In United States, healthcare practitioners have been facing an ever increasing problem of patients who do not pay their medical bills.
If a medical practice works on a 10% profit margin, but say 3% of its patients do not pay, then effectively 30% of the net profit is gone. Collecting money from existing patients is probably more important than getting new patients.
Main reasons of non payment are:
- Insurance coverage is getting restricted on many more procedures, therefore patients are responsible to pay for those.
- Overall rise in healthcare costs.
- Medicaid cuts.
- Many patients have high deductibles health plans, however two-thirds of Americans have less than $1000 in savings.
- Medical expenses usually unforeseen and overwhelming.
- Patients often have multiple medical bills because they require more than one procedure for the treatment.
- They may have other bills to pay like the Student Debt or Credit Card payments.
- Emergency room visits.
|Tip: Debt recovery is primarily done using three services – Collection Letters, Collection Calls and Filing a Legal Suit. Collection Letters are an extremely cost effective and efficient for recovering medical debt. Several patients will pay when they get written demands from a Collection Agency.
Fact: A collection agency makes more money if you directly go for “Contingency based” services like Collection Calls or Legal Suit.
A doctor will save a lot of money by assigning accounts to the Collection letters first, and then transferring “only those accounts” for Contingency based services which did not pay during the Letters service.
How soon can I forward a patient’s account for collections?
You can send a patient for collections at any time provided it is in accordance with your office financial policy. It is advisable to send the patient for collection after the determination of final insurance coverage. This will avoid any confusion since the patient’s insurance coverage can be different from what was initially estimated.
We will cover all the steps which a medical practice or a hospital should take to minimize the loss incurred due to these delinquent patients .
# 1.The number one success rule in medical debt collections is “Early Intervention”.
Have a plan in place for accounts where payment has been past due for more than 30 days. Majority of patients who have not paid within 60 days are now heading for some serious follow-up and collection efforts from your staff . However, your own employees may not well trained to perform the task of debt collections. They may also not be aware of laws involved while performing the collections activity, risking your practice to lawsuits.
Better Approach: Hire on a collection agency to do this job. Collection agencies exist in United States for decades because you cannot beat their effectiveness, cost and tactics required to collect money from past due accounts. They can collect money “diplomatically” or “intensively” per your instructions and accept payments from your patients in many ways (Over the phone, Credit Card, Check, Western Union, Online Payments, Installments, etc). If needed they can also do insurance follow-up and back-office support to enhance your revenue cycle management.
Collection agencies understand the delicate nature of medical collections and attempt to recover money in a way that the doctor-patient relationship remains in good standing. This is done by treating them with dignity and respect and helping them to understand their responsibility of making payment. Collection agency performs advance skip tracing to locate in case the patient becomes untraceable.
- Early Out (Optional @30-60 days – First Party Collections)
The first step is to utilize their “1st Party” written demands service. The cost to send 5 demand letters under your name (or your practice name) is only $15 per patient. Letters are sent weekly, for 5 weeks. They also check if the patient has moved to a new address or if he has filed for bankruptcy recently. In written demands service, the patient is instructed to pay you directly and you get to keep 100% of the money recovered.
Can your staff write 5 perfectly crafted letters for $15? ( plus all the overheads like postal, printing, stationary, infrastructure and employee’s own cost). The real cost of in-house collections will roughly come to more than $100 per patient.
- Collection Agency Demand Letters (Recommended @ 60-120 days)
If the patient has not responded to “1st party” letters, send 5 more letters using “3rd party” written demands service where a collection agency collects money under their own name (not your practice). At this point, your patient knows that this case has been passed on to a collections agency and things have become very serious now. The likely-hood of getting a payment increases many fold. You still get to keep 100% money collected.
- Contingency Collections (Intensive Collections @120+ days)
If the patient has still not paid, more intensive efforts will be required now. Forwarding these accounts for the Collection Calls service and finally the Legal intervention makes all the sense.
In Contingency services, Collection Agencies get paid only if they collect, else you pay nothing.
Assign the role to a staff member to execute your new Account Receivables plan, it should not take 20-30 minutes a day.
# 2. Make sure that your “Patient-Doctor Agreement” form mentions that in case the payment is 30 days (or 60 days) past due, their account can be forwarded to a collections agency and collection fees can be added to his bills.
# 3. Many of these accounts are not worth your time. You should be concentrating on getting new business. Focus on what you are best at and let collection agencies do what they are best at. An experienced agency will perform the collections activity, simultaneously preserving the good name of your practice and your business relationship with the patient.
# 4. A significant portion of your patients may have resources to clear your medical bill right away (or in installments), but they may have other bills too ( credit card, other medical bills, etc).
The idea is to become patient’s number one priority, so when he/she decides to pay, you are number one on their list. Collection agency is an excellent tool to make you their number one priority.
# 5. Older the medical account gets, harder it becomes to get paid. It’s quite possible that after visiting your clinic, your patient has accumulated other medical bills too. Medical debt is a severe problem in United States and once a person is trapped then there are no easy ways out. Recovering on a past due debt is a lot about being quick.
# 6. It is extremely important to hire a collection agency which has a vast experience in the field of medical debt collections and knows how to handle angry patients.
#7. For medical collections all debt collectors must undergo training in HIPAA regulations while delivering enhanced collection results.
If you are looking for a collection agency for medical debt collection, contact us.
A medical collection agency will follow a diplomatic, empathetic yet a professional approach to maximize chances of recovering money.
1. Have a Defined Credit Collection Policy
Medical debt collection is the process recovering overdue medical bills from former or present patients. It is always advisable to communicate patients in advance the approximate cost of medical treatment and what all is covered by their insurance, and how much can they expect to pay out of the pocket. Make payment plans or if your state law allows, take a written consent from patients to skip the non-essential treatments or tests, if they are already doubtful about their ability to pay all medical bills.Collection agency will assist to increase your medical practice profitability.