Practice Management Alert

You have a head start on understanding how to ensure you'll get paid when dealing with patients suffering financial hardship. But there's more to know about creating a winning hardship policy to keep your deserved payments rolling in, despite economic hard times.

In Medical Office Billing and Collections Alert, Vol. 10, No. 2, you learned the difficulty your office could face with a patient who can't pay his copay or deductible. You discovered that you can't simply write-off a patient's balance, and garnered tips on how to make the patient prove financial hardship.

Next step: One important element to dealing with a patient's financial hardship isto have a written policy that informs the patient of your hardship policies. Read on to learn how to create a winning hardship policy, and offer payment plans to patients.

Your practice should have a compliance plan in place that contains a specific policy for patients who ask for a financial write-off of coinsurance or deductible due to financial hardship. Include this information in the  financial policy that all new patients in your practice receive.

Your financial-hardship policy should specify what circumstances must be present to consider a financial-hardship write-off (such as level of income or disability) and the criteria of proof from the patient (such as income tax return, limited income due to longterm disability, etc.). Be consistent in applying this policy to all patients, warns Barbara Colburn, director of operations for Lakefront Billing Service Inc. in Milwaukee, Wis.

You may also decide to have patients sign a financialhardship agreement stating that they have asked for and have met the criteria for a financial-hardship write-off. Then list the items of proof that the practice reviewed as part of the agreement. The person in your practice who is authorized to approve the write-off should also sign the agreement.

Keep in mind that discounts can also apply to other patients who either don't have insurance or use non-par payers. You aren't required to charge a full fee to all patients without insurance. You can offer incentives such as prompt payment discounts or time-of-service discounts, for instance.

This would mean that if the patient pays on the date of service, you can offer them a rate that can be as low as or below what you accept from private participating payers. "A financial policy should be in place and signed by all patients that explains any and all discounts the practice will consider," Colburn says.

Be consistent: If you decide to offer this kind of discount, be aware that you also need to offer it to thirdparty payers as well. You don't want to offer a bigger discount to uninsured patients than you are offering to payers, however. "It could be misinterpreted as a kickback, or a violation of the Stark Act, the Anti-Kickback Statute, or the False Claims Act," warns Steve Verno, CMMC,CMMB, NREMT-P, a medical billing consultant and educator in Orlando, Fla. You could then be getting your practice in hot water, or risk burning bridges with payers and patients.

Last resort: If you have followed-through on your financial-hardship policy and even offered discounts or payment plans, but the patient still won't pay, writing off the balance due may be your only option. See the sidebar "Recognize a Write-Off in 6 Steps" for more on when you can and should write off the balance.