In the current medical practice landscape, physicians are increasingly frustrated when it comes to the issue of payment for the care they provide. Doctors and their staff members often find themselves chasing patients and insurance companies to get paid, and frequently are forced to write off bills that could and should be paid.
The Affordable Care Act has resulted in higher levels of patient responsibility, yet many patients remain under-insured or without insurance, leaving physician practices to manage those encounters to ensure proper payment.
The following strategies can help physicians approach their workflow from the perspective of maximizing their reimbursements and ensuring they are able to collect all they’ve earned.
In general, doctors rely on billing personnel or outside billing services to issue statements and to follow up with patients and insurance companies.
But billing services and personnel need direction from administrators or doctors as to the most efficient way to maximize the remuneration they receive for the care they provide. With this in mind, every physician should have intake forms that clearly assign medical benefits (though these aren’t always honored).
These forms also should remind patients of their responsibility not only for unpaid portions of bills, but for any collection costs that might become necessary, including fees charged by collection agencies or attorneys.
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Without this provision, physicians often end up paying up to half of their fee to a collection agency or a lawyer, when including this clause in their intake forms would have cost them nothing.
Providers also need standard billing practices that leave nothing to discretion. Doctors should send statements on a regular (perhaps monthly) basis, and have a strict policy as to how many statements are sent prior to referring an account for collection. (Three statements is a good number.)
The reason for this is threefold. First, issuing quick and consistent billing statements reminds patients of their obligation to pay. Second, fresh debts have a much higher repayment rate than aged ones.
Finally, statements must be sent consistently to preserve the right to sue. Most states provide that patients’ failure to object to statements in a timely manner is grounds for later legal action.
Collection agencies can provide pressure that billing personnel or services cannot. It is important, however, to ensure that medical practices use reputable collection agencies that comply with state and federal laws.
Furthermore, billing arrangements must be taken into consideration when selecting a collection agency. Many agencies charge a percentage of monies recovered, with some rates as high as 50%.
Other agencies, however, charge a flat fee, with rates as low as $10 per account. The advantage to the percentage-of-fee basis is that it gives the collection agency a financial incentive to collect, and ensures that doctors won’t pay anything if the agency is unsuccessful.
However, a percentage fee basis typically results in doctors paying much more when the collection agency is successful. Conversely, the flat fee arrangement generally costs less, but rewards an agency for bringing in accounts rather than actually working them. The downside to the flat fee arrangement is that physicians run the risk of paying for a service that does not guarantee, or in many cases, does not produce, results.
Additionally, collection agencies have no ability to compel patients to pay. They can call and write letters, but have no legal means to extract payment from patients unwilling to settle their accounts.
Indeed, the threat of damaging patients’ credit ratings was drastically reduced in August 2014, when Fair Isaac Corp. (FICO) announced plans to reduce the impact of medical debt on the credit scores it compiles.
Under the new model, FICO distinguishes between medical and non-medical bills in collections; medical bills don’t carry as much weight in consumers’ scores.
Attorneys can do what collection agencies cannot: file lawsuits against debtors, get legal judgments, and in certain cases, levies on assets and wage garnishes. Rather than waiting until a collection agency fails to produce results, sometimes it makes more sense to refer an account directly to an attorney.
For example, immediately hiring an attorney makes more sense when the amount at issue is more than $20,000, because collections agencies are unlikely to succeed where the average patient cannot pay by check or credit card.
In cases where patients deposit (and possibly spend) checks meant for their doctor, involving an attorney right away helps the doctor preserve his or her right to compel the patient to pay the money owed and reduces the risk that the patient will dissipate the funds.
Doctors need to consider fee arrangements when dealing with attorneys. Attorneys paid on an hourly basis have no economic stake in the debt. Moreover, paying an attorney on an hourly basis risks paying legal fees on debts that ultimately are not collectible.
However, while contingency fees may provide the attorney with an incentive to collect, and ensure that the doctor does not pay if no money is collected, physicians usually pay significantly more on accounts where money is recovered.
Doctors, like other professionals, have a right to be paid for their services. From internal billing personnel to collection agencies to attorneys, you have options, and if you manage your accounts properly, you can efficiently and (almost) painlessly bring in money that you thought would never materialize.
Coren H. Stern, JD, is an attorney with Bressler, Amery & Ross, P. C., in Fort Lauderdale, Florida. Send your financial questions to firstname.lastname@example.org.