Practice Management Alert

 Sooner or later, most medical practices must dismiss a patient who simply refuses to pay his bill. And as if that wasnt bad enough, you could wind up paying in a big way if youre not careful how you handle this prickly situation.
 
Aside from being an unpleasant situation on a personal level, dismissing a patient is fraught with legal and professional peril as well. Physicians are caught between a rock and hard place when dismissing patients from their practices  theres the potential that the patient could file abandonment charges and also that your licensing board could level administrative action against you for what it considers to be unethical behavior, warns attorney Robert Wanerman with Reed Smith in Washington.
 
The problem of outstanding patient debt is particularly prevalent in surgical practices, notes consultant Catherine Brink, CMM, CPC, president of Healthcare Resource Management Inc. in Spring Lake, NJ. Thats because surgical practices often deal with large deductibles.
 
Regardless of your practice type, the first decision you must make is the point at which youll discharge a patient on financial grounds. In most cases, a practice wont dismiss a patient unless theres a substantial sum of money at stake, says Brink.
 
Most practices will hand over a patient to a collection agency before dismissing him, so you must also decide how much time youll give the agency to work the account before throwing in the towel  Brink suggests three months for large accounts (e.g., $1,000 or more). Your practice should establish these dollar and time cut-offs in your financial policies and procedures (see related story,"Do Financial Policies Stick....."), and they should apply equally to all patients.
 
Take a close look at your state medical societys rules when establishing these policies, Wanerman advises. Some states have strict requirements. For example, Texas doesnt allow its physicians to cancel an appointment for failure to pay, he offers. Similarly, look at your managed care contracts when establishing patient dismissal policies, because many contracts contain provisions about what a physician must do.

 
Lets say a patient owes you $1,000 and the collection agency isnt getting the money, Brink offers. What do you do? First, you have to let the patient know hes being discharged from the practice  you cant simply drop him without a word. After giving notice, physicians must agree to provide treatment as needed in the meantime, explains Wanerman. Thirty days is usually plenty of time, but whats considered reasonable could vary from one context to another, he warns.
 
The best way to notify a patient that shes being discharged is in writing, Brink and Wanerman agree. If you want to give the patient one last chance to redeem himself before discharging him, you can send a registered letter explaining to the patient this is his last opportunity to pay up, and that otherwise hell be dismissed, Brink suggests.
 
If your last-ditch effort doesnt work and you must dismiss the patient, send him a certified letter with return receipt. That way, you can be absolutely positive the patient actually received your letter, Brink says. The physician, not the billing manager, should sign the letter, she continues. It should explain the reason why youre terminating the patient and explain that your office agrees to provide interim treatment and to send a copy of medical records to the new practitioner, Wanerman notes (see sample letter, "Here's the Letter..." article).
 
Your cooperation with the patient is essential during his transition between your office and another practitioner, Wanerman insists. You might be tempted to hold onto a patients records until he pays his bill. But that would hinder his ability to continue receiving the best health care possible  and that makes it a big no-no.
Dont hold records hostage, Wanerman urges.

Keep in mind that the American Medical Association and other societies have said physicians dealings with patients are rooted in a fiduciary relationship, not a financial one, Wanerman points out. That means a patients failure to uphold his end of a financial relationship doesnt give the physician the right to leave the patient high and dry. Up until the very end, you must be as helpful as you can to ensure youre not falling on the wrong side of a legal or ethical line in an attempt to secure your bottom line.