Collecting Self-pay Balances: Cash Is King

You cannot pick up a newspaper today without reading about the 47 million uninsured US residents. Well, that is only the tip of the iceberg.

Yes, there may be that many people without any third-party coverage, but there is a much larger group of individuals who fall into the self-pay category: all of us with high-deductible health plans. Deductibles today run from $500 to $5,000, and if you are normally a health individual, when a need for radiography or a CT scan presents itself, there is a good chance that you will be paying for a portion of it out of your own pocket.

Given this shift toward many services being paid for personally, consumers are more concerned as to how they spend their money. Funny how it didn’t seem to matter how much a service cost when the employer was paying the bill.

Now that I’m paying for medical services, I’m part of the new consumer-driven health care generation, and I’m not going to settle for the way that services have been delivered in the past.

If I can’t get an appointment within a reasonable time frame (and remember, I’ll define reasonable), I’ll go somewhere else for the service. You’ll need to give me the total cost of the services upfront, because I will be shopping. Oh, and by the way, trying to justify a higher price because of your quality doesn’t cut it. How would a layperson know whether one radiologist was better than another radiologist? If you schedule me for an imaging service at 1 pm and I wait until 2 pm, you can count on me subtracting the value of one hour of my time from your bill.

You may be finding that patients are the primary payors, even though they have presented you with their insurance cards before the time of service. Your practice will need to adjust, given this new class of self-pay patients; here are some ideas to help ensure that your self-pay receivables don’t skyrocket.

• For preverification of third-party coverage, use online resources, when available.
• Collect copays and deductibles before patients leave the office.
• Review and request any outstanding balances before setting another appointment.
• Ask for payment in full: You are not a bank. If they can’t pay in full, tell patients that you will accept two equal payments. If the patient still balks and says, “I can’t afford two payments,” train your staff never to say, “So, what can you afford?”

The Cost of Balances

Some techniques are needed to speed up the payment-plan process because it is expensive to accept small monthly payments. To verify this, track the time it takes to open the mail and identify the payment, endorse the check, and prepare the deposit slip. Then you must post the payment, balance the batch, and send another statement. I’d bet that you will find that it costs more than $5 to process a patient’s check.

If patients can’t pay in full, first ask for two equal payments or ask them to use their credit cards for the balance. If they suggest paying $10 a month on a $500 bill, show ffthem how outrageous a request that is (it will take 50 months to pay off the balance).

I realize that some patients can’t pay in two payments or use a credit card, so use the following guideline for setting up a minimum acceptable payment amount. The minimum payment you decide to accept should always be higher than the combination of the patient’s monthly cell-phone and cable bills.

Some accounts will inevitably fall into the self-pay category after services have been rendered and will pop up on a future aging report. There may also be more accounts than you can possibly afford to contact. To get the most bang for your buck, you should prioritize the accounts.

To maximize your collection efforts, always print reports in descending balance order so that you can work on the largest balances first. It’s a myth that accounts can only be collected in alphabetical order. Sort by primary payor. Patients who have some type of third-party coverage are more likely to pay than purely self-pay patients.

If an account has rolled to self-pay due to a third-party rejection or denial, verify that you have properly followed up with the third party. I know many practices have the policy that it is the patient’s responsibility to clear up third-party problems, but sometimes the reason that a claim was rejected is too complex for a patient to be able to get the claim properly paid.

Produce reports by ZIP code. The more affluent the patient’s neighborhood, the better the probability that he or she has the means to pay. Speed up your patient statement cycle. You should send one informational bill asking for payment in full and then a final collection notice. If a patient doesn’t pay on the first statement, he or she will probably ignore your second and third statements, so save time and money by cutting to the chase and sending the final collection notice on day 30, at the latest.

Remember that treating every patient as your most important customer will lead to having happy patients who are more willing to pay your bill. If I’m treated poorly, I’ll pay poorly, and if I feel that you value me as a customer, I’ll value your services and will put your bill at the top of the pile.

Happy collecting!