Valuing Patient Relationships over the Collection of Late Payments
Our most recent blog posts discussed the first two principle parts of the revenue cycle: setting clear expectations in the front office, followed by collecting upfront fees and accurate client documentation. In this blog post, we will discuss the final phase of the cycle, as well as the steps you can take to avoid hiring an outside agency to deal with any overdue accounts.
As a private practice, your last resort should be contracting a collection agency to strong-arm your clients into paying their outstanding balances. Sending patients’ overdue bills to a collection agency can be bad for a physician’s reputation; and in the end, it may not gain you much financially. Therefore, it is critical that you take every precaution to avoid this potentially messy process.
After you have thoroughly educated your patients about how much they owe and why, and made sure that your staff knows the importance of collecting accurate demographic information (addressed in previous blog posts on these topics linked above), you can begin phase three of the revenue cycle: fast claim processing and robust bill collection.
1. Fast Claim Processing. As soon as a patient is discharged and the clinical documentation is complete, a standard 1500 claim form should be electronically processed within four to five days. Generally speaking, Medicare and Medicaid will reimburse an electronically submitted claim within two weeks. A stronger payer, such as Blue Cross or other traditional private insurance providers, will reimburse within a week.
Obviously, streamlining your office’s claim-processing procedure will result in quicker reimbursements and a more reliable cash flow. However, the other side of the reimbursement equation is the less predictable bill collection procedure.
2. Robust Bill Collection. Bills for deductibles or other amounts that are not known at the time of the patient’s discharge should be invoiced as soon as possible following the visit. If the initial statement goes unpaid, subsequent ones can be sent to the patient with highlighted or underlined text to communicate urgency. Your billing department should also make payment plans available for any patients who may need them.
At this point it’s important to note that if your office does not have the expertise to collect outstanding bills successfully, you should consider outsourcing a reputable collections agency. For many years, it was commonly accepted among many in the health care industry that outsourcing processes would be too costly and ineffective. However, over the past 20 years, most practices have discovered that outsourcing processes which fall outside your core competency will strengthen your business and bolster your bottom line.
At CRT Management, we offer a whole array of Medical Billing Services to help you in this endeavor:
- Charge Entry for Billing
- Claims Follow up Managing the Billing Department
- Handling Patient A/R Balances
- Documentation Retention
- Patient Portals
- Internet and IT Technology Support
- Mobile Applications for Hospital Billing
Billing is no longer just the simple task of billing – there are far more components to that process and it’s getting more and more complicated every year. CRT has kept up with the ever-changing landscape, making each of these service components part of our core expertise.
Just like payroll services today have all but eliminated in-house payroll, the same holds true for billing or Revenue Cycle Management (RCM). Because the process of collecting money from payers requires a team effort, having a business like CRT in your corner, working hand in hand with your team, increases the chances of getting paid what you’re entitled to at the lowest cost possible.
However, if you choose to keep this task in-house, then you must educate your staff on how to place an appropriate amount of pressure on patients who have an outstanding balance, yet still maintain the trustworthiness of your practice.
Office staff must be trained how to audit a patient’s account and how to know when it’s time to have a patient either meet with someone in the billing department, or be contacted by a collections agency.
In general, it’s a good rule of thumb not to hire an agency to collect overdue payments until at least six months of nonpayment and several follow-up notices have been sent to the patient. If you send a patient’s account to an agency just 30 days after nonpayment, you may harm the relationship you’ve built with that person.
Before hiring an agency, be sure your staff contacts patients directly via phone to ensure there hasn’t been a change of address, a loss of job, or some other hardship that may have impeded their ability to pay. Remember: your first response should be asking your patients to work with the billing department. You want to maintain a positive environment and good patient relationships. Therefore, leave the dirty work of collecting overdue balances to the agencies, and only do so as a last resort.
Finally, be prudent as to the amount of time and energy you are willing to allocate toward collecting overdue invoices. As a patient’s account ages, the likelihood of your office collecting on it decreases dramatically. It’s expensive for your practice to carry overdue accounts for which you won’t be able to collect.
It’s often a better use of your office staff’s time and resources to concentrate on other aspects of your business that you can control, such as strengthening your ongoing relationships with financially reliable patients.