Patients are now responsible for an estimated 35% – 40% of their healthcare bill.
Insurance companies and employers purchasing health insurance both accept the premise that higher deductibles and co-pays will lead patients to be more responsible for their health and their healthcare decisions. This change in direction, however, puts more pressure on medical practices to collect patient payments in a timely manner, as these payments represent an ever-increasing part of your overall revenue. Only a diligent effort on the front end will ensure our collection percentages remain strong.
As patients assume responsibility for an increasing proportion of their healthcare costs, providers face a potential financial dilemma of having to write off receivables for patients that cannot afford to pay their contractual responsibilities. This article will focus on revenue cycle management processes that can minimize your financial risk.
According to an annual survey conducted by the Kaiser Family Foundation and Health Research & Educational Trust, the percentage of workers enrolled in a health plan with an annual deductible of $1,000 or more has risen dramatically in the past decade, from 10 percent in 2006 to 44 percent in 2016.
The average deductible for single coverage is $1,317, up from $826 in 2009. More people are getting health coverage under the Affordable Care Act (ACA), but 85 percent of individuals who had signed up through exchanges selected Bronze or Silver plans, plans which offer lower coverage with higher deductibles.
With rising patient responsibility, this situation creates a complex set of trends that translates into increased financial risk for practices with poor financial controls. For most medical practices, passive approaches to collecting patient balances will no longer be acceptable.
Sending Bad Debt to Collections is Ineffective. Average Recovery Rate of a Collection Agency is just 13.8%
Assess Current Processes
Because healthcare reform has brought higher patient copays and deductibles, patient payments continue to grow, becoming a larger percentage of your total monthly revenues. Effective patient collections are more critical to the financial health of your practice with every passing day.
Begin by meeting with your staff to discuss the importance of 1) instilling a culture of responsibility amongst all employees; 2) improving patient engagement and satisfaction through a better understanding of your practice’s financial policies; and supporting your practice’s financial viability through collaborative efforts to collect patient copays and past due balances. Encourage input and discussion amongst staff responsible for registration, appointment scheduling, insurance verification, and pre-certs. Your staff should provide valuable insights into their departmental processes and serve as champions for implementing improved processes.
The goal of staff discussions is to develop and implement protocols that …
- Foster patient compliance by improving the patient experience. Ensure that all patients receive clear, consistent, and timely communication that would enable them to make fully informed decisions about their financial obligations to the practice;
- Deliver financial assistance to proactively and consistently offer payment plans to those who cannot pay their balance in full;
- Achieve financial stability. Establish appropriate patient payment processes to achieve stability in financial risk.
The Percentage of Revenue Attributable to Patients is Steadily Increasing. How Long Before it Reaches 50%?
Areas of Increased Attention…
- Your goal should be to collect 100 percent of co-pays and past-due patient balances every day. Measure your staff effectiveness by daily tracking scheduled collections vs. actual collections. Ask each staffer who collects copays/deductibles to complete an “If Not, Why Not?” report each day for the monies they do not collect.
- Communicate with your patients – via your website, EMR patient portal, appointment reminder calls, etc., the Patient Responsibility for promptly paying co-pays and past due balances before additional services are rendered.
- Improve the “Ask.” You will find that some employees are instinctively better at collecting patient payments. Have other employees observe their techniques. If you have a small staff, consider having your front-office personnel take a field trip to another office to learn.
Identify Patient Responsibility Prior To Their Visit
- Check insurance eligibility on every patient prior to every visit to identify what co-pay and/or deductible are due; and ensure the patient’s insurance is active.
- Let your patients know what payment you will expect at the time of their visit. Eliminate potential patient excuses, such as, “I didn’t know the cost of today’s appointment would apply to my deductible.”
- Numerous online insurance eligibility programs permit you to do real-time eligibility / benefit status verification at the time of service.
- Patients are creatures of their own habits. Make sure you have payment options that make it easy for them to pay you.
- Accept cash, checks, debit cards, and credit cards. More payment options mean more time-of-service collections.
- Accept check and credit card payments through your website.
- Set up payment plans for those patients who don’t have the money and indicate that they are willing to pay their bill in installments.
- A payment plan should be documented in writing and signed by the patient. The payment plan should spell out what will happen if the patient misses a payment.
- Payment plans should not extend beyond six months, with tiered thresholds based on the amount due.
- Explore a “credit card on file” (CCOF) program. Many dermatology and aesthetic practices require a patient to keep encrypted credit-card information on file. Once an insurance claim is processed and contractual adjustments are made, the remaining balance due from the patient is charged to the credit card and the patient is sent a final statement summarizing the transaction. This process keeps your accounts receivable due from patient to a low, manageable level. A CCOF program will be more readily accepted by patients once primary care practices implement these financial controls. Although it is a terrific business tool, patient resistance is high when you are the first medical practice in your community with this financial requirement. It is a financial control that is long overdue.
How It Works
The concept of CCOF is similar to that of a hotel’s payment policy
- When a patient checks in at the reception desk, they are asked to leave a credit card on file. The credit card information is entered into your EMR payment system and securely stored.
- After the visit, submit the insurance claim as usual. Once the claim is adjudicated and the EOB posted, recall the recall the credit card information and process the payment.
- Send a zero balance statement to the patient.
Similar to a hotel, the medical practice is protected from non-paying patients.
A CCOF program can also be used to set-up payment plans with patients, regardless of whether they have insurance or not. A CCOF program collects scheduled payments in a non-aggressive, efficient way.
Are your patient collections strategies going to succeed in 2017?
The challenges of collecting from patients are rising. It may be time for your practice to make a change in how you collect patient’s payments.
Benchmark your patient collection strategies to see if you’re set up to increase profits or increase patient receivables in 2017. Below are a few questions related to your revenue cycle processes to guide your discussion with staff.
- Have your patient receivables grown in the past 12 months?
- Do patient receivables make up more than 20% of total revenue?
- Are patient receivables more than 60 days past due?
- On average, do you send more than 1 statement per patient?
- Do you make collection calls to more than 5% of your patients?
- Are less than 50% of patients paying their bills online?
- Does it take more resources (time and collection cost) to collect from patients who have not met their deductible?
- Do you have conversations with patients about their financial responsibilities BEFORE their visit?
- Do you use online patient eligibility verification tools?
- Do you bill more than 20% of patients AFTER adjudication?
If you answered mostly “yes”, it may be time to consider a change in how you communicate your practice’s financial policy and collect from patients.
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