Situation A: a mother and daughter have lunch at a high-quality restaurant that includes a musical, two lunches and dessert for a total of $215. When the check arrives, the mother and daughter leave the restaurant without paying.
Situation B: a mother and daughter visit their Pediatrician so the daughter can obtain a check up/physical, the Gardasil vaccine, have her vision and hearing checked, and have forms completed for sports camp and school. The mother has a high-deductible plan; she receives a patient statement for the entire visit and does not pay.
Ask a few individuals how they feel about situation A vs. B. In both situations, the mother (Guarantor) must pay the bill. The restaurant will insure they collect their money, but will the physician office?
There has been a dramatic shift in design of insurance policies in the last twenty years. Most patients/guarantors pay their patient statements timely. However, there are patients/guarantors who do not pay their patient statements. Per their insurance policy, they are required to pay the portion that is “Patient Responsibility”. A practice needs a consistent policy to manage all patient statements as well as how to manage patient accounts that do not collect.
The practice leadership needs to decide the following: How many and when do we send out patient statements (initial statement, 30 day statement, 60 day statement)? How many telephone calls do the billers make to the guarantor during the patient statement process? Do we have a payment plan policy? Do we use a collection service? Does the collection service have adequate experience in the medical field?
These seem like tough questions. Many readers are probably thinking that “we have never used a collection service in the past and just wrote this off as bad debt.” In the past, this might have worked well. Billing and patient statements were very predictable when most of the insurances were 80/20. Today, most insurances are PPOs/HMOs with <5% that pay the entire billed amount. More and more patients have high deductible plans as well as plans that limit the number of well checks per year. The revenue cycle is constantly changing.
Please remember that a patient’s insurance policy does not mean “Insurance company pays all”. The insurance policy is an agreement for which there are obligations of the insurance company and the patient/guarantor. The guarantor who does not pay his patient statements might be the type of person who is paying his credit card, car payments, house, utility bills as well as other bills but places the patient statement as ‘optional’. This person learns through the system that for some bills there are no penalties, the organization gives him a ‘pass’. If a person does not pay his utility bill, the account goes to collection and the power can be turned off. A practice in the field of providing medical care to patients needs to balance the approach of how they collect (this is not ‘Joe’s Garage’). Issues occur with a small number of patients that they might need a payment plan or help to assure they can pay their bill. In many cases a payment plan for these select patients provides the flexibility they need to pay the bill. These patients usually answer the phone and respond to the patient statements. The patients that do not respond to the patient statements nor answer/respond to multiple phone calls are the ones that, unfortunately, need to go to collection. Many in collection become willing to work out a payment plan since they realize that they need to pay. Being consistent and collecting from everyone is fair to all patients.
For these reasons, I recommend that practices have a patient payment plan policy, extra fees for patient statements not paid within 30 days of initial statement as well as a collection policy in place. For clients that use the PhysicianXpress system, there is a collection option with a series of 3 letters and 10 phone calls to patients over a two month period. This is an ‘affordable’ option of only $6.75 per account that goes into collection. If the guarantor does not pay, there is a second level of collections that goes to the credit bureaus as well as other measures. Generally this last step cost 30% of the amount collected.
