Practice Management Alert

If your practice has 20 percent or more of its patient accounts receivable outstanding 120 days or longer, you're likely suffering from a collection problem, experts say.
 
Procedures aimed at securing payment before and during a patient visit will save the practice time and money, says Lori A. Foley, CMA, a consultant with Gates, Moore & Co., a physician practice management consulting firm in Atlanta. "It's always most expensive to collect your money after the patient has gone out the door," she says, noting that a practice spends about $6.35 to collect payment on the average outstanding patient bill. "You've got statement paper and mailing costs and the costs of employee time spent on follow-up. It's not recoverable."
 
The best way to ensure that you are paid is by adhering to procedures that focus on collection, starting at the beginning of the visit, says Susanne M. Byrd, business manager of Podiatry Associates of Wausau, a five-physician practice in Wausau, Wis. In the first three months of sticking to her practice's collection procedures, patient accounts receivable declined about 10 percent, she says. Today, the practice turns an average of about five out of 100 delinquent patient accounts to a collection agency. "Consistency and follow-up are important," she says. "Once you get into a routine of faithfully following your precollection procedures, you will see a turnaround in accounts receivable." 
 
Podiatry Associates takes the following precollection steps, which Byrd recommends to other practices:

 

Set a financial policy. New patients are asked to sign a financial policy form that details the payment agreement between them and the practice (to view the form go to www.codinginstitute.com/extra/mob). The form has separate paragraphs for different types of patients, including those with insurance, workers' compensation, personal-injury coverage and Medicare. Each section points out the patient's responsibility. For example, the insurance section states: "You are responsible for deductibles, copays, noncovered services, coinsurance and items considered 'not medically necessary' by your insurance company."
 
The form also specifies that copays and deductibles are due when services are rendered, and the remaining balance is due within one month of notice from the insurer. It also includes Medicare assignment and the sections for authorizing release of information. After asking the patient for insurance information, the staff member at the front desk checks the appropriate sections on the form and asks the patient to read the sections marked, and sign and date the form.
 
New, uninsured patients are asked to sign a different financial policy form (see Web site mentioned above). It states payment will be made at each visit and provides a section for making full payment by credit card or by monthly payments due on the 1st or 15th of each month. This form is also used for patients covered by insurers that the practice does not participate with.
 

Keep track of outstanding balances, and ask for payment at each visit. Existing patients have their account status listed on their encounter forms. "When the patient comes in for an appointment, a member of the front-desk staff prints out the encounter form. The form states the copay and highlights any balance in green. When the patient comes in, we ask for that copay before they see the doctor. On the way out, we ask for the balance owing," Byrd explains.
 
The same encounter form is used by the physicians to indicate what services were rendered, and it follows the patient back to the front desk for checkout. "The green area on the form is a flag so we again can see whether there's a balance when the patient is checking out, and so we'll know to ask for it," she says. All the forms for the day are collected at the front desk and given to the billing department the next day. The billers then enter the data from the forms into the computer record and send out the claims.

 

Follow up in writing if payment is not made. The practice sends statements to patients every 30 days, and most patients have received two by the time the insurer has made the payment, Byrd says. If payment by the patient is not made within 30 days of receiving the insurance company's reimbursement, the patient is sent a collection letter, which Byrd calls "Letter 1." It requests payment by a specific time and date, which is two weeks from the date of the letter (see a sample of Letter 1 on page 11). To get the recipient's attention, Letter 1 is printed on blue paper. "We usually get about a 75 percent return on it. I think it works because of the wording. People don't always understand their explanation of benefits forms, and when you send them a statement and tell them the patient balance, they're still waiting for insurance to pay for it." This tells the patient it's been 30 days since insurance has paid and that the practice is serious about wanting the money that's owed.

 

Try contacting the patient by phone. If no payment is made within the two-week period specified by the first collection letter, the practice attempts to contact the patient by phone. "Our physicians ask that we try to contact patients by phone three times, in case there is some problem. They want to make sure the reason the patient isn't paying is not because of some concern or problem with their care, especially if the patient has had orthotics or surgery," Byrd says. The practice tries calling on different days of the week and at different times. If they can't reach patients twice, the account staff members stay late one night a week to make calls when people may be home.
 
Leaving phone messages can be tricky, Byrd cautions. "You can't compromise the patient's confidentiality. When you leave messages on an answering machine, you don't know who may be listening."
 
You also don't know who may answer the phone. For example, Byrd can't say she's calling from Podiatry Associates because it's confidential information that the patient has a relationship with them. Instead, the callers give their first names and say they're from "your doctor's office." They also leave their direct phone number and ask them to return the call, she says.

 

Use the right language. When they reach the patient, the representative says he or she is calling from Podiatry Associates and states, "We're calling about your account." Byrd says she's learned that saying very little to the patients during these calls is essential in getting them to talk. "Don't feel that you have to fill in the dead space on the phone. Try to say as little as possible," she says.
 
Foley also recommends this phone approach. "You can say, for example, 'You have an outstanding balance with Dr. Smith. What arrangements do you want to make to pay that balance off?' Then say nothing, because whoever says the next words loses that conversation," she says.

 

Be understanding. If patients indicate during a collection call that they are having a problem paying their bill, be understanding and offer help, such as allowing a payment plan.

 

Document your calls. When you make collection calls, document the entire conversation and what each patient committed to do, Foley says. If the commitment is not met, follow up with a letter, she adds.
 
The phone-call attempts produce mixed results, Byrd says. With telephone answering devices and caller-identification services, phone calls can be screened and dodged. However, caller identification lets patients see who has called, and the practice sometimes receives payment within days of placing calls to numbers that had no answer and no answering machine. The phone call in which contact is made usually results in a full payment, or a partial payment with an agreement to pay off the balance in three to six months, she adds.

 

Make one last collection attempt before turning accounts over to a collection agency. If no payment is made within the two-week period specified in its first collection letter, and the patient has not responded to phone calls, Podiatry Associates sends out a second collection letter. "Letter 2" is printed on pink paper and warns that the account may be turned over to a collection agency (see a sample of Letter 2 at right). About half of the accounts still outstanding at this point, which is about 60 days from the date of service, pay in full after receiving this letter, Byrd says.
 
If no payment is received, Byrd gives a copy of the account's history to the treating physician and asks for permission to give it to the practice's collection agency. "Sometimes the doctors know, for example, that the patient has some extraordinary circumstances or problem that we don't know about in patient accounts. We let the doctors see everything we've done on the account and what care they have provided," Byrd says. Although the number of accounts the practice considers for action by its collection agency is small, it rarely writes off the balances when its own attempts to obtain payment have failed.
 
When the practice is considering turning an account over to the collection agency, the bill is about 60 days old, which is fresh from the agency's standpoint, and still may result in some revenue to the practice, Byrd says. "We know that if the agency collects anything, it's more than we will at this point because we've done all we can. When somebody's credit rating is going to be affected, that can produce results. We've had people pay us five years later because they went to buy a new house or refinance an old one, and they couldn't do it because they still owed us."