Patient Statements: What`s New?

T he technology for emerging new treatments for diseases is dynamic and innovative. Lasers, fancy new biologic drugs, micro this and micro that; it’s almost impossible to stay current with the ever-changing and high-tech world of medicine. However, it seems that the technology for handling the business side of medicine seems to stay in the Twentieth Century. It’s not uncommon to make an appointment with one of the nation’s premiere physicians in a certain specialty who can perform highly technologically advanced procedures only to find out that the physician’s office has a 12-year-old copier, a fax machine that doesn’t work when the answering machine is turned on, or a billing system that is completely manual. In this vein, many offices still run statements for patients manually. They make photocopies of the bills on the copier machine, fold and stuff the envelopes (including the return envelopes) by hand, and then stick on the postage stamps one by one. Many times, little handwritten notes (by the billing manager or staff) are made on the patient statement reminding them of a late payment or that the office is still waiting to hear from the insurance company. Statements are sent sporadically — sometimes on a Friday during the last week of the month, sometimes on a Wednesday during the first week of the month, and frequently an entire month or two is missed with no patient statements sent at all because Suzy was behind on her work. Please! Isn’t it time that medical offices update their processes and start to take advantage of more professional and computer compatible technology? Seems that this question has been on a few people’s minds because I’m receiving questions related to this topic. I’ll share with you a few of the questions we’ve received over the past months and offer my answers. Q: I keep hearing about outsourcing as many functions in the office as possible. Does that apply to sending patient statements? What are the advantages and disadvantages of outsourcing this aspect of my office? A: If you aren’t already outsourcing, you should seriously consider this option. Companies like Express Bill do a great job. Our two national billing services haven’t sent out bills from our offices in years. Outsourcing is reliable, professional, and cost-effective. Here are a few reasons why outsourcing makes sense for any office, no matter how large or small. The Pros 1. Delegate to the “pros.” It’s all they do so they’ll do it better than your office ever could. 2. You can’t do it cheaper in-house. Add up the cost of the paper needed to run the statements, the cost of printer ribbon, the cost of the envelopes and return mailers, staff time, and lastly, the expensive postage stamps and you’ll see how much it actually costs to send one statement. Most out-sourcing companies charge you less, per statement, than what you pay for one postage stamp. 3. It’s instantaneous. As soon as you forward the electronic file, the out-sourced company has the work. When you sign a contract with them, be sure that you spell out the turn-around time. If you want to assure that the statements go out within 48 hours of the time you send the file, stipulate that in the contract. 4. Statements are sent consistently. Since it just takes a few minutes to set up the electronic file, very little staff time is needed. Even if Suzy is behind on her work, spending 20 minutes to create the statement file shouldn't be an excuse not to get the statements out on time. So there really is no excuse for not sending the statements out the same time each month, every month! To monitor the outsourced statement service’s reliability, we have a dummy patient (our billing service manager) in the file. Whenever the patient statements go out, we get a bill. We know exactly when our manager should get her bill. We also know, by using this monitoring mechanism, when patients should be getting their statements so that we can expect an increase in phone activity in addition to the money rolling in. The best part about sending the dummy statement is personal verifiability. How many times do patients call after they have received their final past due notice stating that they never received any bills? This was the first time they received a bill, they say. You can now counter those remarks by stating that you know that the statements went out because your dummy patient got hers. So unless the address is incorrect, it’s highly suspect that the patient didn’t get the bill. (Funny isn’t it; they always seem to get the final notice bill while the preceding bills just never made it through the mail. How convenient!) The Cons 1. You need a computer. Enough said. Q: How many statements must I send before I can write off the balance? We have recently done some analysis and found that it costs us about $2.50 to send out one statement. We have patients that have $5 and $10 balances, so after two or three bills we actually lose money. Any suggestions? A: Here are some of my recommendations: 1. Send no more than two consecutive statements to any patient. If a patient fails to respond to two consecutive billings without making any payment, they are sending you the message, “I’m not paying you.” The HBMA (Healthcare Billing and Management Association), the national association for professional billing services, states that statistically you have little, if any, increased action on an account if you send more than two statements. The cost of sending another statement doesn’t result in any significant response rate to warrant the extra billings. Limit your statements to two, and then write off the balance or turn the patient over to collections. 2. Set a minimum dollar balance for statements. Most practices don’t send out bills with balances lower than $5. They set their computer to delete those files from getting a bill. You can leave the balance on the patient’s account so you can collect it should he or she return to the office. Practices that have low co-payments, such as $5 or $10, should make sure to collect the co-payment at the time of service before the patient is even seen for services. If you have many accounts with those small co-pay balances, you need to re-evaluate your front-desk collection policy and/or educate your front desk staff about collecting these co-pays up front at the time of the patient visit. Q: What’s your opinion about charging patients interest on slow-pay or no-pay accounts? Good idea? Bad idea? Any alternatives? A: If you’re a bank, you should act like a bank. If you are a doctor’s office, you shouldn’t act like a bank. Charging interest requires you to comply with various truth in lending laws. You must publish statements about your interest rate and how it is compounded. Additionally, you must have patients sign statements acknowledging their understanding of your rate and how and when it is assessed. Bottom line: bad idea. The best alternative is to send two statements and then turn them over to a collection agency connected to a national credit entity. If the patient doesn’t respond, write him off and turn him over. I heard of one dermatology office that states in their patient collection policy that failure to pay the invoice when received will result in a $5 rebilling fee. I don’t particularly like that option because I feel it has a hidden message that if you don’t want to pay the bill this month, it’s o.k.; we’ll just charge you an additional $5 next month. A much stronger message is stating to patients in your financial policy that you send out two statements. Patients failing to pay within 60 days will be turned over to both the collection agency as well as the national credit bureau (which will affect their credit rating). Q: What are most doctors accepting as payment alternatives? We just accept cash and checks but are considering a few credit cards. Is this worth the effort and expense? A: Yes, absolutely. If you are only accepting cash and checks, then you’re only hurting your practice. Get on board with Visa, MasterCard and Amex, and also consider offering your patients the debit card options. The more ways you have available for your patient to pay, the better your chances are of getting paid and the quicker you’ll have the money in your bank.