How to avoid turning over patient accounts to a collection agency

A column about keeping your practice in good health

By — Posted July 16, 2012.

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Sending patients’ overdue bills to a collection agency can be bad for a physician’s reputation and may not gain the practice that much financially.

“The recovery is just completely miserable,” said Elizabeth Woodcock, principal of Woodcock & Associates, a physician management and consulting firm in Atlanta. “The costs are really high, and the public relations are just horrible.”

The goal, say many practice managers and medical practice consultants, is to have patients pay their bills and reduce the chance that a collection agency will be needed to get that accomplished. The key is to have good billing practices up-front, educate patients about what they owe and why, and ensure demographic information is correct in the system.

The first step is to collect part of the patient portion as soon as possible. The practice should prepare patients that the co-payment is due at the time of service by stating this when they call for an appointment and during the reminder notification. When patients are in the office, staffers should ask them how they want to provide their co-pay instead of asking whether they want to do so.

“You want to make sure that you have every possible way that a patient can pay you,” said Laura Palmer, senior practice management consultant with the Texas Medical Assn. “You don’t want to be the holder of the debt.”

Staffers should be prepared with scripted answers if a patient says no or cannot pay at that moment.

Bills for deductibles or other amounts that are not known immediately should be sent out as soon as possible after the patient visit. If the initial statement goes unpaid, subsequent ones can be color-coded bright red or orange to communicate urgency. Payment plans should be an option for those who need them.

The next step involves educating patients about their financial obligations. Medical practice managers say most people want to pay their debts and will do so if a bill makes sense to them. Problems are more likely to develop when a bill is viewed as incorrect or inappropriate.

Some of the most challenging cases involve patients who are unaware that their insurance won’t cover services provided, said Pam Potter, practice administrator of the Bone & Joint Clinic of Houston, a 12-physician orthopedic practice. Or they required a referral and did not understand the process.

“We have patients go through financial counseling with us,” said Potter, who is also a principal with the practice management company AlteraMed Group. “And we try to give them the best estimate of what they are going to owe. They have that understanding before they go forward.”

The third step to reducing the likelihood of needing a collection agency is to ensure that demographic information is correct. A common reason bills do not get paid is they are sent to the wrong address. Problems also may develop if a patient’s name is misspelled or the practice has the wrong insurance information.

Medical practice managers advocate against asking patients as they arrive for an appointment if any information has changed. Rather, address and insurance information should be confirmed at every visit.

“We don’t ask patients if everything is the same,” said Ellen Tantlinger, practice manager of Vermont Gastroenterology, a three-physician practice in Colchester. “We ask them specifically if they still live at a certain place. And we make copies of insurance cards and driver’s licenses at every visit.”

Address verification software is integrated in some practice management systems. It can be a useful tool to make sure a patient’s information matches that of the U.S. Postal Service.

These steps should increase the chance that patients pay their bills, but there always will be a few who do not. Some practices have policies of writing off these amounts rather than turning to collection agencies, which can get expensive. Others use such agencies for bills that are above a certain amount and unpaid by a set time.

“That’s a last resort,” Potter said. “But if you’re doing everything up-front, that’s going to be kept to a minimum.”

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