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Managing Collections to Get What's Earned

Controlling patient collections is difficult. Collecting co-payments, deductibles, and self-pay amounts up front makes a huge difference, but there are still times when patients owe money. Sending statement after statement gets expensive. How do you know when to write off the amount as non-collectable or turn the account over to a collection agency?
The practice must determine its own collection policy. The policy should be documented in the practice compliance plan, and applied consistently. The practice must make a good faith effort to collect from the patient. Most practices send at least three statements.
Decide if you want the aid of a collection agency. The agency contacts the patients, saving your practice time and money, and usually is paid a percentage of the amount collected. Send a final notice to the patient stating that if they don’t pay their account within certain time, the bill will be turned over to a collection agency.
Many practices want to write off balance due to financial hardship. If your practice decides to go this route, be sure the practice has a financial hardship policy. The patient must be able to prove an inability to pay. Be consistent. Creating an application for your patients to complete showing monthly income, assets, monthly expenditures, and the number of dependents will help you confirm financial hardship.

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No Responses to “Managing Collections to Get What's Earned”

  1. Barbara says:

    I am the billing agent for a group of specialists who only provide inpatient consultation for children at the request of their attending physicians. There is no office or clinic, so we cannot collect copays or payments in advance. We collect insurance and billing information from the hospitals. We are having problems collecting the patient portions after insurance pays. We have sent statements for as long as 2-3 years with little or no response. We do “soft” collections. The physicians do not want to use a collection agency. I would like to know if anyone else has encountered this problem and how they dealt with it.

  2. Julia, CPC says:

    It costs the physician quite a bit of money to send statements for that long, especially since there is no result. The longer you send statements without taking further action, the longer patients will take to pay – if they pay at all. I would suggest contacting a collection agency. You may find a collection agency that is willing to take a ‘softer’ approach – many payments are received after just one contact from a collection agency.

  3. jessica says:

    Hi Barbara.
    I would think your only recourse would be to create an excel spreadsheet to the group with cumulative outstanding patient balances as well as month by month and year by year breakdown. Then meet with them and let them know you understand they do not want to resort to a collection agency, but it is your responsibility to advise them of the what that means in terms of lost income.
    Then it is their decision. I have also run into similar resistence to certain financial policy changes and I have learned that all I can do is present the facts, frustrating as it may be at times. Good luck!

  4. Teresa says:

    It is important to keep in mind that co-payments and deductibles cannot be collected from Medicare patients prior to the services being rendered.

  5. Rochelle Settlemeyer says:

    Has anybody found a collection agency that works well for healthcare practices and will work outside of their home state? We have been using someone for years but it is clear that we are simply not benefiting as a practice and need to find someone new. I have gotten extremely frustrated in the search and would love some referrals if anyone has any.
    Thanks 🙂

  6. Armen says:

    Teresa, Do you have anything in writing stating that “co-payments and deductibles cannot be collected from Medicare patients prior to the services being rendered”? With Medicare patients we know for sure how much they gonna owe, so it is a surprise that we are not allowed to collect up front. thanks!

  7. Edie Elliott says:

    Medicare must be billed first before co-insurances and deductibles are collected. When Medicare is billed first, the deductible amount is documented in their system. Also, keep in mind that if there is a secondary insurance, it should also be billed. Then the patient can be billed for their responsibility.

  8. Kim Boyd says:

    Rochelle Settlemeyer, we use a company IC Systems. They have done very well for us and they are not in the same state that we are in. Their number is 800-685-0595 if you wish to call them to check things out.

  9. francine dipaolo says:

    I completely agree with Jessica. Create an sxcel spread with simple facts, name, dob, dos,amount due. Let them see how it is hitting their pocket.

  10. Tamara says:

    To: Rochelle Settlemeyer
    I recommend Credit Control Corporation. They work in several states nationwide. Contact is Terry Fuller at 800-723-5431 or terry@credcontrol.com. Website is http://www.credcontrol.com. Our office has worked with them for many years. They are willing to take a “soft approach” and tailor the contract to your needs.

  11. Armen says:

    Medicare Claims Processing Manual
    Chapter 1 – General Billing Requirements
    30.3.3 – Physician’s Right to Collect From Enrollee on Assigned Claim Submitted to Carriers
    (Rev. 1, 10-01-03)
    A. Before the Claim is Submitted
    The provider (including physicians and suppliers) who is accepting assignment should not attempt to collect more than 20 percent of the charge from the enrollee when the deductible has been met. He or she should, if the occasion arises, be advised not to do so. Any greater amount collected will:
    1. Reduce the amount payable to him/her on the assigned claim,
    2. Cause the enrollee unnecessary hardship in raising the excess amount, and
    3. Require extra work for the carrier in paying this excess to the enrollee instead of the physician.
    However, a provider (including physicians and suppliers) may accept assignment after having collected a part of his/her bill. The fact that the enrollee has paid more than any deductible and coinsurance due does not invalidate the assignment.
    B. Showing the Amount Collected on the Claims Form
    In submitting an assigned claim, the provider (including physicians and suppliers) must show on Form CMS-1500 any amount he/she has collected from the enrollee for these services. This information is essential for correct payment of the benefits due; failure to show the amount paid is likely to result in excessive benefit payment to the provider (including physicians and suppliers) (i.e., a benefit payment which, when added to the amount already paid by the enrollee, will exceed the Medicare allowed amount).
    EXAMPLE: The physician accepted assignment of a bill of $300 for covered services and collected $60 from the enrollee, but failed to show on the claim form that he/she had collected anything. The carrier determined the Medicare allowed amount to be $250, and since the deductible had previously been met, made payment of $200 to the physician. Since the physician would have received $190 in benefit payments and the enrollee $10 if the amount collected had been shown on the claim form, the physician has been overpaid $10. When this overpayment comes to light, e.g., by a complaint from the enrollee, the carrier will take necessary corrective action, e.g., advise the physician to refund the $10 to the enrollee and if he/she fails to do so, pay the enrollee the $10 and recover the overpayment from the physician.

  12. Jennifer says:

    I was in the same boat as you… stuck with a physician who wanted to do “soft” or in-house collections for patient balances. It took a little bit of time in demonstrating our lost revenue but he finally conceded to our need. We found Transworld Systems (http://www.transworldsystems.com/) who operates nationally. It costs us about $12 to generate a statement in our clinic, whereas Transworld charges us $10.50 to contact the patient each week for 5 weeks in just the first phase. They alternate between a phone call and gentle written demand letter. If the debt is not collected, we can start the process again for a second phase at an additional $10.50. Our recovery rate is over 80% now and costs us a lot less to collect especially in FTE resources. The icing on the cake though is the “thank you” letter that is sent once the balance is paid. They are recommended by MGMA. In the meantime, don’t give up the good fight to convince your doctor; they can be very stubborn creatures.

  13. Janeris says:

    Thank you for the reference Armen. I have heard different things from different people so having a reference is always great!

  14. Beverly Lewis says:

    Hello everyone I am Beverly and I will be officially out of school in April I just wanted to let everyone know that all of your post was very informative I am excited and nervous to get out there in the collection profession. Just to make sure I understand correctly; a soft or in house collection strategy is handling collections with in the office rather dealing with an agency?

  15. Gina says:

    We also use “Transworld Systems”for collections. I totally agree with Jennifer they have been great for us.

  16. Melanie says:

    Our office uses Transworld as well. We receive many payments after their first letter sent out

  17. Patti Harmon says:

    I work for a group of Hospitalist and we also rely on the hospital information for our billing purposes. We have also found it hard to recieve the co pay from the patient and many of our patients are self- pay. I track every patient thru their social security and date of birth for our Medicaid and Medicare to see if they are eligibile for the insurance. This is part of the process I use as a starting point, but the physcians are still not happy. We tried a collection agency and that did not work but our company is growing so that is something we may look at again. Is their a form for finanicial hardship that we can use for our patients or is this something we need to create in our office?

  18. Rochelle Settlemeyer says:

    Thank you Everyone for your help and referrals! I have contacted a local rep with Transworld and set up a meeting for next week.
    You guys are great!!!!!

  19. Sue Carney says:

    Rochelle, we recommend Frost Arnett located in TN. You can reach them by contacting Trae Christian direct 502-594-6177 or tchristian@frost-arnett.com. We have never had a complaint from patients regarding rudeness or unprofessionalism. They provide you with reporting on the accounts submitted and status of accounts including percentages of bad addresses which we take to our registration teams.
    They accommodate their collection strategy to what you want and will “soft collect”.
    I recommend you give them a call as well.

  20. Armen says:

    I would recommend Legal Recovery Resource Phone: (866) 689-3262 info@lrresource.net
    Transworld did not really work for us. Instead of paying them for Phase 1 ($10) we are just sending out final demand letter’s after 3 statements and I would say more than 50% pay after that. For hard collection we use LRR and they are really good at what they do.

  21. bridget says:

    my question to those who use transworld, what happens after phase I? what entices me is paying $10 per account instead of 30% to our collection agency, but if this $10 only gets us five weeks — do we then have to pay more for continuing to collect? not sure if it will save us much.. is the account theirs to keep after the five weeks or is it returned to us?

  22. Ellen says:

    After the 5 weeks, Transworld keeps 50% of what they collect. So they stand to profit more when the account goes into phase II.

  23. Elaine says:

    Have you tried sending a letter specifying the date of the service and whom the physician was that they saw. Giving them the option to pay by credit card or set up payment arrangement. Then telling them if not paid in 30 days that account will be sent to a collection agency.
    We did all of our own inside collections and we would offer a 10% discount if paid that day by credit card or if they would give us their check number that they are writing. My staff was receiving a 10% of what they collected and I one employee that received $5,000.00. So the in house worked for us we did it on a Saturday morning 9:00 – 12:00 and the employee received miniminum wage for coming in and 10% of what she collected.

  24. Sara Hopkins says:

    You may also want to consider getting patients to give a credit card to keep on file and if a payment arrangement/payment plan is not established within 90 days then you charge the card. This would obviously have to be listed in a financial policy upfront and signed by the patient. If they don’t have a credit card, then a debit card would do, which the majority of people have. ABN’s are important as well to have signed up front and explained thoroughly….that way, they are aware that there is a possibility of a balance they will be responsible for.
    I have known practices to implement this and it has dropped their A/R tremendously when put into practice. Most people will go ahead and pay so that their credit card is not charged. You may receive a few disgruntled patients up front, but the majority understood that the physicians are due their money. Some physicians opted to not see patients if they did not agree to the policy. Just another suggestion 🙂

  25. tracy says:

    I use a company called Benuck and Rainy they are located in New Hampshire WONDERFUL. Contact person is Peter R. Parisey 888-697-5566

  26. Kristine says:

    ok question here. I am working at an office that I feel jumps the gun and sends every patient with a balance to collections after 1 statement to the patients home. Is that legal?

  27. Miklos Auber says:

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  28. Miguel Leman says:

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