How to Handle Collections Reasonably and Compassionately
According to the Kaiser and New York Times survey, almost 25% of U.S. patients have trouble paying a medical bill. The same survey states that 32% of adults between the ages of 18 and 64 have postponed getting needed care due to the cost and 40% said they have relied on home remedies and over-the-counter drugs. This is the result of many patients finding themselves with high deductible insurance plans leaving them responsible for a larger percentage of the cost of care. In addition, the copay associated with the plans can be higher than the patient can afford.
The financial stress of patients has only been exacerbated by the COVID-19 pandemic, with 22 million people reporting being unemployed in the first four weeks after a national emergency was declared.
When the pandemic first struck, many doctors offered bill forgiveness and leeway. Going forward, it will still be important for physicians to handle collections reasonably and compassionately.
Investigate root causes
There are many root causes to collection problems. Some patients may be unhappy with the outcome of an appointment or treatment plan and need to discuss the matter before paying. Others may have simply forgotten or misplaced the bill. In many cases, particularly given the sudden economic downturn, patients could be facing unemployment or other serious personal issues such as illness and death in the family. Patients can also be faced with critical daily choices such as buying food, personal care products and home maintenance. There is also the possibility that an insurer or employee at your practice has made a billing mistake. Regularly assess your billing policies and procedures to determine whether errors are occurring and at what rate.
The 2019 Healthcare Consumer Study, commissioned by health care financial engagement platform Cedar and conducted by independent research firm Survata, found that patients wanted transparent and easy billing. The survey found 60% of respondents have asked their physician for expected out-of-pocket costs ahead of their care, but 51% of those who asked were not able to get that information easily or accurately.
To establish a solid baseline for collections, it is important to be transparent about pricing and insurance coverage at the start of treatment. Have conversations upfront with patients about billing, fees and their balances.
To facilitate an informed discussion, you and your staff must have a firm grasp on each patient’s insurance coverage. So, collect and vigilantly update vital patient information such as demographics, insurance providers, deductibles and co-pays. You may want to ask patients for consent to put their credit cards on file so that you can charge them for any amounts remaining after insurer payouts.
Consider a payment program
In 2014, Novant Health, with facilities in North Carolina, South Carolina and Virginia, having already introduced payment plans for patients 300% below the federal poverty level, took a bigger step. Recognizing that patients’ bills continued to rise over time due to interest, a non-interest bearing payment plan with a flexible repayment time frame was instituted with the assistance of the Vendor ClearBalance. While this approach may not work for all providers, a payment program can provide various levels of comfort for the patient, and it can also increase the chances of the total balance being paid to the provider.
You can administer such a program internally or through a third-party provider. Payment-plan programs typically involve:
- Creating and distributing printed or electronic statements and bills;
- Setting up notifications in your electronic health records system to notify staff when payments are due; and
- Training staff members to make reminder calls to patients who fall behind on their payments.
A third-party provider may simplify program administration, but you will need to accurately estimate the cost of this service and choose a trustworthy firm.
Use collections, legal action prudently
Sometimes turning a bill over to a collection agency is the only way to get a patient’s attention. However, you should exhaust all other options before sending a bill to collections because doing so not only generates ill will with the patient, but also decreases the recoverable amount of the bill. After all, collection agencies usually work on commissions ranging from 10% to 25% — or more — depending on the age and type of debt and the ease of collection.
If you do engage a collection agency, try to maintain good relations with affected patients. You do not want the agency to antagonize them. When looking for a provider, investigate each one’s track record, ask for references and contact other physicians for recommendations. Also, be aware that a collection agency that handles hospital debts often works differently from one that handles physician practices — the ones focusing on hospitals tend to be more aggressive and physician practices can be more flexible with patients.
If necessary, you can file a civil lawsuit, but this is typically viewed as an absolute last resort. Taking a patient to court could backfire on the practice if the story gets out in the news or on social media — particularly during a time when so many are struggling financially.
Use common sense
How your practice handles billing and collections has become even more important in the current environment. “One size fits all” never worked, but in the current environment, common sense and fairness must prevail. Exercise patience, sound judgment, flexibility and compassion to ensure optimal outcomes for all involved.
For more information, contact Antwone Turner at email@example.com or 312.670.7444. Visit ORBA.com to learn more about our Health Care Group.