My Receivables Are Growing: Time for a New Billing Service?

Laurie Morgan May 15th, 2012

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When receivables balloon, that could be a sign that your billing service is not as on top of things as it should be. But it's not the only possibility

We’ve received several calls recently from physicians looking for referrals for new billing services.  The reason?  “Our receivables are out of control.  Our billing service just isn’t doing a good job.”

When receivables balloon, that could be a sign that your biller is not as on top of things as he or she should be.  But, that’s not the only possibility.  If you jump the gun and replace your in-house biller or billing service without understanding all of the drivers of higher receivables, you could end up worse off than you started.  Some other potential causes for growing receivables that you should investigate:

  • Are you collecting deductibles – or billing for them?  Funny how these “I need a new biller!” calls tend to come more frequently in the beginning of the year – when patients’ deductibles are reset, and patients will be responsible for your entire allowed revenue in many cases.  Too often, practices just get into the habit of billing for these amounts, instead of collecting at time of service – usually because “that’s how we’ve always done it.”  Once you decide to bill the amount instead of collecting it, you’ve significantly reduced the likelihood it will be paid promptly – and introduced the possibility you won’t get paid at all.
  • Are patients prepped for payment at visit time?  Patients who arrive at the practice without being forewarned about what they’ll be expected to pay are much more likely to request that they be billed – and then to be angry or confused when they receive the bill so many weeks later.  Work with payers to determine patient responsibility before the patient’s appointment, and then let patients know what they’ll be expected to pay when you make their reminder call – including clearing of past-due balances, if any.
  • Are you making it easy for patients to pay?  If a patient has a high deductible or large balance, or is about to undergo an expensive procedure, paying in full by check at the time of service may be impossible.  Be sure you accept all major credit cards to make it easy for patients to pay when cash is short (this way, they’ll make their payments to their credit card company – and your staff won’t have to become collectors).  Investigate specialty lending options for patients for significant expenses like elective surgeries.
  • Are your office staff members aware that billing starts with them? Too often, compartmentalized job responsibilities obscure the contribution everyone in the practice should be making to bringing revenue in the door.  With about a third of most practices’ total revenue now due from patients, today’s revenue cycle is about more than just third-party billing.  Make sure your front desk staff, in particular, understands that the practice is entitled to be paid for its services – asking for payment at the time-of-service is nothing to feel awkward or embarrassed about.  A weekly audit of superbills can be a great tool to assess front-desk consistency in collecting from patients – if they’re not doing so close to 100% of the time, corrective action is needed.
  • For insurance-side receivables, are you seeing patterns?  If reimbursement revenue is slowing, it’s helpful to analyze whether it’s happening across the board – or if a single payer is causing the bulk of the problem.  If repeated denials and appeals are to blame, is a repeated coding or documentation error occurring?  And if a payer is becoming increasingly difficult, your biller may need to request a new support contact at the payer – and, if the relationship and reimbursement reliability can’t be improved, you may eventually need to consider whether to renew your contract with a difficult payer.

Laurie Morgan is a management consultant with Capko & Company. She specializes in marketing, management and technology for medical practices and blogs about practice management issues at www.capko.com/blog. Laurie has a BA in Economics from Brown University and an MBA from Stanford. Laurie recently wrote for Getting Paid on Hidden Ways Medical Billing Shortcomings Hurt Your Practice and Keeping Tabs on Payer Contracts – Good for Your Practice and Your Patients, Too.

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Let’s Collect Deductibles in 2012: Tips for Improving Self Pay Collections #4

Kathy McCoy, MBA May 3rd, 2012

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Practice management guru and author Sara M. Larch, MSHA, FACMPE quantifying why and how patient self pay collections could make or break your practice in 2012

It’s 2012 – Do you know where your cash flow is coming from? If you haven’t heard by now that high deductible health plans are putting medical practices more at risk than ever before, we have a must-view webinar for you. Called Let’s Collect Deductibles in 2012: Tips for Improving Self Pay Collections, it features noted practice management guru and author Sara M. Larch, MSHA, FACMPE quantifying why and how patient self-pay collections could make or break your practice in 2012. And she offers a comprehensive plan of action to make sure you collect all the monies due you from patients.  Industry experts project that patient self-pay payments will make up 30 percent of a practice’s total annual revenue in 2012. That puts medical practices at risk of losing one third of their cash flow if they don’t start working hard to collect self-pay dollars directly from patients.

You can glean valuable information by checking our prior posts: Part I on the need for improving your self pay collections, Part II on motivating patients to pay at the time of service and Part III on “Best Practices” in self-pay collections. This blog post will underscore the case for avoiding sending accounts to collection agencies and ways to support your staff in improving their payment at the time of service (PATOS) skills.

During the webinar, Sara presented a compelling case for making PATOS collections a priority. According to Sara, co-pays that are uncollected at the time of service spend an average of 16 days in Accounts Receivables. Deductibles take four times longer than co-pays to collect.  For balances due, most practices sent statements at 30, 60 and 90 days. Many send a letter accompanying the statement at 90, 120 and—if goes that long–150 days. The average cost for all this follow-up is $17.68 per account. If the balance is still unpaid, it typically goes to a collection agency at 180 days–at a cost of 25-50% of the recovered amounts. There’s no question that most practices would prefer to avoid the use a collection agency in chasing dollars owed by patients. In addition to creating an unpleasant touchpoint with patients, it’s expensive. Consistent and effective follow-up can be challenging and the older an account gets, the harder it is to collect. But the bottom line is this: on average, 50% of overall patients’ financial responsibility goes uncollected once they leave the office. 

The average cost for all the usual follow-up in self pay collections is $17.80 per account

The statistics above are ones you should share with your office staff when you initiate intensified efforts to collect PATOS. Sara suggests that you ensure they also understand and be able to explain the practice’s patient collection policies, and to identify each patient’s expected co-pay, deductible and/or prior balance. They need to follow the practice’s cash collection policies and ask patients for payment in a firm, tactful manner.

Kareo regularly sponsors videos and webinars featuring leading medical billing experts discussing a variety of practice management issues. You can sign up for our notification list for upcoming informative webinars such as this one. And be sure to check out our webinar archive for other topics that may be of interest to you. 

You can also hear Sara speak in our next webinar, Using RVUs to Improve Your Bottom Line. Register now!

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Let’s Collect Deductibles in 2012: Tips for Improving Self Pay Collections #3 – Best Practices

Kathy McCoy, MBA April 24th, 2012

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Sara Larch discusses specific strategies for improving self pay collections in this complimentary webinar

We all know the reimbursement outlook for medical practices continues to be bleak in 2012, but did you know it is possible to give yourself an immediate raise, even in this environment? How, you ask? By collecting the self-pay monies that patients owe you.

That was the subject of an information-jammed webinar recently presented by well-respected practice management expert and author Sara M. Larch, MSHA, FACMPE on behalf of Kareo. Called Let’s Collect Deductibles in 2012: Tips for Improving Self Pay Collections, the webinar offered an extensive arsenal of tips, strategies and tools you can use for improving your collections starting tomorrow. Why the sense of urgency? Because in 2012, the portion of your total revenue owed to you by patients will be the highest it’s ever been: a whopping 30 percent of  the average practice’s total annual revenue. Compare that to 20 percent in 2011 and just 12 percent in 2007, and you can see the huge financial hit your practice will take if you don’t shore up your self-pay collections.

To help you get started, Kareo has been covering Sara’s extensive webinar in “quick-read” blogs that help you tackle this large topic. You can check out blogs #1 and #2 if you want to catch up. To learn what Sara considers some “Best Practices” in self-pay collections, keep reading.

It’s important to get some baseline information on how well you were doing on patient collections in 2011 before you can set goals for 2012. Hopefully, your practice management system will allow you to run a year-long snapshot that shows your total self pay collections in 2011. Going forward, Sara recommends that you start generating a Daily Cash Collection Report that includes a graph completed by collectors showing the amount of cash taken in at time of service by collector and by practice location. 

Sara emphasized throughout her presentation that it is much more effective to collect payment at the time of service (PATOS) than at any other point of a patient’s interaction with the practice. When you start running a monthly PATOS report, you will see why: it shows the amount of dollars brought in as cash, what is outstanding as bad debt, what is still aging in AR and uncollected, and what has gone to collections. Obviously, you want to minimize the dollars in the latter categories and focus on improving cash PATOS. To set your 2012 goal for PATOS, Sara recommends you look at what you could potentially collect based on your various contracts and specific payer mix.

Sara also offered some Best Practice Strategies that could easily be implemented in your practice. Our prior blog mentioned the importance of having a solid financial policy in place that you communicate to patients at least annually. Prior to each appointment, it is important to verify the correct insurance information with the payor for each patient. If applicable, screen patients for Medicaid or Medicare eligibility.  And have your staff calculate what the patient’s estimated payment portion should be, based on the required co-pays, deductibles and anticipated uncovered services.

 Collect pre-payments for procedures or surgeries not fully covered by insurance

When patients arrive for their appointments, be sure to scan their insurance cards to capture current copay and deductible amounts. Collect pre-payments for procedures or surgeries not fully covered by insurance.  If a patient is not contracted with an insurance company, have financial counselors negotiate a 75% to 100% payment upfront. Patients with high deductible health plans should also be expected to pay 75% of their estimated visit costs.

Billing fees can also be an effective way to motivate patients to pay at the time of service. Some practices levy a $10 statement fee if a copay is not paid, and a$15 late fee if copays are not paid in 30 days. Finally, Sara gave a great example of a letter (see below)—distributed with a self-addressed stamped envelope–that could be given to patients if they had not paid at the time of check-out. A cardiology practice that started using this simple technique increased its copay collections by 22% in 2 weeks!

We’ll be posting more from Sara’s webinar—be sure to check back for her thoughts on avoiding collections and supporting your staff in developing their PATOS collection skills. In the meantime, be sure to check out our Resource Center for all the videos and webinars Kareo has sponsored related to improving  your cash flow and profitability.

You can also hear Sara speak in our next webinar, Using RVUs to Improve Your Bottom Line. Register now!

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Let’s Collect Deductibles in 2012: Tips for Improving Self Pay Collections

Kathy McCoy, MBA April 3rd, 2012

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Anyone who sat in the recent webinar Let’s Collect Deductibles in 2012: Tips for Improving Self Pay Collections, however, now has a much better handle on their true self-pay collections profile

So you think your practice is doing a credible job of collecting monies due from patients—but you’re not sure. Anyone who sat in on the recent webinar Let’s Collect Deductibles in 2012: Tips for Improving Self Pay Collections, however, now has a much better handle on their true self-pay collections profile. To determine if you might benefit from viewing the entire webinar, see if you can answer these questions for your practice:

  1. What percent of your patients pay at time of service?
  2. How much does your medical practice collect annually at the time of service?
  3. How much could you collect annually at the time of service?
  4. When will a patient receive a statement if they don’t pay their copay or deductible?
  5. What percent of patients pay their self pay balance when they’re billed after the visit?
  6. What does it cost to send a patient a statement?
  7. What are the legal or contractual risks of not making a good faith attempt to collect copays, coinsurance, and deductibles?

According to our webinar presenter, practice management expert and author Sara M. Larch, MSHA, FACMPE, few medical groups can answer these questions.  Why is it important to have a better handle on your self-pay collections? Because according to industry experts, nearly one-third of your total annual revenue in 2012 will be owed to you directly by patients–not their insurance. That statistic alone shows the need for greater focus on payment at time of service (PATOS)–even if you think your office is already doing a good job.

Fortunately, those who are short on time can check out our series of blog posts based on Sara’s webinar. The first blog in this series offered more statistics you can share with your office staff to get them on board with improving your patient collections. This post will focus on motivating patients to pay at the time of service.

According to Sara, it is important to have a clear patient financial policy in place and to communicate those terms to patients. It should include an explanation of payment-related terms such as co-insurance, copayments and deductibles. It should spell out when the patient will be expected to pay (“Be prepared to pay at each visit. We will be collecting all copays, deductibles, and coinsurance due.”). And it should list all the ways that patients can pay (“Payment can be made by cash, check or credit or debit card.”) Sara advises that you give your financial policy to all new patients, and annually to established or returning patients. You should also post it on your practice website and patient portal, if you have one. You can find sample language for more firm yet professional financial policies in the webinar.

To achieve the goal of improving self pay collections, it is important to have a clear patient financial policy in place and to communicate those terms to patients

Other terms you should spell out in the policy include additional obligations of the patient. These include bringing their insurance card to every visit, and paying for any care not covered by insurance upon check-in.

Remind patients of your policies when they call to schedule an appointment. Remember, patients are most amenable to paying their balances prior to their appointment because they want to see their doctor. If a patient has an outstanding balance and calls for an appointment, make it clear they will need to pay what they owe before the doctor sees them. In her presentation, Sara also gives a great example of a sign-in sheet that asks how payment will be rendered right at the check-in desk.

Sara’s presentation was chock-full of other great tips on Improving Self Pay Collections.  Be sure to check back for more from the webinar. Kareo regularly sponsors videos and webinars featuring leading medical billing experts discussing a variety of practice management issues. Be sure to check out our webinar archive for other topics that may be of interest to you.

To learn how practices can deal with the business epidemic of insurance underpayment, Kareo will be sponsoring a free webinar this month entitled “Getting Paid Accurately: What the National Health Insurer Report Card Means to Your Practice and How You Get Paid.” Register now to learn more about the impact of insurance underpayment and what you can do to protect your practice.

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Medical Practice Collection Letters that Work – With Samples

Brandon Betancourt March 7th, 2012

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Medical practice collection letters that take a more positive tone can get better results

Collection letters that go out to patients usually have very stern language. For example, a letter may mention that unless the patient sends payment in immediately, they will leave the practice no choice but to send them to a collections agency. Another typical phrase is “final warning” or “3rd and final attempt,” or “delinquent” in bold letters.

The assumption is that the debtor is blowing the practice off. And our response as collectors is to intimidate and scare the debtor into paying us. In essence, the letter is saying, pay us or else! But does it work?

In my experience, these types of letters are not very effective. It may scare a few people, but they mostly do two things.  If the debtor is a seasoned debtor, meaning someone who is accustomed to carrying a lot of debt, their response is, “You are going to send me to collections? Get in line.” In other words, the letter creates apathy.

The other response is offense. And when people are offended, they get angry. Nobody likes to be called delinquent; even if they are. And when a patient is angry with the practice, the likelihood of them paying is less. Why? Because nobody likes to pay people they are angry with. 

Thus, strongly worded letters that threaten and intimidate patients have unintended consequences. In our experience at our practice, I think I made more people mad than actually sent payment in when I used this type of firm language.  

Consequently, I began to think about how I could make our medical practice collection letters more effective. And what I determined was that people that owe our practice money fall into four groups:

1) They don’t understand the bill, so they put it off.

2) The bill is too high for them to pay outright, so they put it off.

3) They truly missed the bill or forgot to pay it.

4) They never had the intention to pay, regardless.

For people in groups one through three, I think the approach should be different. Instead of fighting with fire, our approach is to fight it with water, so to speak.

And for those in group four, there are other ways to deal with them. But a “3rd and final attempt” stamp on the statement isn’t going to suddenly make them realize they should send payment in. 

So how do we fight with water instead of fire?

In our practice, we send patients that are delinquent a letter too, but we try to use a different approach. Our letter’s objective is to simply make them aware that the bill is overdue. No threats, no intimidation.

We also make an attempt to acknowledge that the bill may be difficult to understand, but we can help them. So if they have questions, they should ask us. We are here to help.

Lastly we do allude to the fact that if they don’t call us soon, or settle the bill, things could get difficult for them.  But we don’t mention the words “collections company” or “attorney.”

Before we began using these letters, I estimated that maybe 5% of patients sent in payment after they received a collection letter. With our newly worded letter, we received a 30 to 40% response rate.

If the patient didn’t respond to our first letter, we often give patients a call. The call is not intended to make patients feel guilty or to bully the patient, but rather be informative.

“Hello Mrs. Smith, we wanted to follow up on our letter that we sent last week. We noticed we haven’t received payment for little Timmy’s sore throat visit last month. Did you have any questions, could we help you explain your EOB? We also wanted to let you know that we can set up a payment plan to help you with your medical bills.”

Sometimes, we are unable to reach the patient, so we send them another letter that basically reiterates our main points.

You can see samples of these two Sample Medical Practice Collection Letters now.

Of course, there are patients who slip through the cracks and disregard our attempts to collect despite our best efforts. Our practice employs other approaches that fall outside of the scope of this article.

I would also like to point out that this approach doesn’t eliminate other best practices, such as verifying eligibility, collecting copayments and deductibles at the time of service, just to name a few. One still needs to do all those things.

But my intent with this article is to provide a different perspective in your collecting efforts, to think differently about how to approach this, and continue offering empathy, compassion and education, even when the patient is not in the examining room.

Brandon Betancourt is an administrator for a private pediatric practice in the suburbs of Chicago. He blogs regularly about running a small private practice at PediatricInc. You can follow Brandon on Twitter @PediatricInc

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Medical Billing Tip of the Month – March

Kareo March 5th, 2012

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Thank you to everyone who voted on our blog and Facebook for the March Medical Billing Tip of the Month. The winner of our Medical Billing Tip of the Month contest this month is…

Educate Staff and Patients on Patient Collections

The most important part of billing is education: staff AND patients (in our case, parents, since we’re a pediatric therapy group.) When I verify eligibility and benefits online, I print a copy for the parent and explain deductibles, co-insurance, co-pays, and benefit limits. We do this both for new patients and for calendar year plans where deductibles re-set on January 1st.

When I need to ask for a payment toward their deductible up front rather than after receiving an EOB affirming the patient responsibility for deductible, they’re not only much more willing to pay, but they pay with a smile. It’s much easier to collect from an informed patient, especially when they see it in black and white straight from their insurance carrier.

We collected on deductibles this past January from many patients and had no complaints or reservations about paying out of pocket because they’d been informed properly and professionally by us here prior to their visit.

Jeff Jarvis
aMAYZing Kids
Lake Forest, CA

Thank you to all who entered; please be sure to submit your Medical Billing Tip of the Month to Marketing@Kareo.com by Friday, March 16, for inclusion in the next round of judging. We’ll post the top three tips on our Facebook page for your vote! You will win a $250 American Express gift card if your tip is chosen. Good luck!

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Lending Money to Patients: Poor Time of Service Collections Hurts Your Practice in a Surprising Way

Laurie Morgan February 1st, 2012

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If you allow your patients to carry a balance – for example, if you offer the convenience of billing for co-pays, instead of requiring good time of service collections – then you’re lending your patients money.

Too many practices are lending money to their patients.  Think your practice is not one of them?  If you allow your patients to carry a balance – for example, if you offer the convenience of billing for co-pays, instead of requiring good time of service collections – then you’re lending your patients money.  And, since most practices don’t have financiers on staff, it’s not likely that this is a good line of business for your practice.

You may think that you’re doing a good deed for your patients, making things easier for them.  But, too often this is the sort of good deed that never goes unpunished.

There’s often an unhappy transformation that happens between the time the patient is gratefully accepting your medical services at your office and when the bill for their portion of your fee arrives.  The gratitude all but disappears.  You’re no longer the compassionate caregiver who helped them with an urgent medical problem.  You’ve become an annoyance.  Your patient may even have forgotten the visit to your office that was so important to them when it took place – and now your bill is an unpleasant surprise.  The same person who gratefully accepted your convenient billing option is now annoyed to receive your bill!  You are now just another creditor, and people tend to resent their creditors.

I learned about this the hard way when I ran a small publishing business.  People often asked for payment terms for advertising purchases.  Since my clients were small business owners, too, I wanted to be nice and help them succeed.  I could have urged these clients to pay with a credit card.  After all, credit card companies are in the business of lending money – and I wasn’t (at least not intentionally).  But my clients really wanted to be billed – who wouldn’t prefer to pay later? – and I thought I’d be better off saving those credit card fees.

I also thought that they would feel even better about my product if I helped them buy it.  Instead, what actually happened was the customers transferred their annoyance with the bill they’d forgotten about to their views about my product, even imagining it was substandard in order to justify paying more slowly than agreed – or not at all.  I was surprised to learn that my happiest customers were the ones who paid me up front.  They didn’t have the annoyance of a bill –and our relationship wasn’t tainted by awkward collection conversations.  The customers who paid up front delivered most of my referral business.

When the bill arrives, the emotions aren’t so positive

We see this same psychological phenomenon happening with medical practices all the time.  When offered the option not to pay at the time of service, most people take advantage of it.  It feels great to put off paying.  But when the bill arrives, the emotions aren’t so positive.  And if the patient has trouble paying their bills, they’re going to feel bad about receiving yours.  That bad sentiment can easily spill over into the patient’s attitude toward your practice, even poisoning referrals. 

Many, if not most, of the patients who opt to be billed could easily pay with a credit card at the time of service.  Then if they need more time to pay, they can take more time to pay – they’ll just be receiving a loan from an actual lender, i.e., their credit card company, and not from your practice.  They won’t have to deal with the shame or inconvenience of calling your office to arrange a payment plan – they’ll simply manage their credit card payments as they do for other purchases.

Make it easy for patients who can’t pay in full with a check to pay with a credit card.  Shop for the lowest fees, but don’t let credit card fees deter you from offering multiple, easy ways to pay at the time of service.  The cost of collections alone typically far exceeds any “savings” from not accepting a credit card.  If patients leave the practice because they can’t pay or fail to refer you because of misplaced anger or embarrassment, the cost to your practice can be immeasurable.

For higher cost services or procedures, pre-authorized credit card payments allow your patients to pay you in installments but reduce your financial risk and your billing hassles; this approach can also allow patients to automatically pay for co-insurance or deductible amounts after their insurance has processed your bill.  For uncovered procedures and services, investigate medical credit plans like CareCredit that can help your patients pay over time – without turning your practice into an unintentional and inefficient consumer finance company.

Laurie Morgan is a management consultant with Capko & Company. She specializes in marketing, management and technology for medical practices and blogs about practice management issues at www.capko.com/blog. Laurie has a BA in Economics from Brown University and an MBA from Stanford. Her last article for Getting Paid was Confusion Over Patient Payments Reigns – And It’s Costing You Money.

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Let’s Collect Deductibles in 2012: Tips for Improving Self Pay Collections, Part 1

Kathy McCoy, MBA January 27th, 2012

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Expert Sara Larch reviewed strategies for collecting deductibles and copays from patients in this recent webinar

If you haven’t reviewed your strategies for collecting money from patients within the last year, now is the time to re-evaluate your policies and procedures for doing exactly that.  Why? Because now more than any other time, you have a golden opportunity to maximize your cash flow—and the outcome is almost entirely in your hands.

That was the message during an information-packed webinar presented recently by practice management expert and author Sara M. Larch, MSHA, FACMPE. Called Let’s Collect Deductibles in 2012: Tips for Improving Self Pay Collections, the presentation was the latest in a series of practical “how-to” webinars sponsored by Kareo on making your practice more profitable and efficient.  We will be recapping Sara’s strategies from the webinar over several blog postings. Check back to take advantage of our abbreviated synopses of her presentation that make for fast reading—and good business sense.

Because many workers are choosing high-deductible health plans out of choice or a lack of selection, the percentage of a patient’s out-of-pocket costs in relation to the total reimbursement for their care is skyrocketing. Industry experts expect patient payments to comprise a whopping 30 percent of a practice’s total annual revenue in 2012. Compare that to 20 percent in 2011 and just 12 percent in 2007! So if you haven’t done anything to shore up your patient self-pay collection policies, you are already at 30 percent risk of bringing in less money than before.

Industry experts expect patient payments to comprise a whopping 30 percent of a practice’s total annual revenue in 2012

What types of payments are considered a patient’s responsibility? They include:

  • Deductibles
  • Co-payments
  • Balances for procedures where only a portion is covered by insurance

And of course, uninsured patients are responsible for the entire cost of their care. Too often, however, practices are reticent to insist on payment up front. Yet these are dollars the clinicians are earning and depend on for their livelihood. Perhaps these statistics may put patient self-pay collections in perspective:

According to industry research, collecting payments upon registration leads to an 80 to 100% recovery of the dollars owed by the patient. Why? Because the patient wants to keep the appointment. Practices can expect to only collect 50 to 70% of what the patient owes after s/he is treated. And consider this: 65% of all patient bad debt is the result of insured patients, not the uninsured. Clearly, payment at the time of service (PATOS) is a critical way to bring in the maximum dollars to your practice.

Our next blog will focus on strategies for increasing your PATOS in ways that are patient-friendly yet firm. You can receive notification of upcoming informative webinars such as this one by signing up for our notification list. And be sure to check out our webinar archive for other topics that may be of interest to you

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Getting Paid in 2012: What You Need To Know Now To Make It Happen – Trends with Commercial Payers

Kathy McCoy, MBA January 18th, 2012

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In the recent webinar, Getting Paid in 2012: What You Need To Know Now To Make It Happen, Elizabeth Woodcock discussed trends with commercial payers

For medical practitioners, finding ways to get paid fully, fairly and in a timely manner will continue to be challenging in 2012. To address this very large issue, Kareo recently sponsored an information-packed webinar entitled Getting Paid in 2012: What You Need To Know Now To Make It Happen. The webinar was conducted by someone who certainly knows: Elizabeth Woodcock, MBA, FACMPE, CPC, a nationally recognized author, practice management consultant and medical billing expert. Elizabeth frequently presents timely topics related to enhancing efficiency and cash flow within medical practices.

Our first few blogs recapping the webinar touched on 2012 changes in CPT codes and physician fee schedules and other changes from Medicare. Click any link above to see our blog postings on these topics, or check out our webinar archive. To see her thoughts on 2012 trends with commercial payers, you’re in the right place.

According to research by the MGMA, 10% of a practice’s revenue is now derived from High‐Deductible Health Plans

The biggest trend in the commercial insurance marketplace, according to Elizabeth, is the increasing adoption of high-deductible insurance plans by employers. Research conducted by the Medical Group Marketing Association found that 10% of a practice’s revenue is now derived from High‐Deductible Health Plans. The reason? Employers are looking to contain their escalating health care costs wherever they can. Employees either select these plans because they are cheaper than lower-deductible plans, or they simply don’t have a choice—that’s the only option offered by their employer. And it is not uncommon for deductibles to total $5,000 over the course of a year.

Elizabeth presented some statistics that drove the point home: in 2007, patient financial responsibility as a percentage of total revenues amounted to 17 percent for the average practice. In 2012, that figure is projected to rise to 30 percent—nearly double the percentage in 2007. This becomes significant because many practices still finding collecting monies due from patients to be their biggest challenge. Elizabeth advises that billing professionals and practice managers begin to think of the patient’s obligation as their financial responsibility before insurance. That means collecting co-pays at the time of service and even requesting pre-payment such as in the case of scheduled procedures. They should also have strategies in place to collect on balances due after insurance payments are deducted.

Our upcoming blogs on Elizabeth’s webinar will focus on the Affordable Care Act and “voluntary” incentive programs offered by Medicare and Medicaid.  You can receive notification of our upcoming informative webinars on medical billing, managing cash flow or enhancing your team’s efficiency by subscribing to our notification list.

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Confusion Over Patient Payments Reigns – And It’s Costing You Money

Laurie Morgan January 17th, 2012

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Confusion over patient payments may be costing your practice money.

In our work as practice management consultants, one of the themes we’re constantly repeating is the need to explain (and repeat!) patient payments to patients so that they understand what portion of their bill is their responsibility.  It may seem that this work should be done by insurance companies and benefits administrators.  But, the reality is that it is crucial for practices to take responsibility for this, to protect their revenue.  Making sure the patient is clear on what they will owe for services is crucial to gaining commitment to pay and reducing the work of explaining “incorrect” bills down the road. 

Over the holidays, I had an unusual opportunity to see the effects of patient confusion about insurance coverage in a dramatic way. A family friend who joined us on Thanksgiving and Christmas apparently thought health insurance and medical bills were universally annoying enough for holiday small talk.  Naturally, I was hoping to be “off duty” for the holidays, but when I heard how thoroughly he misunderstood everything about his insurance coverage and his doctor’s compensation, I knew I had to pay attention and try to set him straight.

“Fred” started our Thanksgiving conversation by stating unequivocally that his doctors are “greedy and overpaid.”  When I gently pointed out that, actually, many practices are facing declining profitability thanks to shrinking reimbursement, insurance bureaucracy and the difficulty of collecting from patients, Fred was unmoved. “They get all the co-payments now!” Fred blurted in frustration.  “That all adds up to a fortune at $30 a pop – and it’s all on top of what the insurance companies pay them. “ 

“But Fred,” I said, “those co-payments aren’t on top of insurance reimbursement.  The insurers have just shifted responsibility for that part of the doctor’s fee to patients.  And, as a result, doctors are getting much less in many cases, because some patients can’t or won’t pay their co-pays.”  Fred thought about this for a minute.  “That doesn’t make sense – the doctor can just deny the patient care.”  Not always possible, I explained. And, unless the practice can collect the co-payment up front, they won’t know in advance of treatment who will fail to pay.  Fred thought doctors would just report patients to credit bureaus or use collection agencies, but I tried to explain that it might not be profitable to do so when the amounts owed are small (even though those small numbers add up to a big bite of total practice revenue).

I thought I’d made some headway with Fred, who said he appreciated the clarifications I’d provided.  But, along came Christmas – and our second conversation.

“Well, I keep getting billed co-insurance for my colonoscopy last month, and I know you say I should be able to trust that my doctor’s not just sticking me for extra money.  But I am sure that I don’t owe them anything – I already met my deductible, so there shouldn’t be any more co-payments or anything.  I’m just so frustrated, I’m going to ignore the bill.“ 

Common Patient Misconceptions

My conversations with Fred about his healthcare probably lasted only 15-20 minutes in total, but his misconceptions spoke volumes.  It was pretty clear that:

  • Despite visiting his doctor repeatedly throughout the year, Fred had never understood that his co-payment is part of the total payment his insurer permits his doctor to receive – not a “bonus”
  • Fred’s pre-procedure consultations did not include clear explanations of what portion of the total fee would be his responsibility
  • Fred wasn’t asked to pay his co-insurance at time-of-service
  • No one had ever explained to Fred the difference between co-payments, co-insurance, deductibles and out-of-pocket maximums

Fred has been a heavy consumer of medical services over the past several years – besides the colonoscopy his procedures have included knee arthroscopy, hip surgery, lots of physical therapy and treatment for chronic arthritis. All of these visits to different physicians were opportunities for Fred to learn what his insurance covers and what it doesn’t.  He could have learned not just how the portion he owes is calculated, but also how much more value he’s getting from his insurance and his physician’s care than he’s actually paying in premiums.  Instead, Fred is confused and assumes he’s being ripped off by his doctor, his insurer or both – and he’s costing his physicians money by paying slowly and questioning his balance due.

The increasing complexity of insurance programs and patient payment schemes has put a burden on practices to analyze and explain a wider variety of scenarios.  And, sometimes it’s not possible to make every patient understand.  But, that doesn’t mean it’s not worth trying.  If someone at Fred’s doctor’s office had explained his co-insurance, along with the difference between a deductible and out-of-pocket maximum, at the very least, Fred might have been more comfortable that no one was trying to make him pay money he shouldn’t owe.  And at best, the practice could have collected that co-insurance at the time of service – avoiding Fred’s confusion and irritation with receiving a subsequent bill.

Make a resolution to be sure your practice is doing its best to explain to patients what they’ll owe, and why – when setting up appointments, when confirming appointments, and at the time of service.  And ask for your payment at time of service!  You’ll have fewer “Freds” who are confused and annoyed by bills and believe they’re being overcharged, you’ll receive more of the revenue your practice is entitled to, and you’ll spend less on explaining bills and collecting balances.

Laurie Morgan is a management consultant with Capko & Company. She specializes in marketing, management and technology for medical practices and blogs about practice management issues at www.capko.com/blog. Laurie has a BA in Economics from Brown University and an MBA from Stanford. Her last article for Getting Paid was Small Business Lessons for Physician Practices – Part 4 of 4 – Operations Management for Physician Practices.

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