Surviving the Deductible Reset in 2012: How to Collect Deductibles and Improve Self Pay Collections

At the beginning of each calendar year, medical groups feel the impact of deductibles on their bottom line unless they implement “best practices” for self pay collections.  Medical practices will have even more self pay patients in 2012 and the deductible category is the fastest growing portion of self pay.  This is a result of the number of patients selecting high deductible health plans without the ability to pay their deductible – thus resulting in patients who are underinsured.

Patient collections are labor intensive and expensive – much more than collecting from insurance companies.  This makes it even more critical to collect what you can at the time of service.  Timing is to the medical practice’s advantage before the patient has been seen by their physician. According to McKinsey & Company, providers can expect to collect only 50 to 70 percent of an insured patient’s balance after he or she is treated. Other studies have shown that a patient is 90% likely to pay before they see their physician, 70% likely at checkout and then it drops to 40% after they leave the medical practice.

I have read that there are two factors that motivate patients to pay: 1) Make it easy for them to pay, and 2) They have to know that there are consequences for not paying.  This is consistent with the studies above.  Before the patient sees their physician, they are more motivated to pay because the consequence of not paying may be not getting to see their physician.

When are patients more motivated to pay?

• Pre-Visit: Patients want an appointment and are most likely to pay their deductibles and prior balances at this point in the patient experience.
• Time of Service:  Patients don’t want to worry about paying their doctor – they want to worry about getting well – but they are more motivated to pay before they see their physician.  If you make payment at time of service required and fully communicate this to the patient pre-visit, then they will arrive prepared to pay. If they are not willing to pay, your financial policy should state that they will be rescheduled (this is the consequence they want to avoid…).  If you don’t create a consequence, there is less motivation to pay.
• Post-Visit: Patients and their families are so happy to be well and are not worried about paying their doctor (they are worried instead about paying the telephone or cable bill, buying groceries, etc.) …..until they need another appointment.  Make paying prior balances a requirement to obtaining a (non-emergent) appointment.

Communicating with your patients about payment expectations is a key success factor in improving self pay collections – you have to talk about it at every available opportunity.  Patient communication should include:

• A patient financial policy given to new patients and to all patients again annually; and make it available on the website/patient portal

• Make it easy for patients to pay the medical practice.  Let them know all of their options as early in the conversation as possible. Let patients know the medical practice accepts Visa, MasterCard, Discover, American Express, debit cards, personal checks, and cash. Remind them they can pay over the phone.  Look at check-in kiosks and see if those are appropriate in the practice.  Add an online payment option to your website or patient portal.  A study by HFMA/VISA found that 42% of hospitals offer web payment portals, but only 5% of patient receivables are currently paid here.  Paying online is increasing at a rapid rate.  Most patients have experience paying for non-healthcare services online (Amazon, EBay, etc.) – let patients know the medical group has made paying easier!  It requires no paper or stamps and patients can pay 24 hours/day.
• Communicate with patients about payment expectations during appointment phone calls, on your website/patient portal, as part of appointment reminders, and when they arrive for their visit.

As you communicate each time, staff need to reference the earlier communications – “As we outlined in our financial policy…”, “…during your appointment phone call…”

It is also very important that the telephone and front desk staff not bear the burden of time of service collections alone.  Everyone in the medical practice (physicians, nursing personnel, etc.) needs to be educated on the practice’s self pay policies and what their role is in improving performance.  Nursing personnel or technicians should not call a patient back unless they have paid their copay, deductibles and prior balances.  Physicians and other providers must direct patients back to the front desk professionals when patients ask them a question about what they owe.

Front end staff must be trained and become comfortable asking for payments. Creating scripts that staff can follow and doing some role playing among the staff will help prepare them for different types of patient situations.  Consider creating financial incentives for front end collectors or preferably for the entire front end team and evaluate collection performance based on the potential to collect vs. actual collected amounts.

Collecting deductibles is the most difficult part

Collecting deductibles is the most difficult part of self pay collections.  Unlike copays, deductibles change throughout the year.  Medical practices need an excellent registration team and process to ensure that insurance and medical benefit information is current in the practice management system (PMS).  Staff must verify a patient’s insurance eligibility and benefits before the appointment.  This can be done via the web or phone.  During that process, it should be determined if the patient has a deductible and if so, what amount is still due.  Entering that information into the PMS will allow appointment reminder calls to include that information.

If the patient has an outstanding deductible, they should be asked to pay it prior to seeing their physician.  The decision to ask for the money before the visit has to be made and committed to or you will leave money uncollected.  Once the patient sees their physician, the ability to collect this money drops dramatically.

If a medical practice already has a patient financial policy, are regularly informing patients of their payment obligations, and their time of service collections are going pretty well, they may be ready to reduce the costs of this part of their business by automating some of the processes.  Vendors currently offer technology that can calculate a patient estimate and print a document that can go to the patient – currently large multispecialty groups and surgical specialty practices are leading in use of this technology.  Some patients present as self pay but actually qualify for Medicaid or Medicare or other third party insurance.  There are vendors that offer automated batch processing solutions to identify patients with coverage.  One study showed that between 5% and 15% of active self-pay accounts are covered by Medicaid for specified dates-of-service (Source: Passport Health Communications).

Clearly, our AR is filling up with self pay balances and increasingly deductibles that are due to the medical group.  This is felt most acutely at the beginning of the calendar year.  Make 2012 different by focusing on time of service collections and communicating with your patients about payment expectations.  Invest the time upfront to verify if a patient owes a deductible and then skillfully ask for the money at time of service.  But, let’s be realistic – not every patient is going to be willing to pay.  Be ready with the next ask – send them home with a pre-addressed envelope so they can send their check back in, offer time of service discounts, ask them if they can just pay half.  Find a way to reduce the ‘no pay’ encounters in the medical practice.

Join us on January 19^th for a complimentary Kareo webinar, “Let’s Collect Deductibles in 2012: Tips for Improving Self Pay Collections,” in which Sara will expand on each of the topics mentioned in this article and provide more tools and tips to help collect deductibles in 2012 and improve the medical group’s self pay collection performance.

Sara Larch, MSHA, FACMPE, is a speaker and consultant in practice operations and revenue cycle management and co-author of “The Physician Billing Process: 12 Potholes to Avoid in the Road to Getting Paid.” She contributed an article on  “Preparing For 2012:  What Needs to Happen When?  Create Your Calendar Now” in our October Getting Paid newsletter, and an article on “Strategies for Successful Denial Follow-up in Medical Billing” in our June Getting Paid newsletter.