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A RE YOU WRITING off all encounters and sending them to a collection agency after 90 days? If so, why? Collection agencies will charge a premium to chase your patients and insurance companies who are not paying. You have to make sure you have exhausted your own collection efforts before paying that 25 percent (or higher) fee. So how hard do you work at collecting that money from your patients? How many of your patients would have paid you in full if you simply had sent out a more informative bill? It's quite possible that your 90-day cut- off date needs to be re-examined. There are many industries that recognize that 90-days-past-due invoices are most likely bad debts. This is not the case in the healthcare industry. Many of your patients have two insurance companies that must be billed consecutively, not simultaneously. This pushes most of your accounts to 60 days in processing time even in the best of circumstances. Yet many practices treat 60 days as overdue. When problems occur, it often sets remittance back 30 days per incursion. These are routine issues that may result from bad informa- tion being provided by the patient, a clerical error within your office, or even the payer mistakenly rejecting your claim. Let's create a hypothetical patient, Jane Smith, and see how simple clerical errors can cause multiple delays in the processing of a claim. Ms. Smith's encounter is processed with a clerical error due to a single digit in the ID number being omitted [30 days elapsed]. Your staff is two weeks behind on appeal- ing denials [45 days elapsed]. Your staff sends a statement to the patient requesting Bad Debt? By Timothy DiBona her correct ID number. Statements are mailed every 30 days, and as stated above, nonpayments take two weeks to process [90 days elapsed]. Now you can bill and receive reimbursement from the primary carrier [120 days elapsed]. Finally, you send a claim to the secondary carrier and complete the encounter [150 days elapsed]. Your practice may have different pro- tocols in place to limit the delays for the example above, but it is not uncommon for patient accounts to spiral through 30, 60 or 90 days without any fault of the patient. Do not be afraid to hold onto some patient accounts until it is clear you have exhausted all of your own collections efforts. Whether you outsource your billing or do it in-house, it is not unreasonable to ask your staff and vendors to perform the following actions: + Clearly indicate on the invoice when payment is due. According to Brett Burbank, Regional Territory Manager of Professional Office Services, "Fifty percent or more of patient statements mailed today do not indicate when the payment is due." Buck that trend. Establish a call to action. + Create different language and urgency as each statement is mailed. When you issue your final bill, send a "Final Notice" in a completely different format from your normal statements. + Create and advertise payment plans on your statements, for example: • Forty percent discount if paid within five business days • Six equal payments over six months at 0 percent interest • $50 minimum per month to avoid collection action + Scrub your aging reports. Insurance companies mail payments to the wrong addresses or mistakenly do not process some claims. This is easy money waiting to be reissued to you. Wring the accounts receivable towel dry before you hand it over to the collection agency. Increase your income-per-encounter ratio. Run a collection process suited for the healthcare industry. Timothy DiBona is the Business Director at Doctors' Management Service Inc. and President of Salus Resource Group. He has collaborated with hundreds of physi- cians over the past 25 years. He believes in trust-first relationships fueled by consistent communication. He can be reached at Tim@DoctorsManagementService.org. ■ Why Rush to ++++++++++++++++++++++ +++ + +++ + ++++++++++++++++++++++ PRACTICE NOTES M D N E W S . CO M ■ MD NEWS Greater Boston | 1 3