Managing Patient Balances in Trying Times
By Dennis Allen
Patients don't like to pay medical bills, and a growing number simply don't pay. The trouble is, as the economy puts the pinch on everyone, more out-of-pocket burden gets shifted to the patient in the form of larger patient deductibles, coinsurance, and copays. As patient responsibility grows, so will your patient accounts receivable. Think of it as working for free.
Chances are, you do more pro bono work than you realize. Through inaction, your practice may allow patients who are perfectly able to pay, choose not to pay; yet you may continue to see those patients while their balances snowball. You can, however, protect your practice with the following four action items that will help you get and keep control of your patient A/R.
Identify patient’s ability to pay up front.
Have your front desk ensure the patient understands that he or she will be responsible for any remainder balance as determined by their carrier. Don’t allow the front desk to estimate or guess what that remainder might be, because it’s impossible to know for sure when even the carriers refuse to provide a definite answer. Also, it’s okay (emergencies excepted) to decline new patients who either have no insurance or have none with which you are contracted—it’s your choice. However, steer clear of a reduced or sliding-scale fee schedule unless you and your attorney are willing to navigate the Medicare rules and commercial contracts mine fields.
Offer a payment plan.
When a patient either asks for payment arrangements or simply doesn’t pay on the second statement you send, offer a payment plan to lower the payment hurdle. The best plans allow a reasonable—but not long—time to pay and expect a regular and realistic minimum monthly payment. Use a plan such as 4 equal payments for balances up to $300, 6 equal payments for balances $301-$800, and up to 12 equal payments over $801. You can apply your own breakpoints, but keep the minimum payment above $50—about the cost of a month of cable TV service—to keep the cost of billing less than the revenue. Likewise, extending payments beyond 12 months just puts you in the free banking business.
Create a delinquent payment policy and collection plan.
When it’s time to send a second statement, your odds of getting paid have seriously dropped, and you have to hope that the patient may have overlooked the first bill. Attach a gentle reminder or stamp the second statement “Past Due.” By the third statement, you have identified a patient who either cannot afford to pay or chooses not to pay. That’s when a letter with your signature needs to accompany the statement. The letter should be clear, concise, and friendly. It should express concern, inquire if there is a problem, invite a call to discuss a payment arrangement, and tell them the next collection step if your billing office does not hear from them. If you get no response from the letter, or if someone on a payment plan misses a payment, sending more statements will be fruitless. Write off the account as “bad debt,” turn it over to a collection agency, and don’t wait to do it. If you keep the account on your books, you’re only kidding yourself, and you will never have an accurate picture of your A/R. Past-due balances do not age well, and though a collection agency may cost you 35 to 50 percent of the balance due, acting quickly can reduce your chances of getting zero, nothing, nada, zilch.
Develop a patient discharge policy.
Providing some level of pro bono medical care is, of course, a good thing. But shouldn’t you decide who gets your valuable time for free? Patients who choose not to pay are stealing that choice from you. It should be your choice to operate a thriving practice or run a free clinic. For this few, but growing, number of patients, you have only two options: Either adopt them or discharge them.
Discharging a patient from your practice should be done with a carefully
written letter (be sure to check with your attorney) that explains the
circumstance and offers emergency-only care for, say, 30 days. Again,
we’re talking about patients who have chosen not to pay. It’s not an easy
decision to make that final discharge decision, but a discharge is the
last line of defense in protecting the health and future of your practice.
