Access Management Quarterly: Don’t give up: ED copays are built into contracts’

Here’s the managed care perspective

Many who oversee emergency department (ED) registration have given up trying to collect copays, but this is a definite mistake, according to Michael J. Williams, president of the Abaris Group, a Walnut Creek, CA-based consulting firm specializing in emergency services. "Copay collection strategies are a critical tool needed to round out the revenue cycle for EDs," he insists.

Are you missing out?

You’re missing out by not collecting copays, Williams says, since they are part of the payment assumptions built into payer contracts. "Hospitals often have inadequate or no systems in place to collect the fees we have negotiated in our contracts, namely the copays," he says.

Copays generally are $25 to $50 for all managed care patients, and there is the potential to collect up to $800 at the beginning of the year when Medicare patients have not yet met their deductible, Williams says. "Only 35% of copays are paid after the ED visit," he adds.

If you increase this to 65%, you’ll increase revenues by $150,000 per year, assuming you collect from 15,000 managed care patients with an average copay of $35, Williams says. Some EDs are collecting $25,000 to $100,000 per month in copays that otherwise would be written off, or for which additional costs would be incurred by mailing bills in an attempt to collect, he adds.

Too often, ED managers shy away from collecting copays, fearing violations of the Emergency Medical Treatment and Labor Act (EMTALA), according to Thom Mayer, MD, FACEP, chairman of the department of emergency medicine at Inova Fairfax Hospital in Falls Church, VA. "However, the hospital attorneys would be the first ones to tell you there is nothing wrong with doing this," Mayer says, adding that his ED has had significant success in collection of copays.

Copays should be only collected after the patient has been fully medically screened, Williams notes.

Some EDs report unsuccessful experience with copay collection. "This is something we have struggled with," says Richard Eckert, MD, medical director of emergency services at University Hospital in Augusta, GA. Instead of doing a medical screening examination at triage, patients are taken directly to treatment rooms where a physician sees them and a disposition is made, Eckert says. "The chart may be made with the financial data before the patient is seen, but since we have the policy that all are being seen and fully evaluated, this does not violate any EMTALA concerns."

The complete chart is made either before or during the medical evaluation process, he says. No copay questions are asked up front. He adds that the ED tried to implement a copay collection process at discharge. "This required additional personnel that we did not have to spare," says Eckert. "Also, very rarely could we collect anything. The patient response was almost always Bill me.’"

Here are things to consider about collecting copays:

Use "tools" to encourage payment. Williams recommends use of the following to encourage a patient to pay at or near the time of service:

Promissory notes. These are contracts signed by the patient or financially responsible party provided at discharge.

Self-addressed envelopes. If patients don’t have the copay, Williams recommends providing a self-addressed stamped envelope with the patient’s account number on it. "If the ED has a financial incentive for point-of-service collections, this payment gets credited to them. Staff are usually highly motivated to pursue this."

ATMs and/or credit card machines. A strategically located ATM machine in the ED is a powerful incentive for patients to settle copays, he adds. "This can be a freestanding machine or a little credit card machine at the desk. It’s hard for a patient to ignore or avoid this payment option if they have their ATM or credit card with them."

Determine which group will receive revenue. At Inova Fairfax’s ED, the copay revenue is collected entirely by the hospital, Mayer reports. "We have had some talk of a 50/50 split between the physician group and the hospital. But while it is a fair amount of money, it is something the hospital is doing with the registrar people who are hospital staff members."

Evaluate costs. Eckert recommends evaluating costs if you plan to set up a copay collection system up front. "The added cost of collecting far exceeded our ability to collect. We found that it was simpler to concentrate on moving patients quickly and safely through the ED." Although most physician offices collect copays up front, you cannot do this in the ED unless a medical screening examination has been performed, he notes.

If you decide to do this, an appropriate medical person would have to be used, Eckert says, and if no medical emergency were found, the patient would be refused further use of resources until they paid up front. "This means that you would have to send away both well-insured who didn’t have a copay on them that day, as well as the indigent who doesn’t pay his bills anyhow, or you would have a two-tiered system, which would be illegal." This would create a public relations nightmare for the facility and a lot of angry people within your ED, Eckert adds. "I do not think that many hospitals are going to allow you to refuse further care to a paying customer."