Growing financial pressure on patients in the post-healthcare reform world means physicians need to be prepared to deal with payment issues to protect the financial health of their practices. The keys: Be up front and proactive.
The growth of high-deductible health plans, combined with the economic downturn has made collecting fees from patients a growing challenge for medical practices.
“We’re seeing universally increased out-of-pocket expenses from the patient side. Deductibles are definitely going up, copays and premiums are going up, so there is a lot more awareness [by patients] of what things cost and the patient responsibility,” says Laura Palmer, senior industry analyst with the Medical Group Medical Association (MGMA).
The fastest-growing type of health insurance is the high-deductible health plan. According to America’s Health Insurance Plans, enrollment in these plans grew by roughly 15% from 2011 to 2012, and again from 2012 to 2013, so that nearly 15.5 million Americans were covered by this type of plan as of January, 2013.
In addition, millions of Americans have entered the insurance market for the first time under the Affordable Care Act (ACA), and many of the new health plans come with high out-of-pocket costs.
According to a recent Robert Wood Johnson Foundation analysis of health plans sold in the ACA exchanges, the average annual deductible for a silver-level health plan is $2,267.
Out-of-pocket medical costs are even higher for those who purchased ACA-compliant insurance policies directly from insurers or through brokers. For example, eHealth, one of the largest private health insurance exchanges, found that individuals buying coverage from October, 2013 through March 2014 had an average annual deductible of $4,164. For family plans the average deductible was $7,771.
As patients face higher out-of-pocket costs, physician practices see an impact on their cash flow. An MGMA survey found that multispecialty practices saw their bad debt go up by 14% between 2008 and 2012.
As costs rise, physicians need to adjust or refine their approach to billing strategies. “As high deductible health plans have been rising over the past few years, practices need to really do a good job collecting up-front when they can,” says Margo Williams, senior associate with the American College of Physicians’ Center for Practice Support.
Here are some steps to help increase fee collections from patients:
Setting clear policies that everyone in your practice understands and knows how to enforce is critical, experts say.
That starts with checking a patient’s insurance eligibility before every appointment. “A lot of offices had a policy to check once a quarter or once a year but that’s long gone,” Palmer says. “Just because someone has a card doesn’t mean they have the benefits. You have to be a lot more conscious and do this on the front end.”
In addition, Williams says, patients should be reminded at the time they schedule appointments to bring a form of payment with them, and that they will be expected to pay their portion of the visit when they come for their appointment.
“We keep tabs on patients and try to collect copays before they are seen because they manage to sneak out at the end of the visit,” says Rebecca Jaffe, MD, FAAFP, a family physician in Wilmington, Delaware and a board member of the American Academy of Family Physicians.
Make sure that all of your policies are communicated clearly and in advance so that patients aren’t caught off guard. That includes making sure any forms patients sign contain notices about extra costs applied if accounts must be sent to collections, or if interest on outstanding balances will be charged.
Patients tend to have a poor understanding of their insurance policies, which can lead to surprise charges they’re sometimes unable to pay.
“A lot of patients don’t know their policy or what’s required of them and sometimes the practice has to educate them,” Williams says. “It behooves the practices to figure out what the rules are and help the patients understand.”
Offer as many payment options as possible. Equip your practice so that fees can be accepted by any method the patient has access to-credit or debit card, cash, or check. “Make it as easy as possible,” Williams says.
Maria K. Todd, PhD, chief executive officer of the Mercury Healthcare Companies says many physicians don’t take credit cards due to concerns about having to give up 2 or 3 percent of each credit card transaction. But that’s a short-sighted approach. “If you have cash now versus a check 30 days from now, you have the float on the money. Is that worth 2 or 3 percent?” she asks.
In addition, technological advances eliminate the need for traditional credit card machines. Services such as Paypal, Square or iPads with a credit card attachment offer practices more options.
Once your practice has the ability to accept credit cards, Todd suggests having patients place their credit card on file so they can be automatically charged for amounts not covered by insurance.
Jaffe offers an additional idea to make it easier for patients to pay. “Our strategy periodically has been to run a special for patients with big bills,” she says. If the patient agrees to pay in full by the end of the month he or she will be asked to pay just 70 cents on the dollar. Jaffe says the offer of a discount moves some patients to act.
When patients are unable to pay for a routine visit it may be acceptable to turn them away and require them to reschedule at a time when they can pay. Again, this policy needs to be clearly documented, and staff must be well trained so that it’s uniformly and properly applied.
However, Todd points out that having office staff determine when a visit is truly routine can be problematic. “Until someone does triage you don’t know,” she says.
She offers the example of her father’s routine doctor visit to address elbow pain. He was checked in by the front desk staff and asked to wait. A nurse happened to walk past him and grew concerned by his appearance. She moved to have him quickly examined, only to find he was having a heart attack and that the pain was manifesting in his elbow.
The moral of this story, Todd says: “Train your staff to be competent or see everybody.”
Patients who are unable to pay for services over the long-term can be terminated and referred to a local hospital, community service organization or another physician.
Here again, however, it’s important to proceed with caution, Todd says. If the patient has been under your care, you are obligated to provide written notice 30 days in advance of termination. The patient must also be transferred to another provider you know to be competent. Failure to do so can have both ethical and legal consequences.
Many physicians are sending outstanding bills to collection agencies more quickly than in the past. Whereas it was once common to wait 180 days before taking action, more practices today are deciding to send outstanding bills sooner.
At the same time, Todd says, collections agencies are expanding their scope to go after first-dollars now that more people have high-deductible policies.
“Cash flow is king,” Todd says. Many practices are finding that it makes more financial sense to hire an agency that takes roughly 28% of the outstanding balance than hire a full-time employee to go after the money.
In addition, physician practices need to consider that under the Affordable Care Act, patients who purchased policies through government-run exchanges and are receiving federal subsidies have a 90-day grace period to pay their insurance premiums.
During the first 30 days of that period the insurer is required to continue to pay claims. But in the last 60 days, payment can be withheld. If patients fail to pay all their premiums, they’ll lose their coverage at the end of the 90 days, and physicians will be required to collect any withheld payments directly from the patient.
One way to avoid getting stuck with a big bill is to consider paying a patient’s insurance premium for them. Although unorthodox, Todd says that if the bill is large enough, it makes good financial sense to pay. It’s well worth spending $350 on a patient’s insurance premium to collect thousands of dollars in outstanding claims.
Even the best-laid plans to collect patient balances must still factor in the human element. “You know these people and you know some of them to be unbelievably honorable. They’ve told you the stories and you try to do your best for them,” Jaffe says. However, in the end, she says, “I have to pay my rent and pay the staff.”