Healthcare Business Management Association - HBMA
Login
Public News Public News - HBMA Healthcare Business Management Association

Improve Patient Collections and Stay Compliant with Payor Requirements

Share
05/10/2017

From the May/June 2017 issue of HBMA Billing






Improve Patient Collections and
Stay Compliant
with Payor Requirements

Patient Collections Are Vital to Increasing Revenue and Ensuring That Your Billing Service is Adhering to Best Practices


Collecting from patients has become increasingly vital to the financial health of most practices, as the patient portion of medical bills continues to rise. With sky-rocketing copays and deductibles, the patient due amount now accounts for approximately 30 percent of the income for practices. Because of this, the efficiency of a medical practice’s billing operations has a critical impact on its financial performance. Billing companies must understand not only the best practices in collecting from patients, but also how to remain compliant with specific payor requirements. Additionally, providing education on these best practices with the clients themselves can help everyone involved meet their income goals. .

A 2015 survey by the Kaiser Family Foundation on employer health benefits illustrates why patient collections play such an important role in a practice’s financial viability. The results of this survey show that:

  • out-of-pocket costs for patients has increased by 230 percent in the previous 10 years, and
  • of the patients enrolled in an Exchange Plan through the Affordable Care Act, over 90 percent are in high deductible plans.

Other surveys show that 73 percent of large employers plan to introduce a high deductible plan to employees within the next three years, with 20 percent of those employers saying it will be the only choice offered.

This rising patient financial responsibility translates into real dollars and cents for practices, with patient co-pays accounting for one-fifth of a private practice’s income.

With these statistics, it is easy to see why collecting from patients must become a primary focus for medical practices and the billing companies that serve them. There are however, a number of issues that must be overcome.

One of the most important factors when collecting from patients is ensuring that the practice remains in compliance with payor contracts. For every payor the practice is contracted with, there can be varying requirements on how the patient portion of the bill should be handled. Each of these must be met for every patient, or the practice could face a breach of contract, cancellation of the contract, or even the possibility of an accusation of fraud.

There are four vital points billing companies must remember for patient collection activities:

  1. Provider-payor contracts usually require that patient co-pays be collected at time of service. A billing company may not have control over this point, but can help to educate the practices it serves to ensure compliance.
     
  2. Provider-payor contracts generally stipulate that patient balances must be collected. Failure to make collection efforts for patient balances may be viewed as a breach of contract by the payor, and the payor may terminate the agreement or deny re-negotiation.
     
  3. Contracts will almost always contain a provision stating how and when patient co-pays and deductibles may be reduced or written off. This must be followed, and discounts should never be provided until all requirements are met.
     
  4. Medicare requires a collection effort for all Medicare patient balances, regardless of the amount. Many other payors have similar requirements.

With these in mind, let’s look at a few best practices designed to improve patient collections:

Follow Practice’s Policies. Most practices will have a financial policy that states how a patient will be billed, how bills will be followed up, collection procedures, etc… (If a practice does not have one, use this as an opportunity to educate them on the value of developing a policy for their patients.) Make sure to closely adhere to the policy in every interaction you have with patients.

Document Everything. Good documentation is vital in collecting from both payors and patients. Document every interaction to create a paper trail. Work with practices to determine how often you will bill the patient before offering discounts, writing off a balance, or sending to collections. (Again, before forgiving balances or offering a discount, make sure to check the provider-payor contract for requirements.)

Consistency is Key. The payor contract and practice’s financial policy are the roadmap to follow for each and every patient collection procedure. Consistency yields results.


Compress the Statement Cycle. The longer a patient balance remains unpaid, the less the likelihood there is of collecting. At less than 30 days, chances of collection are over 97 percent. However, after 60 days, your chance of collecting drops to 60 percent. For example, if you had $10,000 in patient balances, at 30 days you would collect $9,700. After 60 days, you are likely to collect only $6,000, a loss of $3,700. Compressing the statement cycle by sending bills as soon as possible means more income to the practice and your billing company.

Billing companies can also play a key role in improving patient collections by educating the practices they serve. Companies that take this vital step will help these practices improve their bottom line, improve their own revenue, and create loyal clients. Practices can and should be empowered to collect patient co-pays, balances, and deductibles at the time of services in a number of ways.

Key Points for Practice Education
Financial Policy: A patient financial policy is the most vital tool practices must have to increase patient collections. A financial policy is the way to start the money conversation with patients, and tells patients what is expected of them—such as what they must pay and when—as well as what they can expect from the practice, such as whether or not their insurance will be billed.

Credit Card On File (CCOF): Introducing practices to CCOF offers benefits to both the practice and its patients. Patients benefit from CCOF because it allows them to pay their bill with no need to go online, write a check, wait for a statement, or worry about bringing a payment with them to their next visit. Practices benefit with improved cash flow, elimination of patient statements, and reduced collection expenses.

Time of Service Collection: As we saw previously, decreasing time to collection improves payment. This means that the best time to collect is at the time of service. Empowering front-desk personnel to collect co-pays, deductibles, and deposits for high-dollar services is vital. Providing them with the tools they need to collect before the patient leaves the office will pay off both financially and in improved relationships with patients. It can even be helpful to provide scripts or time for role play to help staff prepare. For example, a script might say to ask patients how they want to pay—as opposed to if they want to pay. During role playing, the “patient” can ask difficult questions, giving the staff a chance to get comfortable with the answers.

The Value of Improving Patient Collections
As the patient portion of a medical bill rises, practices can no longer ignore the financial impact of patient collections. Practices are expecting the billing companies that serve them to achieve higher collection rates. By ensuring compliance with provider-payor contracts, billing companies can help these practices reach their patient collection goals. By following best practices as laid out above, as well as educating practices to improve in-office collection procedures, both billing services and the practices they serve stand to improve their performance.


Resources
1 http://www.mckinsey.com/
2 http://www.physicianspractice.com/billing-and-collections/10-collection-tactics-high-deductible-patients
3 http://kff.org/private-insurance/report/2013-employer-health-benefits/
4 http://www.informationweek.com/healthcare/analytics/
9-ways-healthcare-providers-can-improve-co-pay-collection/d/d-id/1298020?image_number=6
5 Mary Pat Whaley, Manage My Practice