Management of accounts receivable is a significant issue in all private offices, and I've addressed it from multiple angles in previous columns.
In most cases, the patient-owed portion can be kept out of the accounts receivable in the first place. Collect as much as possible at the time of service, even if you have to offer a discount for immediate payment. When immediate payment is impossible, or you must wait for the insurance explanation of benefits, ask for a credit card number that you can keep on file and charge as soon as you know the balance due.
Sending statements should be a last resort, but they should be sent promptly, and no more than three times before you refer the account for collection.
Most difficult or awkward collection problems can be categorized, and you should have a standardized strategy for dealing with each of them. Those strategies should be assembled as a formal written policy and applied consistently each time they arise. Such a policy begins by considering possible scenarios.
Standardize as many situations as possible; for example, make a list of any situation in which you always want the patient balance written off, or always want the balance sent to a collection agency without your direction, or always want to make a case-by-case decision.
Be as specific as possible. What do you want done, for example, when a patient is deceased? Do you want to bill the family or estate, or write off the balance as a bad debt, or some combination of the two? My office has a “sliding scale” based on the size of the balance due, ranging from writing off the smallest balances to deciding the fate of the largest on a case-by-case basis. The occasional very large balance might merit referral to a specialized company for a probate search, or other identification of accessible funds.
What about a patient who claims to have been laid off from work and does not pay a balance or discontinues payments? Options include referring the account to your collection agency, writing off the balance, or negotiating payment of a reduced balance.
If a patient has no insurance and requests a discount at, or prior to, the time of service, decide if you want to give one, and if so, how much and under which circumstances. My basic no-insurance discount is 40% if payment is made at the time of the visit. Those who can't pay immediately are offered 25% off if they pay within 30 days of service, 10% if within 60 days. Cases of particular hardship are worked out on an individual basis. We have a similar policy for patients who have insurance that my office does not accept.
For inpatient services, when the hospital has discounted or written off the patient balance and the patient requests a discount, we match the discount granted by the hospital. For small balances that remain unpaid after reasonable efforts have been made to collect from the patient, we write off balances of less than $25.00 and refer the rest for collection.
Delinquent accounts, after collection efforts have been exhausted without success, are usually unsalvageable; but, occasionally, patients will attempt to negotiate a settlement, once they realize the damage done to their credit rating. I am less generous with discounts under such circumstances, of course, but I usually take 5% off if the balance is paid in full within 10 days, and 10% if paid by credit card immediately, by phone. We require them to complete a standard “hardship form” to apply for a larger discount.
Nobody collects every balance owed. This is the reality in any business, especially a medical one. The main objective is to do everything possible to minimize uncollected accounts. Develop a system that works, and be disciplined about implementing it.