Practice Management Alert

If your provider does not like to send patients to collections, don't give up on collecting. Try setting your past-due patients up on a payment plan. Getting a signed payment agreement or promissory note can help you ensure timely payments from the patient.

Preserving good patient relations is important, but so is collecting for services rendered. This may mean working with the patient to arrive at a payment schedule both of you can agree on. Although it may take longer to get your money, a payment plan will help financially struggling patients avoid an outside collector, says Catherine Brink, CMM, CPC, CMSCS, president of Healthcare Resource Management (www.hrminc.com) in Spring Lake, N.J.

"At least with offering payment plans, you have some income coming in versus sending them to collections and possibly never getting paid," agrees Michelle Radmer, billing specialist for Greater Milwaukee Otolaryngology in Greenfield, Wis. Offering payment plans "also shows how much you care about your patient that you are willing to work with them." By sending a patient to collections you also end up paying a portion of the proceeds to the collections agency and possibly create bad will with the patient.

Be proactive: Whenever possible, try to collect from patients before your physician sees them, says Marge McQuade, CMSCS, CMM, a consultant and director of education for PAHCS in Florida. "If you're a family practice, you should be collecting copays upfront and there may be no need for payment plans, but if you're in a specialty office where there may be large surgery bills, then payment plans can be the way to go."

Your practice can consider offering payment plans for major surgical procedures for patients whose insurance will not cover a significant portion of the bill. Also consider using payment plans as a collections tool on large, outstanding balances.

You may also have patients who are underinsured, uninsured, or out of network with your payers, which means they will potentially have large deductibles and balances because they don't have insurance, have high deductibles, or the insurance doesn't cover the services.

Consider offering these patients a payment plan as well.

Look at options early: The biller responsible for collections and A/R should discuss any outstanding account balances with a patient immediately before or after the patient sees the physician. Patients are much more likely to make payment arrangements when in your office. Once the patient leaves your office, it will be much harder for you to collect and set up payment arrangements.

Given the current economy and unemployment rates, payment plans are becoming more prevalent in medical practices. "Practices need to be more understanding that more and more patients cannot pay their balances in full and need to be willing to work with them," Radmer says.

Be polite: While aggressive collections measures may seem more effective when corresponding with patients who owe you money, the opposite is actually true.

Collections experts agree that compassion and sensitivity to a patient's situation are far more likely to be successful and eventually bring in the payment your practice deserves -- but don't let patients walk all over you, either.

Develop a written policy: Make sure you have a written policy that dictates exactly when you will send statements, make phone calls, and send accounts on to the outside collector. Sticking to such a timetable is important for successful collections, even when you're offering payment plan options.

Have a collections policy that includes payment plan policies, but do not include payment plan information in your financial policy, McQuade advises. "If it's in your financial policy, every patient is going to want it," she says. "This is an as-needed option." Be fair, but make sure the payment plan fits the situation, the patient's needs, and your practice's needs.

For proven instances of financial hardship, your practice should be understanding and professional enough to recognize that immediate payment simply may not be an option. And extending the courtesy to work through the situation and continue the discussion in the future is often the best way to ensure payment down the road, experts say.

Tip: Make patients pay a down payment on any payment plan you set up. Then, consider the minimum monthly payment amount you'll allow. "To me five dollars a month is not acceptable," McQuade says. "I'd suggest a $50 a month minimum payment."

Be aware: "Some patients may not be able to afford the minimum amount you require," Radmer cautions."

You may need to give exceptions for these patients." If patients ask to pay less than your minimum, ask the patient to prove that he's unable to pay that amount, just as you would do to prove financial hardship, McQuade suggests.

Good practice: Arrange a payment plan for two months at a time, with the understanding that you will reevaluate every 60 days. This way, if the patient is temporarily unemployed, for example, and starts work again in a month, you may be able to arrange a higher monthly payment down the road.

Get it in writing: "Patients should sign an agreement that states they agree to pay X amount every month, and if they don't keep the agreement, they may be subject to collections," Radmer says. Your practice should develop either a payment agreement form or a standard promissory note. See the sidebar "Employ Promissory Notes or Payment Agreements" on the right for more on payment agreements versus promissory notes.

The payment plan agreement doesn't have to be fancy or formal, McQuade says. "But you have to have the patient sign it, and the office manager should sign and date it," she suggests.

Also keep in mind that if you are charging the patient interest as part of the payment plan, you can only charge what the law allows, Radmer cautions. Check your state's laws to be sure your interest plan is legal.