According to the Medical Group Management Association (MGMA), the fourth most challenging issue in practice management is collecting from self-pay and high deductible patients. With patient payments representing a growing portion of practice revenue, re-engineering how patient collections are approached is crucial to practice success.
From 2003 to 2011, individual deductibles increased at a rate of 117 percent (25 percent from 2014 to 2016). With more companies providing multiple insurance plans with higher deductible options to employees, many employees are selecting the lower premium cost with higher deductibles. Medical practices are seeing deductibles as high as $12,000 per year for some plans. The patient out-of-pocket maximums increased from 2013 to 2016 by 15 percent for individual coverage and 30 percent for family coverage. These staggering increases are making it necessary for physician practices to look for solutions beyond the typical collections processes of the past.
An estimated 15 percent of total practice accounts receivable is patient responsibility and, on average, 30 percent of patients leave the practice without paying the copay, coinsurance, or deductible amounts. The MGMA states that only 40 percent of patients that leave a practice without paying for services upfront will pay for services at a later date. These statistics leave practices with 60 percent of patient accounts receivable for collections or to be written off as bad debt.
Collecting from patients for medical services has evolved over the last decade but still lags compared to other service industries. Collecting at the time of service not only increases revenues, it also reduces expenses. For example, if statements do not need to be generated and mailed, the practice will not need designated staff to monitor the mail for received payments and complete those deposits, which results in decreased staffing needs.
Implementing a Time-of-Service Collections Policy
Historically, many practices have implemented a “pay your copay up front” policy, but most have not adopted a policy requiring patients to pay the coinsurance and deductible amounts at check-out time. The copay amount, as well as coinsurance and deductible amounts, can be obtained through an eligibility inquiry. However, the exact coinsurance and deductible amounts cannot be calculated until after the service is provided, unless the patient is scheduled for a specific test or procedure. Therefore, in order for the time-of-service financial policy to be successful, physicians must select the procedure codes before the patient leaves the office. For scheduled tests and procedures, staff can access the procedure code and calculate the coinsurance and deductible amounts at check-in, which will allow the patient to pay at the time of service.
Emerging technology is the most important factor to consider when implementing a time-of-service collections policy. Many practice management systems have built-in functionality to allow a practice to calculate the coinsurance and deductible amounts before a patient leaves the office. If your practice management system does not offer this functionality, you can create a spreadsheet to include the top 25 procedure codes along with your practice’s top three or four payer fee schedules. This will improve your staff’s ability to efficiently calculate and collect balances at the time of service.
It is also helpful to offer patient payment plans through recurring monthly charges to a credit card. Merchant services companies now provide systems that allow practices to maintain patient credit cards on file and schedule automatic monthly charges when payment arrangements are permitted. Through this type of relationship, the compliance risk of maintaining the credit card on file falls to the merchant services company. When insurance companies pay, an automated email will notify patients of the upcoming charges for outstanding balances.
Increasing patient accounts receivable can feel like an overwhelming process. However, training staff, informing patients of collections policies, and utilizing technology coupled with merchant services should help your practice experience a decline in outstanding accounts receivable and an increase in revenue.
Janet Miller Day, MBA, CMPE is a healthcare advisor with Kassouf & Co.
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