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How to recover lost payments

Physician Practice Advisor, March 1, 2003

The best place to begin collecting payments from delinquent patients isn't at a collection agency. "Start with your front desk," says Terri Weston, CMIS. She ought to know: For 12 years, Weston has headed up the billing department for Total Medical Billing in Dallas.

Your front desk must double check patient information to make sure that your practice's co-payment bills go to the correct address. Never assume that the insurance carrier has the patient's correct address, because often they don't.

Use the following tips to avoid late checks:

* As soon as new patients arrive, hand them a questionnaire. On this sheet, ask for the patient's current billing address and the patient's insurance provider. Ask patients who have not visited the office in six months or more to fill out the form, too. Check that the information on the sheet corresponds correctly to the billing information provided by the insurance company.

* If procedures are not covered fully by insurance, alert patients while they are in the office. Patients may be under the impression that insurance will cover the entire visit. They may raise a stink once the co-pay bill is sent. To find out whether there is a co-pay, call the insurance company for verification.

* For expensive co-payments, tell patients that, if they don't have the money on hand, your office can work out a payment plan. "By doing this, you're opening the door for the patient who might be panic-stricken when they receive a bill for $900," says Marilyn Ollarzabal, C-PAT, C-CAT, CMRS.

When setting up a payment plan for a patient, agree on a reasonable amount and schedule first. Ollarzabal, the chief executive officer of Claims Action of Garden City, KS, shoots down the urban legend that the patient chooses what is reasonable. "Reasonable does not mean $5 a month on a $600 bill, that's just not true," she says.

TIP: Never ask, "how much can you afford?" Instead, say: "Today is Friday the 5th. How much time do you need to pay the $400 in full?" Now you've set the timetable, says Richard Saari, a "debtor expert" with Savit Enterprises in East Brunswick, NJ. A patient recently told one of Saari's clients that she could pay off her $400 balance in four months. "That was reasonable," she says, "but I try not to let the patient guide the payment process."

Searching for the deadbeats

Not all patients will be forthright in providing correct billing information, no matter what you do. Some will go as far as skipping town to avoid paying the bill. Contacting a collection agency is your last course of action. Your first move: Follow-up inquiries to the insurance carrier.

"You must followup to the insurance carrier within 30 days for each patient that does not pay," says Weston. "A lot of times you'll get the same answer: 'We never received the claim.' I don't care about that. I just want to know whether they are going to cover the patient."

Once Weston determines a patient's payment responsibility, she sends out a series of letters asking for the money:

1. The first piece of mail notifies patients that they must pay the doctor's bill. An information sheet asking for the correct insurance information comes with the bill.

2. The second letter is less friendly in tone, reminding patients that they still have not paid their bill.

3. The third letter informs patients that if payment is not received in 30 days, the office will transfer their case to a collection agency.

4-5. These letters are last chances for patients to settle up. Weston mails these after sending the problem to the collection agency. Her hope remains that the patient would rather deal with her office rather than a collection agency, which affects their credit history.

TIP: Make sure you cover all insurance agency avenues before contacting a collection agency. Ollarzabal also says if a patient comes to your office with an injury, find out where the injury took place, like at home, for example. The patient's insurance may not cover the procedure, but if an accident happened at work or at another person's home, this could be a liability issue. Worker's compensation or home owner's insurance may foot the bill.

Your last resort Weston calls a collection agency if the patient doesn't respond by the fifth letter. The agencies have resources that physician offices may not have, such as trace skips. These trace skips track down patients who have moved away without leaving a forwarding address.

One issue to consider as you fine-tune your collection process: cost. Do your homework and compare agency fees, since some receive 30-40% of the bill. That sounds like a lot, but, as Weston says,

"Getting 60% of the bill is better than getting zero."