Financial Best Practices – Take Steps to Improve Your Procedures for Collections

Expenses continue to rise, and revenues are decreasing, yet everyone is working just as hard. Healthcare reform is a constantly moving target that looks like it will only continue to evolve in the new presidential administration. Additionally, many patients are having trouble adjusting to their payment responsibilities in the world of increasingly common high-deductible plans that are being offered.

These are just some of the recent struggles of any medical practice — all of which continue to have a negative impact on your bottom line. Over the next several articles, we will focus on the financial best practices of medical practices. This article will review proper collection procedures. The subsequent two articles will focus on expense management and oversight and the benefits of mid-level providers and alternative revenue streams.

The first item that is generally discussed when exploring the best practices of a successful medical practice is the concept of collections. In order to do so, it is essential that your accounts-receivable collection efforts are as effective as possible. This article will help practice managers understand the impact of certain developments affecting collections and the reasons why many practices experience increased accounts-receivable balances, while also focusing on some keys to collection success.

Recent Developments

Common among medical practices today is a trend whereby collections are down, yet charges are holding steady, and providers are as busy as ever. What might be causing this? The first factor, known to all and of no surprise, is decreased reimbursement. Medicare and private insurance have all been cutting rates, and there is very little that you can do to change this picture.

Additionally, there is the increasing use of high-deductible health plans. In general, there appears to be an overall lack of understanding and education with many patients as to how these plans work and how best to utilize their health savings account (HSA).

Many patients see the lower premium and jump on it, but then can’t figure out why they are receiving a bill for their office visit. And when they do receive that bill, they often have no way to pay for it, because their HSA hasn’t been properly funded. Unfortunately, and important for your patients to note, is that the days of the $25 office-visit co-pay are seemingly coming to an end.

Factors in Increased Accounts Receivables

One area where practices are losing the accounts-receivable battle is before the patient even sees the provider — at the front desk.

Oftentimes, inaccurate insurance data is collected, or there is no communication with the patient about billing and collection matters and policies. Just providing a standard form letter for the patient to sign or take home is not enough. For a costly visit or procedure, consider contacting the insurance carrier in advance to see where a patient stands in relation to meeting their deductible for the year, and how much they may be required to pay out of pocket. Generally, when a patient receives your bill for services a month later, it should not come as a surprise.

The other area that can often lead to increased accounts-receivable balances is in the billing and coding functions. Poor notes taken by the provider or not using EHR properly can make it difficult for the billing department to accurately charge for a service. Additionally, not following up with the billing department on denials and other errors can make it difficult for them to correct a mistake they may be making.

Here, it is extremely important for there to be open communication between the office, providers, and billing teams. Regular, joint meetings should be held so that everyone is working together as a team toward a common goal — improved collections.

Accounts-receivable Success

To be most effective, it is essential that your front-office team receive proper training and support. This includes an understanding of what services co-pays can be collected for, and how they can go about determining a patient’s payment responsibility if it is not readily available on the insurance card. It also includes training in certain soft-skill areas, such as effective patient-communication techniques.

Your front-office staff should set expectations with all patients regarding your payment policies, including what happens if they do not pay their balances due. A friendly reminder to all patients, such as a sign on the reception window stating that ‘co-pays and deductibles are due at the time of the visit,’ is generally helpful to your staff in confronting difficult or forgetful patients. Consider also allowing your team some flexibility in creating a payment plan with the patient. This will help show the patient that, while you are serious about collecting the money, you understand their financial concerns and are willing to work with them. A slow-paying patient is better than one who does not pay at all.

When it comes to billing, timeliness is essential in ensuring that all possible charges are collected. Insurance companies should be billed daily wherever possible. In the event that there is a charge dispute, or in those unfortunate cases where the wrong insurance company is billed, this ensures that the claim can be corrected or properly billed before the time to submit a claim expires. When a claim remains outstanding, consider following up with a phone call or e-mail. If a claim was not paid or was even denied previously, simply resubmitting it tends to have little effect on the outcome.

With patient bills, the process can typically be expedited by ‘reminding’ patients of an outstanding balance when they arrive for or call to schedule their next appointment, as opposed to solely relying on mailed invoices. In larger practices, it can also be prudent to have one designated point person responsible for monitoring patient account-receivable balances. They can help to ensure that all mailed invoices, calls, and certified letters are tracked and monitored. Collecting money costs money — therefore, it is important to understand the delicate balance between collecting the $50 balance due and spending $100 to do so. There should be a formal policy in place so that your team knows when to stop collection efforts, and what to do when those efforts fail. This should include, but not be limited to, dismissal from the practice, assuming all laws and regulations are followed.

With the current economic pressures facing your medical practice, it is essential that you are as effective as possible in collecting as much of your accounts receivable as possible in a timely manner. By implementing a few key policies and procedures, you can help to ensure the financial well-being of your practice.

In the next two articles, our focus will shift to expense management and oversight and the benefits of mid-level providers and alternative revenue streams. Combined with this review over collection efforts, the goal is that your practice will be able to implement a full set of comprehensive financial-management best practices.