By Cinda Cannon, September 02, 2013
It is always easier to collect from patients prior to services being rendered than 60 days later after insurance has finally paid. As patient responsibility makes up a substantial, and increasing, percentage of the revenue collected by the medical office, it should not be taken for granted. Your practice should have a process in place to collect deductibles, co-payments, and co-insurance — prior to services being rendered. Upfront collections reduce the number of patient accounts that end up in bad debt or collections status.
Requesting money from a sick patient, however, seems insensitive to some people. Your patient population needs to understand that health care costs money. Although it may be a touchy topic, with accuracy, consistency, and a system for determining and collecting the portion of payment that is the patient’s responsibility, you can implement a patient-friendly upfront collection policy. Below I will outline steps you should follow to develop a collection policy that will help staff and patients appreciate the importance of paying up front and increase the percentage of patients who do so. [pagebreak]
Train your staff and patients
The key to success is to train your medical office staff on the proper techniques for collecting payment from your patients — and your patients to expect to pay:
- Make sure staff understand the importance of collecting revenue. Health care costs are rising. Requiring payment at the time services are rendered lowers bad debt and keeps costs down for everyone.
- Educate your patients of their financial responsibility. Patients are your customers and should be treated as such. No one can go to the grocery store, put food in their cart, and tell the grocery store to bill them later. This same notion should be adopted in your office. Except in emergency situations, patients should come to expect that they will be required to pay their portion of the bill at the time services are rendered.
- Invest in your staff and give them training tips on how to handle the occasional difficult patients that they will encounter. Remind them to always respond with a smile as they are being very firm about requesting payment. A few sample scripts in the sidebar offer suggestions for handling these encounters. [pagebreak]
Collecting begins with appointments
When creating your collection policy for the practice, think of where the visit begins. Patients are much better at paying when they are informed up front of the expected costs. During each appointment call, staff should remind patients that payment is expected at the time of service and describe the methods of payment the practice accepts. An estimation of the costs may not be possible, but is helpful if it can be provided at this time.
You should also have patients sign a financial agreement that fully explains your collection policy. It is a good idea to place signage in the office expressing your collection practice to affirm your sincerity; this will also serve as a reminder to patients on repeat visits.
Verification of insurance coverage
Train your staff to contact each patient’s insurance company either electronically or by calling the company directly after an appointment has been scheduled in order to verify that the patient is still covered. This process will allow staff to check on any precertification or authorization guidelines that may have to be followed. Staff will know, prior to the patient walking into your office, what the patient’s co-pay, deductible, and co-insurance responsibilities are. [pagebreak]
Collecting before the visit
When the patient arrives establish that you will be collecting their co-pay, deductible, and/or co-insurance before the visit. An alternative is to collect at check out, but this increases the likelihood that you will have patients claim to have “forgotten” to bring any means of payment. With surgical and cosmetic patients you can suffer huge losses if patients refuse to pay after services are delivered. It is impossible to take the service back. Establishing this policy and implementing it immediately will create increased revenue from day one in your practice. Start now. Prepare your policy on this process and implement a practice to collect co-pays, co-insurance, and/or deductibles on at least 90 percent of patients. It may help to develop a grid on your most popular managed care contracts that outlines, by CPT code, your allowed amounts and shows separate columns with a 10 percent or 20 percent patient responsibility. Easy access to this grid will help your front-office staff to collect the patient responsibility from patients who don’t have supplemental insurance. A sample version of such a grid appears here.
Have a policy in place regarding payment plans with detailed parameters for those patients who are truly unable to meet their full payment obligations at the time of service. Keep in mind that payment plans that run too long increase the risk of default. Some practices have found the best approach is to limit terms to six months or less. [pagebreak]
For some practices, a payment plan policy might establish a minimum of, say, $100 due at the time of service, with the balance divided into equal installments over the following six months. Regardless of how your payment plan is structured, it should focus on two equally important goals. First, keep it simple to avoid confusion. Second, find a reasonable balance between collecting as much as possible up front, at the time of the visit, and what the patient can bear. If patients stretch too far upfront, they may not be able to make the remaining payments over the following period, resulting in the worst-case scenario for everyone default.
Patient failure to show up for a visit without notice is, frankly, annoying and rude. But invoicing no-shows can turn patients away from future visits, and they typically have a very low receivable rate. If you plan to invoice no-shows, keep both of these points in mind as the overhead costs of invoicing may give you enough cause to write it off completely. Have a policy in place for how long you will attempt to collect. Most practices that attempt this will drop one or two statements in the mail to patients and if they pay, great! If not, it’s best to write it off.
Collecting after insurance
After insurance has paid and the patient has a balance you will begin your internal collection process. Medical practice management software programs include collection modules to assist you with this, but you must have a policy in place first. Part of your policy will include deciding on an outside collection agency if you are going to hire one. If you use a collection agency for patient balances, then you must decide how long you will pursue the collections process from the patient on your own before turning them over to the collection agency. Then the next decisions will be made specifically with that agency. How long should you wait? Send out two statements. If you don’t receive a response, call the patient and attempt to collect over the phone with a credit card or by placing the patient on some type of payment plan. If patients fail to pay in full or to pay according to an agreed-upon payment plan, then you should consider forwarding their balances to collections. [pagebreak]
When you are collecting from the patient on your own, it is best to review standard collection proceedings and guidelines to be in congruence with state laws. This is important for written and verbal communication with the patient on the matter of collecting.
Writing your policy
It is best to write out a rough draft of your intent for the collections policy and its guidelines and construct it from there. Policies and procedures are not difficult to write after you have formed your first outline on paper. You can find many examples of how to structure a policy and procedure document online. You may be adding to an existing policy. You could also invite input from trusted staff members. Make sure everyone who needs to signs off on the final policy.
Finally, implement the policy with proper training and education of staff on the new procedures for collecting in your practice. Now admire your achievement in creating a process for collecting timely point-of-service payments.
Sample collection encounters
Patients are sometimes surprised to learn they owe money at the time of a visit or resistant to paying. Creating a set of scripts for staff to follow when common responses to a request for payment are received can help make these encounters less fractious and more productive.
Patient: “I didn’t know I owed this.”
Response: “Your copay is shown on your insurance card,” and/or,”Your insurance company told us you have an unmet deductible.”
Patient: “I don’t have any money with me.”
Response: “We accept all major credit and debit cards. We do require patients to pay for services the day they receive them, and did inform you of our office financial policy. It is your responsibility to know your insurance and pay for the portion that is not covered. Would you like to go ahead and make the payment or reschedule your appointment?”
Patient: “I forgot my checkbook.”
Response: “We accept all major credit and debit cards. I’ll be glad to swipe your card today.”
Patient: “I just lost my job.”
Response: “I am so sorry. This is affecting so many people. Unfortunately, we are being affected by this economic downturn as well, and unless we collect what is owed, we can’t pay our bills here and then we are at risk of losing our jobs. I can offer you a payment plan or reschedule you for a later date.”
Patient: “I’ll pay you after the doctor sees me.”
Response: “That is not our policy.”
Patient: “I never had to do this before. No other doctor’s office does this.”
Response: “I can’t speak for other offices, but we are following our contract requirements with insurance companies to collect the patient co-pay and co-insurance, and our office policy of payment is due at time of service,’ which is posted in our waiting room and stated at booking of all appointments.”
These are just a few of the most common objections that your front office staff can and will face. As others become common to your particular practice, add those comments and write a response for the most positive interaction possible. This can be an ongoing tool that helps your office staff to collect at every possible opportunity without offending.