The aging baby boomer generation, and increasing prevalence of chronic disease, health care is in demand. However, that not all who need medical care are adequately insured. In fact, there are many who are still not insured, largely because they cannot afford insurance. Under these circumstances, where the patient is not insured or adequately insured, the healthcare facility or service provider has to depend on getting paid for the services directly from the patient. Most healthcare facilities allow a certain time period for payment of their dues. In fact, most healthcare facilities send bills after twenty eight days of providing the service, which if not paid, is often followed by reminder letters.
The main problem faced by healthcare providers today is the nonpayment of bills, either willfully or unknowingly by the patients. There is a strong need to change the payment system or at least back it up with some strong methods to ensure correct and prompt payment. This situation has led to the development of medical collections, which could be done by the healthcare facility or through an external agency. Medical collections refer to the collection of unpaid debts from past patients for services already rendered by the healthcare service provider or facility. This involves collection of either full or part payment of the services rendered, depending on the extent of insurance, if any, held by the individual.
Need for Collections
Having understood the meaning of the term collections, it is now important to understand the need for such collections. The need for collections largely depends on the reasons for nonpayment of medical fees or debts to the healthcare service provider by the patient. The main reasons for nonpayment of medical debts include:
- The first and perhaps the most important reason for not paying debts is the lack of money. Most people do not have insurance because they cannot afford it. So, it simply extends to the fact that such people cannot actually afford medical care and are therefore most likely not to pay their medical bills.
- The second reason could be that they have sincerely and genuinely forgotten to pay their bills. This could happen if the mail with medical bills is lost in the sea of other bills and promptly forgotten.
- The third reason could be that the patient has limited understanding of his or her insurance policy, where the patient assumes that the insurance company will pay for all treatment provided, which is actually not the case.
- Fourthly, there are some patients who do not care or know much about the credit ratings and hence, do not think much about paying their medical bills.
- Lastly, improper billing or inaccurate billing by the healthcare facility leads to problems with actual reimbursement, thereby increasing the need for collections.
Handling Collections Yourself versus Outsourcing
Given the fact that collections are a reality in the healthcare world today, it is important that all healthcare facilities prepare themselves to deal with the situation. There are various ways to ensure proper payment of medical bills at the appropriate time. Healthcare facilities can either handle the collections on their own or in the alternative, can hand it over to professional medical collection agencies. Both ways have their advantages and disadvantages and the choice of method of collections should solely depend on the requirement of the healthcare facility.
- In-house Collections System
This is where the healthcare service provider sets up his or her own collection team to actually ensure proper and timely payment of debts. The following steps are taken by the in-house team to ensure collections-
- There is a front desk that ensures collation of all details regarding the patient, like his or her name, address, contact details, insurance details, if any, including the insurance card number.
- Next step is verification of the policy held by the person to ensure that the insurance policy covers the treatment.
- Collection of copayment and coinsurance, if any, at the time of rendering the service.
- If the healthcare facility policy does not require immediate payment, the facility should provide bill for the services rendered immediately.
- In the alternative, the facility can send the bill by post within twenty eight days.
- Follow up on the bill is also done by the in-house system till the money is paid.
- Medical Collections Agency
These are outside groups that help healthcare facilities in collecting their outstanding debts from patients. In most cases, it is not possible or viable for a healthcare facility to actually appoint a team to look into collections and debt recovery on behalf of the facility. Under these circumstances, appointing an external agency to monitor and ensure payment of receivables by patients is easier and more effective. Such agencies are third parties representing the rights and interests of the healthcare facility and therefore will be able to collect receivables easily. Moreover, they have trained and fully equipped staff and offices, which is extremely essential for collections.
It is important to understand that billing and collections are highly technical fields, which require a lot of investment in terms of both money as well as time, which most healthcare facilities cannot afford. Hiring the services of a good medical collections agency is the best option for such facilities. Moreover, such agencies are know about the exact debts that are receivable and the exact stage of each case of collection.
Simple steps to Improve Collections
Collections are definitely a reality of today but having said that, it is important to understand that lowering your debts and increasing the pace of your collections will ultimately lead to financial stability and even profitability for your healthcare facility. With the help of technology and the following simple steps, it is possible to improve your collections so that your facility actually profits:
- The first and the most important step is to have a clear payment procedure. This is very essential because early communication of payment procedure will enable the patient to be well prepared. The payment procedure for your healthcare facility should be displayed in your office.
- Accuracy of patient information is very important. Always ensure that you have all the requisite details regarding the patient, such as his or her name, address, contact details, insurance card number and details, and the like. This is very important for processing claims and for getting payments for services rendered.
- Always verify and pre-certify the insurance policy details of the patient before rendering the service. Having a good front desk will ensure that this work is done smoothly and without any hassle.
- Always state the payment responsibility of the patient clearly in all communiqués to the patient. This is very important, especially if the patient refuses or does not pay the debt and the matter has to be handed over to the collections agency. It is important to stress on the payment responsibility of the patient right from the beginning.
- It is also important to understand the genuine difficulties of certain patients for paying their dues and allow them adequate time for paying them. Giving patients options like part-payment or payment in installments will allow them to come to you freely and also ensure regular flow of cash. Moreover, this will actually help you retain your patients.
- Lastly, always know when it is time to let go of a debt and forget it or put it under the bad debts column.
Collections will always remain a major problem in the healthcare world today. Therefore, it is absolutely necessary to meet it head on and deal with it. The above steps can be used by any healthcare provider to actually collect the unpaid debts but as mentioned above, it is important to remember never to waste too much of time or money on unpaid debts, as this could also lead to losses.