Collecting outstanding balances from patients is challenging, but it is also essential to keep your practice afloat. It is difficult to pay the bills and provide quality care services without a steady cash flow.
Thus, this guide will discuss the best strategies to maximize patient collections. That’s not all! We will also walk you through the major challenges associated with it.
Challenges in Patient Collections
Some of the common challenges associated with patient collections are discussed below:
Challenge # 1 – Lack of Price Transparency
Healthcare facilities often fail to communicate the estimated cost of care services to patients, which may lead to ‘bill shock’.
44% of patients may avoid getting healthcare services due to price uncertainty.
HealthSparc
For example, a patient scheduled a routine physical exam and assumed their insurance payer would cover the cost. However, the provider recommended additional tests and procedures, resulting in unanticipated out-of-pocket expenses.
Challenge # 2 – Complicated Insurance Billing
The medical billing system is complicated, involving several forms, various codes, and insurance plans to navigate. These intricacies make it confusing for both the patient and the provider.
A survey revealed that 25% of patients don’t know about the explanation of benefits (EOB). Besides, when bills exceed expectations, 63% of patients prefer calling the hospital for clarification.
BenefitsPro
For example, you sent the patient bill with different medical codes for the rendered care services. Since they don’t understand the codes, it leads to confusion in understanding what is covered by their insurance company and what comes under their financial responsibility. As a result, you will experience delayed patient collections.
Challenge # 3 – High Deductibles and Copays
Today, patients are responsible for paying more than the payer because insurance plans have high copays and deductibles. As a result, patients are more financially burdened, which leads to delayed payments or inability to pay.
Research found that 68% of patients with a medical bill of around $500 fail to pay in full due to high deductibles. Over the past few years, patient’s financial responsibility has risen from 10% to 30%.
Mend
For example, A patient with a high-deductible plan received a $750 bill for a procedure and may struggle to pay the entire amount upfront. As a result, they delay the payment until they have the funds.
Challenge # 4 – Inefficient Billing Practices
Many healthcare organizations are still relying on slow and error-prone manual billing processes. This inefficiency leads to inaccuracies in charges and delays in sending invoices. As a result, patients are frustrated and create billing disputes, impacting your practice’s revenue cycle management.
Inefficient medical billing practices cause healthcare providers in the US to lose an estimated $125 billion annually.
The Business Research Company
For example, you use a paper-based billing system with limited or no automation. You made mistakes during data entry or coding. It could be a double keystroke, writing $100 with an extra zero, making it $1,000, or using a wrong CPT or ICD code. Regardless of the type of human error, it will create discrepancies in patient bills. It will require reworking, costing you time, effort, and reputation – while delaying payments.
Challenge # 5 – Difficulty Reaching Patients
Revised patient demographics and outdated contact information will make it difficult to reach patients if you do not update your patient information before every encounter. It will ultimately result in difficulty collecting patient payments.
A survey revealed that around 14 million people owe more than $1,000, and around 3 million people owe over $10,000 in medical debt in the US.
Health System Tracker
For example, a few patients moved to new addresses and forgot to inform the healthcare provider. Now, after each encounter, your office will send patient billing statements to their old address while the patients stay unaware of the outstanding balances.
Strategies for Effective Patient Collections
Now that you are aware of the common challenges associated with low patient collections, let’s discuss five strategies to help you overcome the hurdles and ensure a healthier revenue cycle.
Strategy # 1 – Collect the Demographic Information
You should collect insurance and demographic information of the patients before the encounter to determine their financial responsibility. These demographic details will affect patient collections, so make sure to do the following:
- Before the encounter, collect as much demographic information as possible.
- Remember to inquire about any change in the patient’s insurance plan and check secondary, primary, and tertiary insurance.
- Get details about the coordination of benefits (COB). It will help you identify which insurance policies will affect the processing of medical claims and how other policies will contribute to the payment.
All the demographic information you collect at this stage will appear on the insurance claim.
Strategy # 2 – Insurance Eligibility Verification
Pre-authorization of insurance eligibility and COB should be performed two days before the patient visit to ensure seamless patient collections. Re-run the eligibility verification workflow to acquire the most recent information and prevent denials/ delayed payments.
Besides, running this process two days before the encounter will give you ample time to get the required details.
For insurance eligibility verification, you can follow these steps:
- Confirm which services the insurance policy covers and if prior authorization or referral is required.
- Assess patient responsibility.
- Check with other primary payers for COB.
- Before every encounter, update insurance coverage information to avoid payment delays.
Strategy # 3 – Ensure Complete Transparency With Patients
We recommend you keep communication transparent with your patients. Before they come for the appointment, communicate cost estimates for the care services with them, providing clarity on what to expect.
Here’s a quick checklist to help you navigate this conversation better:
- Give a quick disclaimer to the patient that the actual charges for rendered care service may vary from the estimates to avoid conflict.
- Create and share payment plan options to recover patient collections in the worst-case scenario.
- Discuss details related to financial assistance programs to help patients effectively pay off their balances.
Strategy # 4 – Implement Patient Financial Policy
Another thing you should do for seamless patient collections is to create and implement a financial policy. It should cover deductibles, copays, past due balances, and all other critical financial guidelines specific to your healthcare facility to guide your patients.
Here’s a checklist to help you understand what it should include:
- Collection fees
- Detailed payment plans
- Discount policies for patients on bundled care services
- Fee implications, such as return checks, no-shows, etc.
- Interest and service charges
- List acceptable payment modes, e.g., money order, check, cash, credit cards, etc.
- Old balance collections policy
- Refund policy in case of patient over payments
Strategy # 5 – Monitor Accounts and Collect Patient Payments
Another strategy to improve patient collections is to monitor patient accounts for missing information or necessary changes. In case you doubt any account for data entry errors, we recommend you verify it. Data entry errors can lead to revenue leakage and incur actual costs to your facility for time spent correcting the data, undelivered mail, and re-mailing the statement.
You should also regularly review patient aging reports. Allocate a day in a week to perform this activity to gain insights into outstanding patient balances. In case of any old balances, escalate the matter with the patient professionally and delicately to collect what is rightfully yours.
Bottom Line
This guide discussed challenges associated with patient collections and some effective strategies to navigate these hurdles and maximize your practice’s revenue. Recovering balance from patients requires you to take an empathetic and professional approach. However, if you find it difficult to do it yourself, you can partner with a payment recovery agency.
For assistance with insurance claims, you can reach out to MediBill MD. Our medical billing experts and revenue cycle management (RCM) specialists employ effective coding and denial management strategies to ensure high collection ratios, keeping your practice up and running, regardless of your specialty.
