More of the financial responsibilities for healthcare costs are being passed along to patients due to High-Deductible Health Plans. As a result, many medical practices are reporting that patient balances account for twenty to thirty percent of their entire Accounts Receivable. Those medical practices which do not establish systematic procedures for collecting from patients will miss considerable amounts of revenue. Therefore, guide outlines a step-by-step patient collection process beginning at Pre-Visit Verification, then continuing throughout the resolution of any outstanding balances.
Step-by-Step Patient Collection Process
Step 1: Verify Insurance and Eligibility
The number-one most successful way that a medical practice can collect monies from patients is to verify their insurance prior to each scheduled appointment. Most providers do not ask for this information and as a result, a patient comes in for an appointment, receives care, and then departs. Weeks later, the provider finds out that the patient had no current coverage or the services that were provided needed a referral that was never obtained. As a result, the claim is denied and the patient receives an unexpected bill. The provider does not get paid.
If a provider verifies the patient’s insurance prior to each scheduled appointment, they can ensure that there will be no surprises. The patient’s employer has changed. The employer has switched insurance plans. The patient’s insurance coverage has lapsed. The patient’s marital status has changed affecting dependent coverage. The young adult has turned 26 years old and lost dependent coverage under their parent’s plan. The provider must run an eligibility check on the patient via their practice management software or clearing house at least 24 hours prior to the scheduled appointment. The eligibility check must validate the following:
- Active coverage status
- In-Network Status
- Specific Benefit Details related to the planned services
- Copayment Amount
- Deductible Status (Amount Met/Remaining)
- Coinsurance Percentage
- Authorization/Referral Requirements
Prior to scheduling an appointment, the provider must contact the patient to inform them of the results of the eligibility check. If the patient is unable to be covered by their insurance carrier, discuss possible solutions. If necessary, reschedule any non-emergency appointments. This proactive approach eliminates potential issues down the road when the patient receives a bill for services that their insurance will not pay for.
Step 2: Estimate Costs Prior To Services
One of the major reasons that patients procrastinate paying or stop paying altogether for medical bills is because of surprise billing. When a patient receives a bill for an amount they did not expect, they usually dispute the charge, ignore the statement(s) sent by the provider or completely abandon the outstanding balance.
Clearly providing a cost estimate to a patient prior to receiving the service is imperative. Utilize your practice management software to create a real-time estimate of the costs associated with the planned services and the estimated costs based upon the patients’ insurance benefits. Instruct the patient of this estimate prior to their visit.
Example – A patient with a High Deductible Plan needs to know how much they will need to pay for services rendered. Inform them prior to their appointment and not after. It may allow them to decide on delaying any non-essential visits, set up a payment plan with the provider, or visit another facility that offers reduced pricing. A knowledgeable patient is more likely to make timely payments and less likely to dispute any final charges.
Step 3: Communicate Your Financial Policies
Each provider has a written financial policy outlining when a payment is expected, what methods of payment are acceptable, what actions will be taken when a patient is unable to make a payment, and if financial assistance will be offered.
Share this financial policy with patients either by posting it on your website, making it part of their New Patient paperwork, reviewing it with them during Registration, etc. It is assumed by some that patients read the fine print; therefore, it is important to verbally communicate your policies and confirm that the patient understands them.
By communicating your financial policies ahead of time you can decrease disputes, set realistic expectations for patients regarding their financial obligation, and accelerate payments. Informed patients tend to meet their financial obligations in a more timely manner.
Step 4: Train Front Office Staff
Front office staff members interact with patients daily as the first line of communication in regards to collection efforts. If the front office staff is uncomfortable asking patients for money, they will avoid doing so and ultimately impact collection rates.
Train your front office staff on various collection scripts, methods of communication, and how to handle objections from patients. Develop verbatim scripts for common situations. Conduct role-playing exercises during staff meetings. Train staff on how to respond to objections from patients such as “I forgot my wallet,” “I’ve never had to pay before,” or “I’ll pay next time.”
Effective scripts are direct and professional. For example: “Your insurance requires a $40 copay for today’s visit. How would you like to pay for that?” This sentence includes no apology, no hesitation, and no ambiguity. It presents a fact and poses a simple question.
Step 5: Collect From Patients at Check-In
Collect copays/deductibles/outstanding balances from patients prior to seeing a clinician. Payment should be collected at check-in and not after a visit takes place.
Patients who have not yet seen a clinician are highly motivated to make a payment since they wish to receive care/treatment. Payment is considered the price of admission. Once patients have seen a clinician, they have no similar motivation since they could simply exit, agree to make future payments, and ignore subsequent invoices.
Integrate payment into your check-in process. Front desk personnel should not schedule patients for exams until payment has been made. Clinical staff must collaborate with front office staff regarding when payment has been made so that clinical staff may escort patients to an exam room.
Step 6: Accept Various Payment Options
Patients prefer convenient ways to pay for services rendered. Limiting payment options creates obstacles to collecting payments from patients.
Accept multiple payment types including credit/debit card payments and/or electronic payment portals. Implement mobile payment options when feasible. Create a patient portal allowing patients to review outstanding balances and make online payments. Increased ease of payment directly relates to increased collection success.
Step 7: Utilize Financial Hardship Policy Procedures
Regardless of the intention of some patients to pay for services rendered, some genuinely lack the ability to pay due to job loss, medical crisis, etc.
Create and adhere to a formal written policy addressing hardship cases. Develop a formal application process with defined approval/denial criteria and sliding fee scales according to income levels established through documentation from patients. Develop structured payment plans as applicable.
Document all hardship waivers/discounts granted to patients. Apply your financial hardship policy uniformly among all patients.
Use extreme caution when granting routine copay/deductible waivers for insured patients since most carriers prohibit waivers for copays/deductibles as outlined in payer contracts and may prompt allegations of fraudulent activity. Extended payment plans and formal charitable care programs offer alternative methods of assisting financially challenged patients.
Step 8: Produce Clear & Legible Statements After Claims Are Paid/Paid-Out
Once claims are processed by carriers/payers and amounts are determined that are payable by patients, issue statements quickly thereafter. Unfortunately, many providers generate confusing statements that patients cannot interpret thereby causing late payments and increasing disputes over charges billed.
Well-written statements separate charges, carrier payments/adjustments, and patient liability clearly and concisely using everyday language free of technical jargon. Clearly indicate both the total amount owed by the patient and instructions for making payments.
Issue statements immediately after carrier determination of amounts due by patients i.e., 3-7 days post-processing/adjudication. Waiting longer than two weeks causes excessive disputes and slows collection times significantly.
Step 9: Set-Up Structured Payment Arrangements
Offer payment arrangements structured by length of time for larger outstanding balances. A patient who cannot make a large lump-sum payment may commit to making smaller regular payments over several months.
Set forth clearly defined terms on structured payment agreements including duration/months allowed for payment completion, minimum monthly payment amounts, consequences for failure to make payments, etc., in writing and require signed agreement from the patient prior to initiating structured payments. Monitor progress/payment history of structured payments plans. Experience shows that repeated defaults suggest too long repayment periods while slow payoff rates show too lenient repayment terms. Modify as demonstrated by actual experience.
Step 10: Automate Follow-Ups Via Electronic Means
Automating follow-up communications regarding outstanding accounts increases consistency and reduces manual labor involved in tracking patients who owe monies.
Develop an automated follow-up cadence; e.g., 7 days after statement issuance, again 14 days later, again 30 days later and finally notification prior to escalation action at 45 days post-statement date issuance. Utilize digital means in addition to sending traditional paper statements; specifically utilize email/text messaging as examples of digital reminders. Digital reminders result in greater response rates/open rates compared to paper notifications alone.
Conclusion
Patient collections have become a core revenue cycle function. High-deductible health plans have increased patient financial responsibility substantially.
Practices that treat collections as an afterthought lose significant revenue. Practices that implement systematic collection processes capture that revenue.
Every dollar collected from a patient represents a dollar that bypasses insurance company adjudication, claim denials, and underpayment appeals. That dollar goes directly to the practice bottom line.
