Patient payments are a vital part of a revenue cycle management solution, however, when patients fail to take financial responsibility, many providers and their practices take a hard hit. Not only do statistics show that 81% of self-pay net revenues will go unrecovered but that the default rate for self-pay patients is at a rate of 30% or higher depending on the market area. This means that it can cost twice as much to collect from a patient than it does from a payer.
One reason self-pay revenue goes unrecovered commonly is that the patient’s benefits and/or eligibility were not verified before the visit. Knowing the actual benefits of the patient’s insurance plan allows the team members to properly collect at the time of service versus balance billing which leads to self-pay ‘balances after insurance’. Another common reason is that the team members are not skilled in verifying benefits and therefore they do not understand the impact of not collecting patient balances.
If a patient says “they usually just send me a statementâ€Â a warning bell should be sounded! Let’s look at the cost of sending out a statement. The cost for supplies, team members’ time, and the billing process adds up quickly, especially if it is billed several times before being evaluated for an outside collection process. Consider this, if you are billing for a copay of $35.00 (which should have been collected at the time of service) and typically a patient statement gets “stuffed and stamped†anywhere from three to seven times before it gets paid. Your organization is now a lending company. Not only did you lend them $35.00 but it cost you out of pocket to lend this money to them.
Since many smaller organizations will send 3-5 statements prior to turning this account over to a collection agency, there is an additional fee that needs to be considered.
Let’s do the math:   $35.00     Typical amount of your patient’s copayment
– $10.00Â Â Â Â Â Five statements sent processed @ avg $2.14 each
– $8.75Â Â Â Â Â Â Â 25% Fee owed to agency (if applicable)
= $16.25    Net collection after all fee’s due to not collecting upfront
Then there’s always the patient that insists “I never received it…â€. These are the patients who typically will not pay until sent to a collection agency.
So, how can you combat this problem with poor collections from self-pay patients? Investing in your front office team members and holding them accountable for their collection efforts will make a huge impact on your bottom line. The front office team member is the beginning of your patients’ experience. Having a friendly, customer service approach will not only improve your patients’ experience, but it will also make them feel more comfortable talking about their financial responsibility. There are a few things your front office team members can do to help improve the patient pay at your medical practice.
- The front office team member should not ask whether the patient would like to pay now but instead ask “How would you like to pay your balance today?”.
- If the patient questions their balance, the front office team member should be willing to print or fax a copy of the statement and explain the statement to the patient.
- If applicable, have the schedule reviewed and call the patient to make them aware of their financial responsibility before coming into the office.
Reviewing this information together and clearing up any questions will help the patient understand their financial responsibility.
Another overlooked solution is to have a formal, written payment policy that enables the patients to clearly understand their obligations for the care provided to them. To develop a payment policy there are 4 main areas to consider:
- copayments
- referrals
- responsibility to pay
- past balances
Review the collection rate of your front office team members frequently. Occasionally they may miss an opportunity to collect however, that should not be the trend on the day to day operations.
Remember, there is nothing wrong with wanting to be paid for the services you’ve provided. By allowing patients to delay paying you, you are effectively “lendingâ€Â them money—YOUR money. Your practice is not a bank or in the business to finance loans. While it’s certainly okay to want to provide the best healthcare in the most compassionate manner possible, you won’t be able to do so if you cannot cover your expenses and collect monies owed to you. Collecting at the time of service ensures a healthy end to the billing cycle and shows your patients that you are running a responsible practice.
The most important message is for the front desk team members to remain firm in collecting upfront and to be educated repeatedly on how to determine a patient’s benefits as well as what your organization payment policy.
Take the steps to review your current policies and procedures to see if your practice needs to adjust its approach to patient payment and collections.
As a top revenue cycle management vendor and solutions provider, Medical Practice Success will be happy to review your organization’s Denial Prevention and Management strategy.
If you need help with reviewing or creating the appropriate response to patient collections or general patient bad debt, contact Medical Practice Success.
