3 FAQs About Estimating Patient Responsibility

As patient responsibility balances climb, practices are seeking effective methods of collecting outstanding patient balances and ways to collect more payment at the time of service. Estimating patient responsibility prior to claims adjudication is tricky business, and so far there’s no silver bullet as it comes to estimation software that serves the needs of smaller, independent practices.

However, practices can absolutely figure out a payment estimation plan that suites their needs and supports the critical task of improving patient collections. Let's start by answering these three frequently asked questions:

1. Am I allowed to collect at time of service when the claim has not been adjudicated?

One of the main reasons practices are hesitant to start down this path is because of confusion over whether they’re really allowed to collect the estimated patient responsibility at the time of service. This depends largely on your payer contracts as well as state laws.

As more patients are covered by High Deductible Health Plans (HDHP), many payers have become more flexible in allowing collection of coinsurance and deductibles at the time of service based on the estimated patient responsibility. However, this often requires that you include the amount paid by the patient on your claim when it is submitted. They also require that you process any refunds for overpayments as soon as the overpayment is identified.

If you are considering implementing time of service payment collections as part of your revenue cycle (which is highly recommended), be sure to review your payer contracts as well as seek guidance from your healthcare attorney on any state laws that dictate whether payment can be collected from patients for services that have not yet been adjudicated.

2. Should I collect the full amount estimated?

The next question to consider is whether you should collect the full estimated amount. The answer to this depends on how well you are prepared to monitor your patient accounts for overpayments and issue refunds. This is where you need to investigate your practice management software and how well it supports your patient collections process.

The additional administrative burden of dealing with overpayments is one of the downsides to collecting the full estimated responsibility at the time of service. Unless the patient has a large deductible that is not even close to being met, you could end up having to refund the patient. This can happen when a claim from another provider is processed before your claim and there is no longer a deductible owed.

There are also patients who have Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA) that may be linked to their insurance payer and are automatically charged to pay for services. You may have seen these adjudicated on EOBs from some of the commercial payers, where the claim will be adjudicated and applied to a deductible on one line and then the next line down you will see another transaction paying the claim from the patient’s HSA or FSA. If you were not aware that this arrangement is in place for a patient and your practice collects the full estimated responsibility at the time of service, you will now need to refund that patient the amount overpaid.

To collect the full estimated amount at the time of service, be sure you are familiar with your patients that have an FSA or HSA tied to their insurance.

An effective alternative is to arrange permission to put a credit card on file with authorization to charge up to a certain amount automatically directly after adjudication.

For patients who do not have an FSA of HSA tied to their insurance, you may still want to consider using the credit card on file option rather than collecting the full estimated amount, to avoid having to issue refunds if the estimate turns out to be incorrect. This is especially true if a patient is close to meeting their deductible and it’s possible that another provider’s claim may be applied to their deductible before your claim is adjudicated.

Another option would be to make it your financial policy to collect a percentage of the full estimated amount at the time of service. Some numbers show that on average, practices only collect 50% (sometimes less) of patient responsibility after patients leave your office. This means that if you collect more than 50% of patient responsibility at the time of service, then you’re improving your collections rate.     

3. Do I need a patient responsibility estimator?

Patient responsibility estimators are just one tool that you can use to assist in improving your patient collections. You don’t necessarily have to use an estimator. Many practices have been creating their own patient responsibility estimates for years, using a spreadsheet and a sample of their most common CPT codes and the associated allowed amounts for their common payers. When you combine this type of tool with your current process of eligibility verification, you can create an estimate for what the patient’s responsibility will be for the visit, allowing you to have a conversation with them about their payment options.

The most important thing to remember is that patient payment estimation is just one piece of the overall patient collections process. It’s important that your financial policy is up to date to reflect whatever requirements you have regarding payment at time of service. It is also important that your staff is familiar with those policies and is trained to carry them out.

If you are looking for assistance in shaping up your patient collections process, join me for the Patient Collections Boot Camp.

This webinar series will put you through the paces in taking your patient collections to the next level, while maintaining and even developing patient relationships. We’ll cover patient responsibility estimation, pre-visit collections tips, staff training ideas and much more!

July 13, 2017
10 a.m. Pacific
Register Now

About the Author

Aimee Heckman is a Healthcare Business Consultant with more than 25 years of experience in Medical Practice Management, Revenue Cycle Management, PM/EHR...

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