The Challenge of Front-office Collections How Well Are You Collecting Your Patients’ Co-pays?

Changes in health care reimbursement in the last decade have shifted more payment responsibility to patients. Co-pays and deductibles have been around for a long time but are increasing in the amount of total revenue collected directly from patients at the point of service. Consumer-driven health plans are contributing to this by raising patient deductibles. These changes are forcing doctors to shift more cash-collection tasks to front office personnel.

This article will focus on co-pays and offer guidance on how to implement a program to increase collections at the front desk.

Depending on the specialty, most doctors see anywhere from 3,000 to 5,000 patients per year. Assuming an average of $15 per co-pay, this translates to $45,000 to $75,000 per year in cash collections per doctor. It is surprising to see how many practices still mail bills to a large number of patients for co-pays, not to mention some that actually waive the co-pays, which is in violation of most third-party-payer agreements.

In a group of four doctors, a 20{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} failure rate to collect co-pays can cost the practice $48,000 or more annually. Even if the practice later bills the patient and collects the co-pay, it still loses. Estimates show that it costs as much or more to bill a patient and collect a co-pay as the amount of the co-pay itself.

The following steps can help you maximize co-pay collections, increase practice cash flow, and save on billing and collection costs.

Make an Assessment

First, make an assessment of the co-pay ‘failure rate.’ This is the percentage of co-pays not collected at the time of the visit. It is relatively easy to determine the extent of co-pays collected. One way is to review monthly billing and accounts receivable reports for co-pays that have not been collected. Another is to compare patient-appointment logs to daily cash collections. Although some patient visits are part of a global arrangement, some payers allow you to charge co-pays for certain pre-operative, post-operative, and prenatal services. Checking on this can generate new revenues previously not collected or billed for.

Checking daily cash collections against patient-appointment schedules is also a good internal control which can deter or detect misappropriation.

Next, get doctor buy-in. Once you make an assessment of the co-pay collection failure rate, whether that’s 15{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}, 20{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}, or whatever, advise all doctors and mid-level providers of the financial impact. When doctors realize that closing the gap can translate to a substantial year-end bonus, you will get their buy-in.

Educate Your Patients

Co-pays are not new, so this should not come as a surprise to patients, but if the office has been lax in collections, patients may not expect a sudden change in practice. Begin with educating patients before the visit about their financial responsibility.

When first scheduling an appointment or when reminding patients of upcoming scheduled visits be sure to include a short message that the office policy requires the co-pay to be paid before seeing the doctor. This policy should also be communicated to patients in a one-page handout and mail insert of office financial policies. A sign or plaque at the front desk stating that “your insurance company requests us to collect a co-payment” serves not only as another reminder, but may also pacify the patient as to the reasoning behind co-pays.

In addition, the practice should have a credit/debit card capability on hand to accommodate patients who don’t show with cash or a checkbook.

Train and Equip Front-desk Personnel

Front-desk support staff tend to have a higher turnover rate than other employees, which requires continued training and monitoring. Therefore, written procedures would be helpful. They serve as a training tool, a job description, and a way to assign responsibility.

Front-office personnel should also know what the patient co-pay is before the patient visit. Sometimes the patient’s insurance card (which you should keep a copy of) shows this, but not always. The patient record should have co-pay information, and for a new patient it should be obtained at the date the appointment is scheduled. There should be quick, easy access to this information at the front desk. Front-office personnel should be trained on how to gather patient insurance and co-pay information and should be able to quickly access the appropriate screen on the practice management system that has this information.

How a patient is asked for upfront payment is very important. Having prepared scripts for personnel to use can make the process more patient friendly and effective. For example, asking a patient, “will you be making your co-payment with cash, a check, or credit card?” is much more effective than, “would you like to make the co-payment today?” Also, a script for patient responses, such as, “bill me” or “I can’t pay because…” will not leave the support staff person tongue-tied.

What if the patient just doesn’t pay? Some practices will give the patient a self-addressed postage-paid envelope and ask them to mail the co-pay in as soon as they get home. Others will take a more aggressive approach and charge a service fee for having to bill the patient for the co-pay.

This could have mixed results, however, and should be carefully considered before risking the loss of a patient and bad publicity.

Monitor Results

Monitor performance monthly at first, then quarterly. This will serve as a basis for personnel performance reviews. Finally, track monthly and year-to-date co-pay collections and communicate this with all physicians, extenders, and support staff. Don’t forget to reward the appropriate personnel.

James B. Calnan, CPA is partner-in-charge of the Health Care Services Division of Meyers Brothers Kalicka, P.C., in Holyoke, certified public accountants and business consultants;             (413) 536-8510      .