or a professional collections agency – so don’t expect miracles. A typical recovery rate for delinquent medical accounts is 10 percent. Since you can’t expect a huge pay out, ensure that the process of transferring accounts to the agency doesn’t drain your resources. Ideally, automate the processes of writing accounts off from your active accounts receivable to an agency and remitting any payments received. The more staff time you spend working these accounts, the more they cost you.
Consider working with multiple agencies to ensure that you are getting the best efforts on your behalf. If you have a great partnership, an agency may be able to help you manage your return mail – agencies, of course, have great skiptracing resources. Some collection agencies are capable of handling payment plans efficiently without alienating the patient. Thus, if the patient defaults on a payment, the agency would automatically assume responsibility. Like any vendor, be sure you’re getting the best service – at the best price. If you haven’t done so lately, review the pricing structure of your agency(ies) and determine if there’s room to negotiate.
While 10 years ago, it was common practice to write off patient responsibility without thinking twice, your practice’s bottom line increasingly relies on getting more payments from more patients. Patient collections are a fact of life in the medical practice industry; in these uncertain economic times, you must take extra steps to get them right.
Elizabeth Woodcock, MBA, FACMPE, CPC, is an expert, author, speaker and trainer in practice management operations and revenue cycle management whose clients include Kareo medical billing software. She is a co-author of “The Physician Billing Process: Avoiding Potholes in the Road to Getting Paid.” Watch a recent archived webinar by Elizabeth on Everything You Need to Know About Maximizing Patient Collections.