Why Rush to Bad Debt?

Why Rush to Bad Debt?

Are you writing off all encounters to the Collection Agency at 90 days? Why?

 

Collection companies will charge a premium to chase your patients and insurance companies who are not paying. You have to make sure that you exhausted your efforts before paying that 25% fee (or higher). So how hard do you work at collecting that money from your patients? How many of your patients would have paid you in full if you simply sent out a more informative bill?

 

Your 90 day cut-off date needs to be re-examined. There are many industries that realize 90 days past due are bad debt. But this is not the case with healthcare. Many of your patients have two insurance companies who must be billed consecutively (not simultaneously). This puts most of your accounts to 60 days in processing without incurring any problems. Yet most treat this as 60 days overdue.

 

When problems occur, it often sets remittance back 30 days per incursion. These are routine issues which may result from bad information being provided by the patient, a clerical error within your office, or even the payer mistakenly rejecting your claim.

 

Let’s create a hypothetical patient, Jane Smith. As days expire I will note how each action creates a delay with brackets.

 

Ms. Smith’s encounter is processed with clerical error due to a single digit in the ID# being omitted [30 days elapsed]. Your staff is two weeks behind appealing denials [45 days elapsed]. Your staff sends a statement to the patient requesting her correct ID#. Statements are mailed every thirty days and as stated above, non-payments take two weeks to process [90 days elapsed]. Now you can bill and receive reimbursement from the primary carrier [120 days elapsed]. Finally, you send a claim to the secondary carrier and complete the encounter [150 days elapsed]. Your practice may have different protocols in place to limit the delays for the example above, but it is not uncommon for patient accounts to spiral through 30 – 60 – 90 days without any fault of the patient.

 

Do not be afraid to hold onto some patient accounts until it is clear you have exhausted your efforts. Whether or not you outsource your billing, it is not unreasonable to ask your staff and vendors to perform the following actions:

 

  • According to Brett Burbank, Regional Territory Manager of Professional Office Services, “50% or more of patient statements mailed today do not indicate when the payment is due”. Buck that trend. Establish a call to action.
  • Create different language and urgency as each statement is mailed. When you issue your final bill, send a “Final Notice” in a completely different format than your normal statements
  • Create and advertise payment plans on your statements, for example:

o   40% discount if paid within 5 business days

o   Six equal payments over six months at 0% interest

o   $50 minimum per month to avoid collection action

  • Scrub your aging reports! Insurance companies mail payments to the wrong addresses or mistakenly do not process some claims. This is easy money waiting to be reissued to you.

 

Wring the A/R towel dry before you hand it over to the collection agency. Increase your income per encounter ratio. Run a collection process suited for the healthcare industry.

 

 

Salus Resource Group

Salus Resource Group - Salus Resource Group is a collection of business owners and professionals that serve physicians and dentists across various disciplines.