Avoid These Common Pitfalls When Collecting Patient Financial Responsibility

James Riviezzo Posted by James Riviezzo on Jul 10, 2017 6:00:00 AM

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Patients are more invested than ever before in their healthcare. That’s good news, but here’s the fine print: the growing trend towards high deductible plans means that patients who use such plans bear more of the financial burden. And for the downright bad news? It’s up to you, dear clinician, to collect patient financial responsibility. That’s when things get awkward.

But it doesn’t have to be. In this post, we’ll take a look at the common mistakes to avoid. We’ll also discuss tested strategies to help you successfully (and painlessly) collect money from your patients. Let’s get started.



6 Common Pitfalls

First, let’s take a look at the most common payment collections mistakes you may be making in your private practice.

Here’s a list of strategies to implement so that you get paid on time every  time.


Pitfall #1: Not Accepting Money Up Front


We get it: collecting money up front doesn’t feel right. It’s like you’re saying, “I’m in it for the money, now pay up.” But perhaps this study will change your perspective:

In a study of nearly 500 practices, conducted by Greenway Health, research showed that only 21% of patients billed after the time of service paid their balance due. The overwhelming amount (79%) did not pay at all.

Ask yourself, can you afford to run a business when three fourths of your revenue is never collected?

Balance billing also has the unintended effect of alienating your patients. By delaying billing until some later date, you increase the likelihood that patients won’t pay and, perhaps even worse, they won’t return. Of the 21% of patients who did pay after the time of service, the overwhelming majority did so within the first 90 days. Patients who haven’t settled their bills are less likely to come back for follow up appointments also.

It’s in both you and your patients’ best interest to collect money as soon as possible, especially if you want to build a long lasting relationship. Collecting money up front is a lot less awkward than sending collections letters after the time of service.


Pitfall #2: Not Verifying Eligibility

The best way to set yourself up for success is to streamline your verification process. You can’t rely on your patient or your photocopy on file of the insurance card. You must call the insurance company and verify coverage-- and you should do it prior to the appointment.

Although insurance verification isn’t exactly the highlight of anyone’s day, it’s only 10 minutes per patient, and it can prevent you from losing thousands of dollars. If you neglect to do so, you may end up having to write off the appointment come tax time.

What information do you need to verify from the insurance company? Here’s a rundown of the most common questions to ask:

  • Is the coverage is active?
  • What is the end date for the policy? (This is helpful for knowing when to re-verify coverage.)
  • What is the patient’s copay or coinsurance amount?
  • What is the deductible amount? Has [the patient] met the deductible?
  • Does the policy cover [the diagnoses and/ or services] that may be provided?
  • Does the insurance company require pre-authorization for a service that may be provided?
  • Are we listed as an in-network provider? (If not, find out how much the insurance company pays for out-of-network providers.)

By understanding what the patient is responsible for, you can better prepare the patient for their financial responsibility with your practice.


Pitfall #3: Not Estimating Costs

We’ve all heard the horror stories of patients who arrive for an outpatient procedure and are then quoted a number that’s astronomically higher than what they were prepared to pay. The only thing worse than getting sticker shock before a procedure is realizing that you’ve got to pay up or go without.

Not only is this bad from a customer service standpoint, it also threatens your bottom line. What happens when a patient can’t find the money to pay for the procedure, and he or she doesn’t qualify for financial assistance? Do you take a deferred payment (knowing the dismal odds of actually collecting that money), or do you turn the patient away? Either way, you lose-- whether that’s your reputation, your revenue, the patient, or all of the above.

To avoid putting your patients in this dilemma, take a few minutes to estimate the cost.

Chances are, you’re more adept at dealing with insurance companies and costs than your patient. It may be unfair, but a lot of the burden of explaining the patient’s financial responsibility falls on your shoulders. That’s because insurance companies are often hopelessly bureaucratic with websites that are clunky and difficult to navigate for patients.

This study showed that 67% of patients don’t know how much they owe compared to how much their insurer owes.

You can be a resource that helps your patients understand what they must pay. Your extra effort will keep patients coming back to you.


Pitfall #4: Not Having Empathy

You’re busy, and if you’re not careful, you can make patients feel bad for not understanding their financial responsibility. Try to remember that medical billing is complicated. It’s difficult for patients to decipher what they owe and when.

Train your staff in the soft skill of empathy. Your staff needs to use compassionate language in conversations with patients, especially in regards to financial responsibility. They should take a supportive posture when guiding patients through what’s owed for co-pays, deductibles, and necessary procedures. This helpful tone should also be evident in collections letters, which should be clear, informative, but never adversarial.


Pitfall #5: Using a Collection Agency


This bit of advice seems contrary to rational thought. If patients owe, why not contract with a collection agency to collect the debt?

Here’s why: According to a study conducted by ACA International, the average practice recovers less than $14 for every $100 owed. They’ll charge around 30% for each debt collected. In many cases, you’ll end up with less than 10% of the original debt. Plus, you’ll have zero hope of getting those patients to return to your practice. Is it really worth it?

Instead take an active stance on debt collection. As mentioned earlier, it’s best to collect fees upfront to avoid moonlighting as a debt collector. But, if you must collect debt, handle all debt collection in-house.

Be sure to strike an empathetic, helpful tone when attempting to collect the patient’s financial responsibility. If the patient is amenable, you can work together to find an agreeable solution, such as a payment plan or placing a credit card on file for recurrent billing.


Pitfall #6: Not Putting a Stop to Past Due Balances

But what if you have patients with ever-increasing outstanding balances?

Simple. Stop seeing patients with past due balances. The more debt they rack up, the less likely the patient will be able to pay what they owe you.

Don’t allow debt to continue to increase. Collect outstanding balances before scheduling the follow up appointment. Why before? Patients with past due balances are more inclined to no show. So, you’ll get burned twice: having a patient who still owes and forfeiting an appointment slot that could’ve been given to another patient.


You’re Invited

Would you like to learn more?

We’re excited to announce our upcoming webinar, How to Collect Against High Deductibles Without Losing Your Patients or Your Cool.

In this webinar, you’ll learn how to help your patients understand their financial responsibilities and how to train your front office staff to handle high deductible plans. You’ll come away with important strategies for collecting otherwise lost revenue-- all in less than an hour of your time. Register now.


Don’t forget to download this list of strategies for prompt patient payment.