With Patient Add-On Fees, Make Sure There Are No Surprises

More physicians are attempting to boost revenue by charging patients new "add-on" fees for such things as missed appointments, filling out medical school or work forms, providing copies of records, or general administrative work. But doing so effectively without incurring the wrath of your patients is key.

More physicians are joining the ranks of practitioners attempting to boost revenue by charging patients fees for such things as missed appointments, filling out and/or faxing various medical school or work forms, providing copies of medical records, or general administrative work. A sagging economy and the rising cost of practicing medicine are among the culprits leading to this growing practice.

“Physicians are always looking for ancillary ways to offset the high cost of administration and claims processing,” says Ron Finkelstein, CPA, with Morrison, Brown, Argiz & Farra LLP. “With managed care and reimbursement very tight and declining, [physicians are] always looking for ways to increase their revenue.”

Doing so effectively without incurring the wrath of your patients is the key.

No Surprises

Finkelstein says that a medical practice is a business. As such, he encourages his physician clients to run their practice like a well-oiled, efficient business. If there are charges for various circumstances, such as failing to show up for an appointment or the need to have health forms filled out, that policy needs to be made clear to patients verbally and through signs posted in the waiting room.

“Employees need to be trained on what to say when patients phone to make an appointment,” Finkelstein explains. “If you don’t cancel within 24 hours, you’re going to be charged a cancellation fee. If you want a consult with the physician, there’s a negotiated rate for that. The key is communication.”

Ken Hertz, a consultant with the Medical Group Management Association, agrees, but adds that communication is something that physician practices don’t often do well. He suggests that before taking any action with regard to add-on fees, physicians should first understand what is happening in their marketplace. If there is a general trend toward implementing add-on fees, the practice becomes more acceptable. But, Hertz says, it’s still critical to clearly communicate practice policy to patients.

“I’d do it by email, post it on my website, and have information in the waiting room that could be handed to patients,” Hertz says. “I would make sure to communicate with the patient at least three different ways. And I would also provide an easy option for them to ask questions and provide feedback about the policy. I think you have to be really transparent about this.”

Alternative Measures

Are there alternatives to hitting patients with various administrative fees, or other steps physicians can take to more effectively handle the rising cost of doing business? Finkelstein believes so, and suggests that physicians start by reviewing their scheduling. For example, if a medical practice is office-based but physicians also spend time at the hospital, they need to make sure they’re scheduling time efficiently.

“If they’re going to block out a morning, they need to spend all their time at the hospital making rounds and doing procedures,” Finkelstein says. “Then they have to make sure that they come back to the practice in the afternoon for patient office visits. They can’t be running back and forth.”

In addition, if a physician is doing a surgical procedure at an outpatient facility or a hospital, he or she doesn’t want to get there only to find there’s been a cancellation that leaves a one-hour hole between procedures. “The same is true in the office. A physician needs to have a steady stream of patients,” Finkelstein says. “Scheduling is the key.”

Hertz suggests that in addition to understanding the marketplace, physicians might want to take a step back and analyze their practice. For example, if the practice is experiencing many cancellations and no-shows, and the physician is concerned that it’s costing the practice money, it’s important to find out why the cancellations and no-shows are happening.

“Are these new patients whose first appointment was put off a couple of days, so they went to see somebody else?” Hertz asks, rhetorically. “Is the practice making appointment reminder calls to patients? Is everything being done to make sure patients are well treated and taken care of properly?” He reminds physicians that by charging a patient a no-show or cancellation fee, practice staff must then follow up and bill the patient. “That costs the practice time and money,” he says.

Is it worth it, particularly where patient relations are concerned? Hertz isn’t certain. “I’m not a big fan [of charging for no-shows],” he says. “I’m not sure that they generate significant dollars, and I’m not sure that the negatives don’t outweigh the positives.”

Finkelstein echoes those thoughts, and offers words of advice in the form of an analogy. “It’s not unlike what we face every day with the airlines. [The airlines] nickel and dime us on this and that,” he says. “Why not just build it into a one-time fee and people won’t feel like they’re being nickel and dimed.”

To cut the number of patient no-shows, reminder calls are key. A computer-generated reminder telephone call can reduce the number of patient no-shows, but a human voice does even better, according to a recent study published in the Journal of the American Medical Association.