Positive cash flow is the lifeblood of any business. In medical and dental practices that often means efficient and timely collection of payment both from insurance companies and patients. While everyone will agree, that doesn’t mean that all practices can get it done. We work with most of our clients on setting up a system designed to realize good collections every month. There are multiple elements to the system. Here are 5 of them to give you a window inside.
Have a Written Collections Policy
A good collections system is written down as a policy, and all staff are trained. Collections policies will vary from practice to practice to capture the specifics of each one – staff, insurance, procedures, etc. Nevertheless, there are some common elements in any good collections policy. A few of these are:
- How much to collect at the time of service
- Patient education about what to expect for payment, especially for high dollar value procedures
- The procedure for sending patient statements
- The procedure for follow up when patient payments are late
Proper Coding of Services
It sounds obvious, but it’s worth saying: each procedure the doctor(s) perform has to be coded properly in the patient record. Without that, the rest of any collections policy will fall down. We believe this is the doctor’s responsibility even if the doctor delegates this to staff. In addition, in our clients with the best collection rates, the doctors allocate time once a year to attend a coding seminar to stay up to date.
Make Your Front Desk the Hub for Collections
All patients check in and check out at the front desk. It’s natural for a collections policy to state that collecting the patient balance happens at the front desk. The challenge with the front desk is that it’s also a busy place – phone calls coming in, handling insurance paperwork, other paperwork, etc.
Nevertheless, we believe that it’s worth making the point of payment at the front desk and making adjustments, if necessary, to facilitate payment collection for every patient that has an appointment. It’s worth it! The most profitable time to collect payment is at the appointment. For example, if a patient has a $25 copay, there isn’t any additional expense to collect it. However, if you do not, then you’ll spend money on sending statements, postage, etc. You’ll also have to wait to get the $25, and that time waiting is itself a cost of business.
Insurance Claims – Timely Filing and Follow Up
A collections policy should expect that claims for payment to the insurance carriers happen as frequently as possible, ideally daily. The sooner you file the sooner you’ll get paid. Additionally, we strongly recommend that all claims be filed electronically.
Follow up with insurance carriers is standard in a collections policy. Carriers are notorious for paying health insurance claims late. The billing department needs to monitor payments collected vs. filed regularly, and following up on late payments needs to become a regular practice. It’s not fun but it is necessary. Swallow hard and embrace it!
Train and Measure
It’s not enough to have a written policy. It’s critical to make sure that all staff who play a role in the policy are trained in what they need to do. This is true not only when the policy is new and rolled out for the first time. It’s also true when staff turn over and new staff are hired.
When it comes to measuring collections, we recommend that practices measure 2 factors:
- How much revenue was collected vs. billed
- How well the collections policy is being followed
Compliance to the policy is at least as important as how much revenue is collected. The collections policy is what drives timely and accurate collections. If collections are falling short, dig into the policy. Was a step skipped or shortchanged? Did someone drop the ball? Is more training needed? Should the policy be modified because something changed with one of the insurance carriers? Is it something else? Treat your policy like a living document used daily instead of a one time exercise where it ends up in a binder that nobody ever looks at.
How We Can Help
We work with our clients on the overall financial health of their practice. Billing and collections fall in our healthcare practice management service. When we combine practice management with our accounting, tax, and retirement plan services, we create a full picture of the financial health of the practice. With that full picture we can advise our clients on business decisions that are data based and well informed. If you have questions about a collections policy, or you’d like to talk about problems your facing in your practice and how we might be able to help, please contact us.
