Practice Management Alert

If you have many patient bills and insurance claims outstanding month after month, it may be time to prioritize your collection process. The first step to solving your collection woes is to try to avoid having the problems in the first place.
 
The best time to begin the collection process is before the service is rendered. Practices should verify the patient's insurance deductibles and coinsurance amounts and get a commitment from patients on how they will satisfy their financial responsibility, experts say.
 
"There's a lot you can do to avoid having to go through the collections process," says Catherine A. Brink, CMM, CPC, president of Healthcare Resource Management Inc. in Spring Lake, N.J. "I like to tell patients up front that they are going to be responsible for a specific dollar amount, and ask how they intend to pay it. This works especially well for surgical specialties because when you precertify your patients for a procedure, you're going to find out what the coinsurance is. For example, if the insurer pays 80 percent and the patient pays 20 percent of charges, you will know before the surgery that if your charge is $3,000, the insurance company is going to pay $2,400 and the patient, $600. You can start the collections process right then by trying to get the money before the fact, rather than on the back end."
 
Some surgical practices prepare formal written cost quotes for their patients to inform them of what their insurance company will pay and their personal financial responsibility for the upcoming procedure, and ask for a deposit on the account, if not the payment of the patient portion in full.
 
Note: For more on cost quotes, see the article, Avert Patient Payment Troubles With Surgical Cost Quotes, on page 13.

If the patient's responsibility hasn't been met by the time the insurer has paid its portion of the bill, the practice should begin pursuing the patient as soon as it posts the insurer's payment, Brink says. "When the insurance company has paid the doctor, the patient is informed of that. The patient receives an explanation of benefits from the insurance company before or at the same time as the doctor is paid. So, the patient will know the exact amount owed. The practice's bill should go out to the patient the same day as the payment is posted," she says. "If you wait, it's likely the patient will procrastinate."
 
If you've billed a patient once and not received a payment in 30 days, it's a signal that you may have a problem collecting that bill. Many practices send two or three additional statements in the hopes the patient will pay, but that effort is often a waste of time and money. "If 30 days have passed without payment and you send out another bill, the patient will probably put your new bill under the stack of the other bills they have to pay," Brink says. "The credit cards and other bills are going to get paid first, and if you are lucky, you might get a partial payment."
 
Instead of sending multiple statements, she recommends, call the patient if you have not received payment 30 days after your first bill. "Say to the patient, 'We sent you a bill, but we haven't heard from you. Is there a problem?' Once you have someone on the phone, the person has to either make up some excuse or blatantly hang up on you to end the call," she says. "This is a good time to suggest they put the balance on a credit card." Many times patients will agree to pay by credit card to avoid further hassle and get off the phone. If the patient doesn't want to do that, then you should ask what you can do to help the person pay the bill. If the patient agrees to send a partial payment by a certain date and fails to do it, make sure you follow up.
 
Practices should also monitor how timely insurance companies pay their claims and inquire about payment when it appears the company may miss the timely-payment deadlines set by state laws. Some practices even report the companies that miss timely-payment deadlines to their state insurance commissioners and bill the insurers for interest on the outstanding amount, as state laws permit. Such actions usually prod the procrastinating carrier into paying the claim, and sometimes even the interest, says Adrienne Rabinowitz, CPC, billing manager of Western Monmouth Orthopedic Associates in Freehold, N.J.

The easiest way to avoid collection problems with payers is to make sure you submit clean claims initially, Rabinowitz says. "We have a person who eyeballs every claim before it goes out for coding combinations and errors, which means it never becomes a collection issue," she says. "If you produce mostly clean claims, you're not going to have much to deal with later."
 
Many practices routinely monitor insurance-company payment and aggressively chase companies that haven't paid. But, they fail to put the same effort into following up with patients after the payer has sent a check. "It may be that the practice just doesn't have enough people to follow up. They are so engrossed in going after the insurance company that they forget the patient has a balance due. So, they send out bills that are ignored. Patients pay attention when you send a note that says it's been 90 days since the service was rendered and if we don't hear from you in 15 days, we'll send the account to a collection agency," Brink says. "That's when you'll hear from the patient. So, why wait the 90 or 100 days to get paid? Why not pursue the payment after the first bill?"
 
Practices also have trouble deciding which accounts to work, mistakenly thinking that only the high-dollar balances are worth the effort. "Sometimes it's $100 here and there, but it may be 100 patients that owe that amount. In that case, the smaller dollar amounts should be worked. You have to concentrate on all the amounts owed, big and small. If you want your money, you've got to work everything," Brink advises.
 
Rabinowitz agrees. "Experts will tell you to run your aged balance reports in order of descending dollar amounts," she says. "But what usually happens is there aren't that many huge dollar amounts outstanding. Instead, there are more medium and low dollar amounts, and they add up fast to more than the highest amount owed on your list. So, you really need to address all of them."
 
Is there a time when you should stop trying to collect a patient balance, and write it off? "There are accounts that seem uncollectible, and you might want to turn those over to a collection agency. A collection agency can put a lien on a patient's credit, which is something a practice can't do. If the agency collects, you might get a portion of the money after the agency takes a percentage of what it collects as its fee," Brink says. "But, if a small amount, such as under $50, hasn't been paid for 120 days or longer, you can write that off your books. But, if that patient comes back, you should collect that money up front. The patient still owes that money to you, even if it's from three years ago." You should have a policy on how you handle patients who have small amounts written off as bad debt.