Getting paid in 2024: The front office’s importance for patient collections

The decision to remain independent is grounded in nurturing cherished relationships with patients. These connections also are key ingredients to success in managing the revenue cycle. 

Large health systems, hospitals, and medical practices struggle at times with today’s shift towards consumer-directed healthcare. For the independent practice, successful patient collections is bolstered by a framework of interpersonal relationships that keep patients relatively compliant with their financial obligation — and keep them coming back. 

Here are some strategies that practices can implement to  maintain a successful patient collections process.

Given the reliance on patient payment solutions, managing the revenue cycle is getting more difficult every year even for independent practices. Collecting from patients has always constituted a challenge, but historically most of the problems emanated from uninsured patients. Patients with financial responsibility after insurance represented 60% of patient bad debt in 2021, a sizable 5-fold increase in just 3 years, according to accounting, consulting, and technology firm Crowe. 

Revenue cycle management is no longer a matter of collecting from payers and patients; the new paradigm involves handling patients who have payers covering them — but only partially. This dynamic creates a fundamentally different reimbursement environment for providers. 

The timeframe to capture payments is narrow. A report by the payment clearinghouse InstaMed reveals that 74% of providers reported that it takes more than 2 statements, on average, to collect payment from a patient, while 37% of providers must transmit more than three. And, for many practices, 3 months is considered a positive outcome — often, the collection process drags on for many more months.

Ratcheting up the stakes is the trend for more patients to hold high-deductible plans, and for deductibles to be climbing higher than ever. In 2023, the federal government reports that 21% of the average annual deductible for marketplace plans available through the Affordable Care Act (ACA) are between $4,501 and $6,000, another 21% amount to $6,001 and $7,500, and 20% are $7,501 or more.

While high deductibles are a widely recognized characteristic of ACA marketplace plans, deductibles in the commercial, non-ACA market show a similar upward trajectory. The average single deductible amount (among privately insured patients facing deductibles) is $1,763, up 61% since 2012, according to the Kaiser Family Foundation (KFF). largely driven by a nationwide trend of greater enrollments in high-deductible health plans. Looking at this movement from another perspective, KFF reports that 88% of workers with single coverage have a general annual deductible that must be met before most services are paid for by the plan. 

The digital revolution has touched all areas of our lives, yet healthcare lags behind in easing the payment process. Sixty-one percent of consumers revealed that the ease of making payments is very or somewhat important in decisions to continue seeing a doctor, yet 78% of providers primarily collect from patients with paper and manual processes.  

In the face of growing patient financial responsibility, providers are now looking to their front-office team to support the revenue cycle by way of point-of-service collections. Among many other important duties, these team members are the “directors of point-of-service collections.”

It may be as basic as remembering to say: “How would you like to pay?” while making eye contact with the patient and stating their name politely but firmly. Don’t let the privacy needs of a small reception area undercut this essential task. In those situations, the employee can record the due amount for the patient to read — or hand the patient an electronic tablet displaying the information.

Collection efforts also hinge on whether employees can interpret insurance cards and eligibility checks from payers, in addition to routinely confirming important patient demographics such as current address and contact info. Employees must be equally adept at computing or accessing accurate current balances, including those already transmitted to a collection agency because bad debt can be reversed and payment applied.

Train the team to use terminology such as: “Your insurance plan requires you to pay the copayment” and “We see that your insurance plan transferred the balance to you.” Help patients locate the contact information for their insurance plan, referring patients there for detailed information. 

A vital prerequisite to getting paid is the capacity of the practice’s administrative and billing staff to read and understand an explanation of benefits or benefits summary (available from most clearinghouses) and then put that information into context for the patient. These explanations and summaries can help patients understand their coverage, as well as their financial responsibilities for unmet deductibles before they leave the office or schedule the procedure. Rename your “collector” to be the financial advocate, as most of the role is untangling the web of insurance coverage for patients. 

As appropriate, employees at the point of contact — whether scheduling, greeting, or discharging — can inform patients about the payment plan policy. Payment plans must include a measure of flexibility to be successful. For example, providers should offer twice-monthly installment payments that coincide with patients’ paycheck cycles. For patients who qualify, extend a financial hardship policy. 

Writing off a balance for charity should not be done on a whim, however. Set up a policy, vet it with current payer agreements and restrictions, put it in writing, and apply it consistently. Some patients may at times need relief from or more room to meet their financial obligations; sincere efforts to offer that respite can produce a grateful, loyal patient who ultimately pays the bill.

Engage with tools to digitize the payment process, focusing on reducing the friction for patients to pay. Collect copayments and balances at the point of service via tablets, kiosks, or credit cards (including on file). Send electronic statements as soon as accounts are due, with a link to pay. For outstanding receivables, offer patients a text-to-pay option, as well as an online payment portal. 

With the advance of high-deductible health plans and other trends that are shifting more financial responsibility to patients, maintaining a successful patient collections process has become a must-have skill set for independent practices. Investing in staff training, automation, and process revisions that invigorate collections efforts revitalizes the bottom line and secures the financial future for the practice.