American College of Physicians: Internal Medicine — Doctors for Adults ®

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Afraid to ask patients for copays? Try these tips

Educating both patients and staff can boost collections without making you look like the bad guy

From the September 2000 ACP-ASIM Observer, copyright 2000 by the American College of Physicians-American Society of Internal Medicine.

By Bryan Walpert

Earlier this year, Medical Faculty Associates at George Washington University Medical Center took a hard line on copayments. Barring chest pains and other urgent symptoms, patients who don't cough up copays at the time of service don't see a doctor. Period.

Before the new policy, the practice collected only about 40% of the copays it was owed. As a result, it wrote off thousands of dollars a week in uncollected copays. Today, the practice collects 90% of patient copays.

"We've been very vigorous in enforcing it when patients show up and don't have a copay," said Gary Malakoff, FACP, director of the 15-physician division of internal medicine at the 220-physician multispecialty practice. "It's a large amount of cash."

To boost their bottom lines, practices increasingly are focusing on patient dollars like copays, coinsurance and other balances that can slip through the cracks. Even a seemingly small amount like $10 per patient can quickly add up to thousands of dollars in lost revenue.

The problem is that many physicians—and their staff—simply don't feel comfortable asking patients for money. Worse yet, they're afraid that they'll upset patients by asking for a copay up front.

Here are some ways to tighten your collection system to collect more money more quickly—without hurting your patients' feelings.

ImageAsk up front. It's much cheaper to collect from a patient who's already in your office than to send out invoices. Colorado Health Care Specialists, a five-physician internal medicine and subspecialty practice in Denver, has calculated that it costs between $7 and $8 to send out a single statement. Consultants and practices cite figures ranging from $2 to $10 to send out a billing statement once you factor in the costs of invoice forms, ink, envelopes, postage and labor. That figure jumps quickly if you have to send multiple reminders.

"It's ridiculously expensive in the scheme of things to send out invoices to bill patients for $10," said Stephen Sadowski, senior manager of ECG Management Consultants in Wakefield, Mass.

Educate patients. One of the first steps to increase your up-front collections is education. When patients schedule their appointments over the phone, tell them that copays are due at time of service.

There's no reason to limit the strategy to copayments. If a patient has a balance for a deductible, coinsurance or uncovered services, have your computer system remind the appointment clerk to ask the patient to bring the money to the next visit, said C. David Carpenter, partner with PCSi HealthCare Consultants in Southern Pines, N.C.

To help educate patients, put patient payment responsibilities in writing. "If you can keep it short and sweet, it can be part of a brochure," said Sherry DiDomenico, a practice management consultant with The Health Care Group in Plymouth Meeting, Pa. "It can also be a separate sheet given to all new patients and posted in a prominent place in the office."

Hire enough staff—and educate them. Physicians often try to cut costs by reducing salaries and benefits. But Jan Porubsky, senior health care consultant with Physicians HealthCare Advisors in Atlanta, said that skimping in the area of collections is a mistake. "If those staff are inundated and spread thin, the first thing they might stop doing is collecting copays," she said.

If you have enough staff to get the job done, educate them. One tip is to give front-desk people a script of how to ask for payments. "Some folks in that position don't particularly want to ask for money," Mr. Carpenter said. "They need to be taught it can be done in a friendly, nonconfrontational manner."

For example, this courteous and professional approach works well: "Mrs. Smith, I see that you have a previous balance of $50. How would you like to take care of that? Will that be cash, check or credit card?"

A good front-desk person can make a world of difference. Bill Przybysz, senior vice president at The Horizon Group, a physician practice management consulting group in Virginia Beach, Va., recalled one practice with an a cashier named Ruth who took no excuses.

"One woman said, 'Oh my, I seem to have left my checkbook in the car,' " Mr. Przybysz recalled. "Ruth looked up and said, 'I'll watch your kids while you go get it.' The woman then produced a checkbook out of the bottom of her purse."

Offer every available means of payment. Consultants say that every practice should take checks and credit cards. You also need to make sure that cashiers have sufficient petty cash to break large bills.

What about patients who say they left their cash or checkbooks at home? Dr. Malakoff's practice found one easy solution: It installed a cash machine in its lobby that dispenses $5 bills for smaller copayments.

Your practice might not be large enough to persuade a bank to install a cash machine, but that doesn't mean you have to take no for an answer. If you turn away nonurgent patients, as Dr. Malakoff's practice started doing earlier this year, they'll learn to bring the money.

While some of Dr. Malakoff's patients were upset initially, a little education went a long way. His practice now informs patients on the phone and through wall signs that copayments are required for service. If patients are particularly irate and insistent, one of the doctors personally explains that the copayment is an intrinsic part of their health plan.

For the first few months, Dr. Malakoff said, he had to calm an irate patient a couple of times a week. Today, he has to calm a patient only once or twice a month.

"Once they understand what the copay is, that it is part of their insurance plan and that it's mandatory, they're generally pretty good about coming in with copay in hand," Dr. Malakoff said.

If patients can't afford to pay their balances in full, offer payment plans. "We'll ask, 'What can you afford to send us every week?' " said Lynn Corcoran-Stamm, practice manager at Lehigh Valley Physician Group, a 12-physician internal medicine and subspecialty practice in Allentown, Pa.

Make it personal. If you're not comfortable turning away patients, you can try to boost collections by giving patients a sense of connection with someone in the office.

When patients at Lehigh Valley Physician Group say they don't have cash, checks or credit cards, they receive an envelope preprinted with the practice's address. To help motivate them to send in payment, Ms. Corcoran-Stamm said, "we try to get patients to bond with the person checking them out: 'My name is Linda, and I will put my name on the envelope. You can send me the check when you get home.' It helps personalize the transaction."

Similarly, at Internal Medicine Associates of Delaware County, an eight-physician practice in Media, Pa., patients get a pre-addressed envelope to mail back with the check-out person's name on it. "The patient thinks, 'Oh, no, she knows my account.' It's a psychological thing," said Jill Esrey, practice manager.

Know what to collect. Copayments are easy to calculate because they're usually on patients' insurance cards. While collecting other types of patient balances such as coinsurance at time of service can be more tricky, it is possible.

Create a "cheat sheet" or grid of how much each insurance company covers for your most frequent services (because you'll negotiate different rates with different companies) and what coinsurance they require of patients, suggested Ms. Porubsky of Physicians HealthCare Advisors.

Some consultants say that early in the year (January or February), check-out employees should ask patients if they've met their deductibles. If the answer is no, try to collect what you know their insurance won't cover.

Internal Medicine Associates of Delaware County, for example, keeps a list of carriers who don't pay for travel shots such as hepatitis A. When patients call to make such appointments, Ms. Esrey said, "we quote the fee and tell them what they will be responsible for when they come in."

Keep in mind that your office staff won't have to refer to these cheat sheets constantly—only at first. "If you have knowledgeable people at the front desk who are receiving regular information, they're going to know that information 95% of the time," Ms. DiDomenico said. "Your practice does the same sorts of procedures over and over again and sees patients from the same top 80% of insurance companies."

If you're calculating coinsurance and trying to collect deductibles, of course, you run the risk of collecting too much money. But in many cases, patients will return soon enough to use up any credit balances, explained Marc Halley, president and CEO of Ambulatory Management Services Inc., a physician practice management firm in Westerville, Ohio. If not, he said, you're still better off cutting a single refund check than sending statement after statement to collect unpaid balances.

Make your back-end collection procedures efficient. No matter how much you try to collect copayments before service is rendered and coinsurance or deductibles before patients leave, you'll have to bill some patients.

Start by prioritizing your balances. For example, it's probably not worth sending statements for anything less than $10, Ms. DiDomenico said. Instead, try to collect when the patient returns for a follow-up visit. Mr. Carpenter suggested sending anything under $25 to a collection agency if two or three statements fail to do the trick and concentrating in-house efforts on larger balances.

Most consultants suggest sending out three statements with progressively stronger past-due notices. Mr. Carpenter, for example, said the third statement should indicate that the practice will place the account with a collection agency within 10 days if unpaid.

For anything over $250 in an internal medicine practice, Ms. DiDomenico suggested following up with a phone call 10 days after you've sent the second statement. (Try calling in the evening, when the patient is likely to be home.)

Consultants emphasize, however, that you need to turn over unpaid balances for collection. Though you may be reluctant to take that step, you only make billing problems worse by waiting. "You've got to develop a reputation that you turn people in," Mr. Przybysz said. Otherwise, "word will get around that you're never going to do anything about unpaid bills. Your patients talk to each other."

Measure results. Because Mr. Halley believes that anything you measure improves, he suggests tracking the cash you collect as a percentage of total charges on a daily basis. "It becomes a game as soon as you start tracking that," he said. "As soon as we found out our baseline was 8%, we began to set some goals: moving it to 12% or 15% or 20%. It becomes a challenge."

At one primary care practice, he said, the office manger worked the cashier window one day and collected several hundred dollars—a practice record. She challenged the rest of the staffers who rotated through that position to beat that record, promising to take a pie in the face from the winner.

Happily, the manager got promoted out of the position before having to eat any banana cream. But her strategy worked.

"Guess what happened to point of service collections?" Mr. Halley said. "They skyrocketed."

Bryan Walpert is a freelance writer in Denver.

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