You may have noticed that collecting patient payments has been tough this year. Owing to the pandemic, job loss, and the possible loss of health insurance, patients have had more difficulty managing co-pays, coinsurance, and deductibles, not to mention other out-of-pocket healthcare charges.
"Many of our patients have lost their jobs or have had their hours cut back, and as a result, they are struggling to make ends meet," says Ahmad Chaudhry, MD, a cardiothoracic surgeon in Lexington, Kentucky. "However, we cannot continue to provide care if our patients do not pay their bills."
In Medscape's Physician Compensation Report 2022: Income Gains, Pay Gap Remains, we asked physicians what they do when their patients don't pay. About 43% said that they continue to treat them and develop a payment plan; 13% send their bill to collections; 12% continue their care and write off their balance, and 25% chose other actions. Only 8% of physicians drop patients if they don't pay.
Because you need to pay your own bills, what can you do about nonpaying patients?
Start With Price Transparency
In the past, patients never knew what their lab work or a chest EKG would cost because it wasn't listed anywhere, and it was usually more than expected. Because of new legislation concerning healthcare price transparency, hospitals, health plans, and insurers must pony up with the actual fees, making them transparent to patients. Physician practices should follow suit and keep prices transparent too. Patients are more likely to pay their bills when prepared for the expense.
Patients with insurance often don't know what they'll be paying for their visit or their tests because they don't know how much insurance will cover and what will be left for them to pay. Also, they may not know if they've met their deductible yet so they're unsure whether insurance will even kick in. And patients without insurance still need to know what their costs will be upfront.
According to 10 insights from the Primary Care Consumer Choice Survey, 74% of healthcare consumers were willing to pay a $50 out-of-pocket charge to know the cost of their primary care visit.
Provide Payment Plans
Many patients have always needed payment plans. It's one thing to post a sign at check-in telling patients that all monies are due at the time of service, but it's another reality for a patient who can't fork over the $250 charge they just unexpectedly spent in your office.
Discover Personal Loans recently ran a survey, with results presented in the press release Americans are Delaying Non-Emergency Medical Care in Higher Numbers than Last Year, and found that many Americans with medical debt are delaying nonemergency medical care. For example, they put off seeing a specialist (52%), seeing a doctor for sickness (41%), and undergoing treatment plans recommended by their doctor (31%).
Turning an account over to collections should be a last resort. In addition, agencies typically charge 30%-40% of the total collected off the top.
Though collecting that amount is better than nothing, using a collection agency may have unexpected consequences. For instance, you're trusting the agency you hire to collect to represent you and act on your practice's behalf. If they're rude or their tactics are harsh in the eyes of the patient or their relatives, it's your reputation that is on the line.
Rather than use a collection agency, you could collect the payments yourself. When a patient fails to pay within about 3 months, begin mailing statements from the office, followed by firm but generous phone calls trying to collect. Industry estimates put the average cost of sending an invoice, including staff labor, printing, and postage, at about $35 per mailer. Some practices combat the added costs by offering a 20% prompt-pay discount. Offering payment plans is another option that helps garner eventual payment. Plus, practices should direct patients to third-party lenders like CareCredit for larger bills.
On occasion, some small practices may allow a swap, such as allowing a patient to provide a service like plumbing, electrical, or painting in exchange for working off their bill. Though it's not ideal when it comes to finances, you may find it can work in a pinch for a cash-strapped patient. Make sure to keep records of what bills the patient's work goes toward.
It often helps to incentivize your billing staff to follow up regularly, with various suggestions and tactics, to get patients to pay their bills. The incentive amount you offer will probably be less than if you had to use a collection agency.
Have a Payment Policy
Because your practice's primary job is caring for patients' physical and emotional needs, payment collection without coming off as insensitive can be tricky. "We understand these are difficult times for everyone, and we are doing our best to work with our patients," says Chaudhry. Having a written payment policy can help build the bridge. A policy lets patients know what they can expect and can help prevent surprises over what occurs in the event of nonpayment. Your written policy should include:
When payment is due
How the practice handles co-pays and deductibles
What forms of payment are accepted
Your policy regarding nonpayment
Why Patients Don't Pay
A 2021 Healthcare Consumer Experience Study from Cedar found that medical bills are a source of anxiety and frustration for most patients, affecting their financial experience. More than half of the respondents said that paying a medical bill is stressful. Complicating matters, many healthcare practices rely on outdated payment systems, which may not provide patients with a clear view of what they owe and how to pay it.
The study found that 53% of respondents find understanding their plan's coverage and benefits stressful, and 37% of patients won't pay their bill if they can't understand it.
People may think the patient is trying to get out of paying, which, of course, is sometimes true, but most of the time they want to pay, concluded the study. Most patients need a better explanation, communication, and accurate accounting of their out-of-pocket costs.
What Can Doctors Do?
If you're a physician who regularly sees patients who have problems paying their bills, you can take a few steps to minimize the financial impact on your practice:
Bill the patient's insurance directly to ensure you receive at least partial payment.
Keep adequate records of services in case you need to pursue legal action.
"Be understanding and flexible when it comes to payment arrangements, as this can often be the difference between getting paid and not getting paid at all," says Chaudhry.
When discussing payment policies, physicians should try to distance themselves from the actual collection process as much as possible. Well-meaning physicians often tell patients things like they can "figure something out " financially or "work them in" during a scheduling conflict, but that often undermines the authority and credibility of the practice's office staff. Plus, it teaches patients they can get their way if they work on the doctor's soft spot — something you don't want to encourage.
By following some of these measures, you can help ensure that your practice continues to thrive despite the challenges posed by non-paying patients.
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Cite this: Patients Who Won't Pay: What's Your Recourse? - Medscape - Aug 15, 2022.