Do you need a policy for employee accounts?
A tougher stance can slash outstanding balances
Have you taken a look lately at the outstanding balances of the accounts of your hospital’s own employees? The results might surprise you.
When Dennis Hawkins, FHFMA, examined staff accounts at the hospital where he worked as patient financial services director, he found a combined outstanding staff balance of $300,000 and discovered that, when compared with the general patient population, employee accounts were 20 times more likely to be delinquent.
"The attitude among employees in some organizations is, They owe it to me,’" says Hawkins, now a consultant with Midland Professional Services in Topeka, KS, which works with hospitals and other health care organizations on financial management problems.
To address the delinquent employee account problem at the hospital mentioned above, Hawkins established a new policy regarding such accounts and a payment plan for the employees with existing overdue balances. Over a period of about 18 months, he reduced the $300,000 delinquent employee balance to less than $100,000.
"The first thing I did was take [the policy] to the administration, to make sure it would get their backing, and then I addressed the issue at a board of directors meeting, showing the extent of the problem," he explains. "Some boards don’t like to pressure employees to pay their bills, so you do have to have some backing."
Employees are like any other customer
Once he had that support, Hawkins says, he drafted a policy, essentially stating that employees will be treated like any other customer. A notice about the policy was published in the hospital newsletter, he notes, and employees were advised to check with patient accounts to make sure their account was in good standing. Although the policy did prompt some employee complaints, most staff members supported it, Hawkins adds. "They felt it was only just that people pay their bills in a timely manner."
The policy he developed contained the following elements:
• Employee accounts had a special insurance code for the hospital’s own insurance. Hawkins says that even though some hospitals, such as the one he worked for, might not have enough financial classes to use one for employee accounts, using an insurance code will serve the same purpose.
• The hospital’s insurance was listed as the secondary coverage for employees, even when there was no actual coverage because the employee’s spouse carried the primary insurance. This enabled the hospital to know when employees owed it money, even when the hospital’s own insurance wasn’t involved. "It was an identification factor," Hawkins explains. "We wanted to be able to identify that it was an employee family."
• Every six months, a clerical worker matches the employee list with the open accounts receivable list to make sure none are slipping through the cracks.
• Billers and collectors are not allowed to work on their own accounts or those of other employees in the department, subject to discipline. Such accounts are referred to the billing or collection supervisor to handle.
• As patient accounts manager, Hawkins reviews all business office employee accounts monthly. Quarterly, he runs a list of all employee accounts, using the insurance code, and looks for any irregularities.
• Outside auditors also review the employee accounts each year as part of their regular audit. There is no automatic small balance write-off for any account with the employee insurance code.
Employees with existing delinquent balances are asked to sign an agreement outlining their arrangements for payment, Hawkins says. He and the human resources director speak with any who are reluctant to do so, and almost all work out an agreement. "We did have one employee who wouldn’t agree to any kind of repayment, and we did start garnishment proceedings against that employee," he says. "That made believers out of some of the others."
In addition, the hospital set up a payroll deduction plan for most employees who had outstanding balances, including those with delinquent accounts, with the time frame and payment amount dependent on the size of the bill, he says. For example, if the bill was less than $250, the employee was expected to pay it off in 90 days, in three monthly payments; if it was $1,000, the time limit was a year; between $1,000 and $2,500, two years; and any amount over that, a maximum of three years.
In line with its generous charity policy for all patients, the hospital took a more lenient tack with employees who made 150% or less of the federal poverty guideline and those who had extraordinarily high medical bills, Hawkins explains, writing off substantial amounts in some cases.
"We had some cases in which the employee was well-paid, but maybe the spouse had a bout with cancer, and they had a $20,000 hospital bill, and could only pay $100 a month," he adds. "We set up a two-year payment plan, collected $2,400 and wrote off the rest as charity."
Some of the charity write-offs posed a dilemma for the hospital, because some of the employees involved had elected not to participate in the hospital’s self-funded insurance plan, Hawkins notes.
"Say we had a single mother with a kid or two, who worked in a low-paying job and didn’t feel she could pay $50 or $75 a payday, so she declined the insurance," he says. "Now that person or one of her children winds up in the hospital with a big bill. Do you treat that particular employee differently because she declined the insurance? Do you give a break to an employee who rolled the dice and lost?"
Hospital administrators decided that in the future, no bills would be forgiven for employees who declined the insurance, Hawkins adds, although the rule was not made retroactive.
[For more information, contact: Dennis Hawkins, FHFMA, Midland Professional Services, 712 South Kansas Ave., Suite 400, Topeka, KS 66603. Telephone: (785) 233-8825.]