How to Handle Collections Reasonably and Compassionately
According to a 2016 Kaiser Family Foundation survey, almost 25% of U.S. patients have trouble paying a medical bill. This 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. But, 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 or a death in the family.
There’s 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.
To establish a solid baseline for collections, it’s 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 provider, deductibles and co-pays. You also may want to ask patients for consent to put their credit cards on file so you can charge them for any amounts remaining after insurer payouts.
Consider a payment program
Explore the idea of offering payment plans to patients. 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’ll 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. But 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 don’t 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.
Finally, 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 and flexibility to ensure optimal outcomes for all involved.
If you have any questions, please contact Deirdre Hartmann or Harlene Stevens at (973) 298-8500.