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A structured approach to collecting patient A/R

MGMA Stat - December 7, 2022

Billing & Collections

Robert L. Chiffelle MHSA
Medical practices are struggling to collect patient A/R in today’s economic environment where high deductibles — ranging from $1,400 on the low end to $7,050 for HSA-qualified plans per year and $8,700 for ACA-compliant plans — are common.
 
Collecting patient-due balances is difficult amid inflation and a possible recession. Learn a structured approach to collecting patient A/R to avoid bad debt down the road.
 
A Dec. 6, 2022, MGMA Stat poll asked medical groups how long they wait before sending a patient account to collections:
  • The majority (42%) reported they wait 91 to 120 days before sending to collections.
  • 32% said they wait 120-plus days.
  • 14% said 60 to 90 days.
  • 2% said less than 60 days.
  • 10% noted they never send accounts to collections.
 
The poll had 519 applicable responses.  
Using a collection agency is not a financially viable alternative except in the most extreme circumstances. Given a historical collection agency recovery rate of between 10% and 20% on the dollar owed, it is imperative that practices take an aggressive in-house approach to collecting patient A/R.
 
The first step is to collect more of the copayment and known deductible at the time of patient registration, which means collecting a high percentage of the most likely E/M fee. For example, most practices code a new patient visit as a Level 4 visit, for which Medicare pays roughly $165, and most health plans pay a percentage of this, generally 75% to 90%. 
 
Established patient exams are generally coded as Level 3 or 4 visits, for which Medicare pays between $90 and $125. The copay for a PCP visit is generally set by the plan (typically $25 to $45), and this is easy to calculate. Specialists should collect 100% of the estimated visit charge up front and refund any overpayment immediately to the patient.
  • Did you know? MGMA Better Performers collect more A/R in the first 30 days compared to all practices, with the biggest difference (nearly 9%) in primary care. Primary care Better Performers also had the biggest difference in outstanding A/R in the 120+ days bucket versus other specialties. Learn more in the 2022 MGMA Better Performers data report, Performance and Practices of Successful Medical Groups. 

Collecting outstanding patient A/R via phone call

For outstanding A/R over 60 days from the due date, as determined by the health plan Explanation of Benefits (EOB) form, the most effective method of collecting is a call from an assigned staff member. 
 
The first step in this process is to run a “guarantor A/R report” (generally once per month) that lists:
  • The patient’s name
  • The date the amount(s) owed became due
  • The total amount in arrears.
 
The report’s primary sort should be by amount owed (in descending order, with the largest balance first), and the secondary sort should be by due date.
 
The second step (done before contacting a patient) should be to double-check the amount due in the guarantor A/R report against the financial records in the EHR or PM system.
 
Assigned staff should work the largest balances first, ensuring they are at least 60 days overdue. Work only balances more than $100 and record the date and outcome of each call made in the “Notes” section of the EHR or PM system financial page.
 
Assigned staff should be authorized to set up flexible payment plans with the objective of getting one-half of the amount immediately, and the rest within six months of the call. These arrangements must be noted in the financial record, and payments tracked.

 Staff guidelines for communicating with patients

  • First identify yourself (first name only) and state you are calling from the doctor’s office.
  • State you are checking your records and ask if this is the best number to contact the patient and if the mailing address is correct.
  • Indicate you have received payment from the health insurance plan on the last bill and what the amount of patient responsibility is.
  • Ask if the patient would like to pay today, and if so, how they would like to do this (e.g., via check or over the phone via credit card).
  • If they can’t pay today, ask when you can expect to receive payment. 
  • If necessary, set up a payment plan. Tell them the practice policy is to collect half up front and the rest over six months.
  • For larger balances (more than $600), consider an alternative plan: For example, collect one-third up front, and the rest over nine months.
 
Staff must not get into an argument with the patient. If the conversation becomes adversarial, let them know you will check with the doctor and then take the issue to the appropriate supervisor. 

Common patient objections to paying

The most common objection is “but I already paid,” followed by “my insurance is supposed to cover this.” Have your staff prepared to provide an appropriate response, such as:
  • “You paid a [copayment/estimated amount]. The insurance company has the final say on how much you owe, based on the amount of deductible coverage for which you are responsible, or any coinsurance required, until the plan notifies us after they receive our initial billing.”
  • “Each major carrier has multiple plans with different coinsurance and deductible requirements, which makes an exact calculation on our part difficult.” 
  • “The doctor’s contract with the health plan provides for one fixed fee for each service, and it is set by the plan. We cannot waive your portion of it; that is considered insurance fraud.” [The practice is not “balance billing” patients; they are billed only what the insurance company indicates is the patient portion.]

Collection best practices

  • If a patient asks what happens if they do not pay, note the practice policy is to notify them their balance will be sent to a collection agency and they will be discharged from the practice.
  • Advise your staff to not get into a discussion with patients regarding the high cost of medicine.
  • If a patient has not received the EOB for services, offer to mail a copy to them with the “patient responsibility” amount easy to find. Also include a copy of their patient registration page and circle the amount owed to date.
  • Call patients during normal business hours only. Make no more than three calls without getting a response.

Summary

Collecting A/R is a process-driven exercise, which requires preparation, patience, and written documentation. Above all, staff must always be courteous and respectful. If a patient becomes confrontational, staff should politely terminate the call (I am sorry, but I must hang up now, we will communicate with you shortly in writing). Remember, the ultimate objective is to collect money that is contractually due, and to avoid using a collection agency.
 
Do you have any best practices or success stories to share on this topic? Please let us know by emailing us at connection@mgma.com

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Additional resources

About the Author

Robert L. Chiffelle
Robert L. Chiffelle MHSA
Principal HSC Management Phoenix, Ariz.

Robert L. Chiffelle is a Principal with HSC Management in Phoenix, Arizona, specializing in the management of physician groups. He can be reached at Rchiffelle@cox.net.

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