July 23, 2007

Improving Point-of-Service Collections
By Lenore Yarbrough
For The Record
Vol. 19 No. 15 P. 10

Recently, I was in a great deal of pain, enough that I was in need of services from my local emergency department. After signing in, I was called to a cubicle where my insurance and demographic information was updated. As I verified my address, I thought the registration desk clerk would naturally ask for my copayment, but she never did.

When I was taken to an examination room, another financial employee came to confirm a name change and have me sign a release for treatment. Surely, she would ask for my copayment. She did not.

After treatment, I was dismissed to leave. I stopped at the desk to ask if there was anything else I needed to do and was subsequently told that I was free to go. At this point, groggy from my treatment, my only thoughts were of going home. Later, it occurred to me that not one individual asked for my copayment. Instead of taking my payment at the time of service, this facility went to the expense of generating and mailing a bill. Though I paid this bill in a timely fashion, the hospital could have had my payment on the date of service if only someone had asked for it.

As the costs of running any medical facility continue to increase and malpractice insurance premiums rise, a healthy accounts receivable (AR) is crucial. Collecting the patient balance due at the point of service is the most cost-effective way to maintain a healthy AR, thus keeping cash flow where it should be. This best practice seems difficult for most facilities; however, there are several approaches that encourage timely collection from patients.

Prior to the patient’s arrival, there are several opportunities to adopt best practices that will facilitate favorable point-of-service collection rates. The first opportunity rests with the scheduling staff. When the patient schedules an appointment, a staff member generally will inquire as to the type of insurance under which the patient is covered. While gathering or confirming this information, staff members should inquire and document the patient’s copayment or percentage of responsibility. Following this inquiry, a staff member should remind the patient of the facility’s accepted forms of payment.

Another opportunity to improve point-of-service collections presents itself during appointment confirmations. Research has shown that appointments confirmed prior to the day scheduled will yield a lower no-show rate. Take this a step further and confirm not only the appointment date and time but also the insurance type and copayment amount. This will likely trigger the patient to inform you if there has been a change since the appointment was scheduled or since his or her last visit. The accuracy of the information exponentially increases the probability of timely collection from both the insurer and the patient. Again, remind the patient of the accepted forms of payment—this will help to avoid the “I forgot my checkbook” excuse. Informed patients will be better prepared to meet their obligation.

The easiest time to collect anything—be it monies or information—from patients is when they are standing in front of you. When the patient presents for service, take advantage of your best opportunity. First, verify all basic demographic information: name, address, date of birth, and telephone number (both primary and alternate). Next, verify insurance information. Most insurers are now capable of electronic inquiry, but inquiries may also be made by telephone. Although it requires the short-term investment of IT and/or human resources, the verification process will yield a healthier revenue cycle.

Finally, ask the patient to pay. If you do not ask, the patient most likely will not volunteer to do so. Make sure your facility offers several payment options, including cash, check, and credit card. Most patients are responsible and, if asked to pay at the time of service, will do so. Do not volunteer to bill the patient unless they ask for that option. Remember: Billing the patient costs money.

When unable to verify the patient’s responsibility with the insurer, asking for payment can be perplexing. Ask for a deposit. Consider the range of copayments typically collected for the insurer to ascertain a reasonable deposit amount. If the amount is too high, issuing a refund or applying the overage to coinsurance, deductibles, or other charges will be necessary. Regardless, these options are far better than pursuing payment later.

With rising patient responsibility rates, it may be more convenient for the patient to pay over time. Offering a payment plan with the first payment made at the time of service gives patients the needed flexibility to comfortably pay their balance. Prepare written documents that detail the scheduled plan and get the patient to sign the agreement. These documents can be prepared generically to be more specifically defined at the time of the interview with the patient. Try to take a credit card for payment and get authorization to bill the remaining installments to the card on specified future dates.

For larger patient balances, offer the patient a Care Credit or a similar payment plan. This is a credit card—available only through a provider—in which the terms of the plan are defined by the individual provider. So, depending on the terms set forth by your office, patients could have anywhere from three to 24 months to pay their balance. This can ease the patient’s burden yet still allow the facility to be paid in a timely manner. It will also accelerate cash flow and result in substantially higher payment rates.

Improving point-of-service collections can also be accomplished by offering patients a small benefit to pay their balance in full. Think like a car dealer. Offer a pharmacy discount card, validated parking, or a Starbucks gift card. Check the payers’ agreement to determine how much flexibility is allowed in providing such incentives. The small cost of the perks will save money in the long run. Not only will this plan provide incentive for patient payment, it will also promote patient goodwill.

No matter which approach or combination of approaches a facility utilizes to collect payments, remember that a well-informed patient is the key. By keeping patients informed of their responsibilities early and often throughout the care process, they have the opportunity to prepare to meet their obligation. Most patients are responsible, and, when given the opportunity, will gladly pay their balance if at all possible. For some, this is difficult, and your willingness to work with them to find a satisfactory solution will be greatly appreciated. Either way, you will find that patient collections, as well as patient satisfaction, will increase with minimal effort.

— Lenore Yarbrough is a consultant at Massachusetts-based Beacon Partners.