Three Strategies for More Effective Patient Collections and Upfront Payment

By: on February 19, 2019

In a 2017 survey of more than 1,000 adult patients, over half of respondents said they delayed paying their medical bills due to insurance plans with high deductibles. That’s a lot of income for small medical practices to have to wait to receive, which makes it difficult to pay salaries and stay on top of practice costs.

survey data collected and reported by west health care

Survey data collected and reported by West

In the same survey, 230 medical providers were asked about their patients delaying payments, and 95 percent of them said they were aware that their patients might delay paying their balances due to financial burdens.

That’s a lot of providers who have accepted late or missed patient collections as an inevitability, when it’s actually a fairly solvable problem.

Using the three revenue cycle best practices we’ll discuss here, you and your team can prevent one in three late payments. This will make sure you’re getting paid for services as soon as possible, which in turn will allow you to run your practice as smoothly as possible.

1. Talk to Patients About Costs to Reduce Confusion

Pricing transparency in health care is a popular issue these days, and rightly so. Surveys over the years have revealed a growing demand for it from patients, and that’s not surprising when you consider the changes in health care policies and practice models such as MACRA and value-based care.

Plenty of recommendations, strategies and tips for improving your price transparency can be found online, but most of them boil down to one thing: communication.

In its survey, West found that 36 percent of medical providers never discuss costs or their patients’ ability to pay for health care service prior to ordering or rendering them. The whole point of pricing transparency is to reduce that number to zero, so let’s talk about how you can start having these conversation with your patients today.

Start the Conversation Ahead of Time With Appointment Reminders

A lot of patient scheduling software systems are equipped with customizable appointment reminders that can be sent out via email, text message or automated phone call.

Use these reminders to briefly cover your payment policies (e.g., list of payment methods you accept and required upfront payments, which we’ll discuss later).

In addition to preparing patients for your standard policies, you can also make it clear that you and your team are willing (and eager!) to explain costs and talk through financial concerns when the patient comes in.

Discuss Costs and Patient Responsibility Before Providing Services

Remember from our chart above that 30 percent of patients cited confusion over how much their insurance will cover versus how much they’ll owe out of pocket. They also commonly believe that they were billed for services they didn’t think they were expected to pay for, another reason for delayed payments.

Now consider that 75 percent of patients don’t know how much medical services will cost them until they get their bill.

That evidence suggests that providers are ordering treatments without taking patients’ ability to cover expenses into account at all.

By having these conversations while the patient is in your office, you can do two very important things: Assuage their fears about costs and adjust your recommendations to better accommodate their financial situations. Both of these outcomes will increase your rate of upfront patient collections.

2. Require All or Some Payment at the Time of Service

If you’re really struggling with patient collections, a point-of-service collection policy could be your new best friend. According to the American Medical Association, point-of-service, or POS, collections have a number of benefits, including:

  • Reduced accounts receivable
  • Increased cash flow
  • Reduced collections costs

Here are two tips to help you implement an effective POS collection policy:

Have Patients Walk Past a Checkout Desk on Their Way Out

This seems really basic, but there’s a reason it’s so common to see the checkout desk on the way out of a doctor’s office.

By designing your office so that patients have to walk past a checkout desk, you’re sending nonverbal cues to patients that they’re going to be expected to complete some sort of transaction before they can leave.

Even if you don’t have a desk set up on the way out, you can use very simple verbal cues to direct patients. Something as easy as saying: “They’ll get you checked out at the desk” when wrapping up exams is a great way to ensure patients are making that stop every time.

Verify Insurance Ahead of Time to Collect the Right Amount at the Time of Service

Sending out intake forms to patients before their scheduled appointment enables you to collect insurance information and verify coverage as well as copays and deductibles well ahead of time. Use that information to come up with an accurate balance that you can then ask patients to pay at the time of service.

If you’re unable to verify insurance coverage, or if you have patients who don’t have insurance, you can still require payment before they leave your office. Just make sure you let them know that your collections policy will require them to make payments at the time of their appointment.

This goes back to the point about transparency—you should do everything you can to educate patients on their responsibilities when it comes to payment as well as why you’re charging the amount you are for your services.

3. Use Notifications to Remind Patients About Balances Due

Remember that communication is the crucial element to improve patient collections, and notifications can be a great tool to automate that process. A lot of medical billing software or revenue cycle management tools are able to send automatic notifications to patients regarding balances. Taking advantage of these notifications could help the 36 percent of patients who delay payments because they simply forgot about them.

The billing analytics screen in Kareo Medical Billing Software (Source)

When you start to think about payment notifications, you’ll want to consider two types that I’ll call “proactive” and “reactive.”

Proactive Notifications Alert Patients Before Balances Are Due

Sending out notifications that prompt patients to pay balances before they’re due not only helps those patients who tend to forget about payment deadlines, but can also reduce costs by heading off late payment fees and prevent patients from falling into delinquency.

Additionally, if you’re using virtual notifications (via email or text message) you can include direct links to online bill payment tools that will make it as simple as clicking a few times for patients to pay you.

If your notification system sends phone calls, be sure the recording includes information about how patients can pay you, whether by logging onto a patient portal or even mailing a check.

Reactive Notifications Alert Patients to Past Due Balances

According to the West survey, only 21 percent of medical providers send reminders to patients whose balances are past due.

Use your billing or appointment reminder software to send these automated notifications, and be sure to draft the messages with a friendly tone and include options that will send patients directly to payment options, whether by transferring them directly to your office by phone or linking to online payment methods.

Final Takeaway: Communicate, Communicate, Communicate

I’ve said it before, but it bears repeating: The best way to improve your upfront patient collections is to communicate with your patients.

Talk to them about costs, insurance coverage, payment policies, how they can make payments, deadlines—talk to them about whatever they need to know in order to pay you for your work on time.

You should be using any tools you can to make communication easier, too. In-person conversations are great for addressing patient questions, but you also have a variety of software options to help you as well. If you’re not already using them, I recommend checking out some of the following systems:

As always, feel free to reach out to our team of expert medical software advisors for help researching any of these tools.

Note: The information contained in this article has been obtained from sources believed to be reliable. The applications selected are examples to show a feature in context, and are not intended as endorsements or recommendations.

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