Upfront cash collection has become a necessity
Communication with patients and staff is key
By Joanne Blanchette
Superior Consulting Company
With today’s reimbursement crisis, it is becoming crucial to the survival of health care pro viders to collect payments at the time patients receive service. Gone are the days when providers can afford the luxury of routinely telling patients not to be concerned about the bill or that a bill will be sent to them.
An aggressive upfront cash collections policy is the key to decreasing the number of days a bill spends in accounts receivable, reducing bad debt, and reducing rejections. An average of 80% of the bad debt at several suburban community hospitals outside a major East Coast city was attributed to self-pay dollars due from patients who had balances after third-party payments. The information was obtained from a retrospective review of internal database information over a three-year period.
There is a clear indication that if providers had made efforts to collect estimated self-pay balances before service, bad debt would have been reduced significantly.
Before establishing an upfront cash collection policy, senior managers must exhibit strong support for staff efforts. For many health care providers, this concept is relatively new, and employees initially may be uncomfortable collecting money from sick patients. Changes to financial policies should be introduced with a compassionate attitude, but it should be emphasized throughout the transition that the new policies are needed.
Managers should solicit staff buy-in on new credit and collection policies by informing employees, physicians, and others of the upcoming changes (or enforcing the existing policies), while emphasizing the expected benefits to the institution of the increased cash collections.
Scheduling system software (with managed care functions) that supports the provider’s objective is extremely helpful. Managed care functions within the scheduling system should be able to look at what type of appointment is being scheduled and compare it with the type of insurance built into the system and calculate the estimated self-pay portion. Based on the fees that have been programmed, quoting an estimated price and estimated balance due from the patient while the patient or the physician’s office is on the phone becomes as simple as reading the information aloud.
Upfront cash collections also can be done with a manual scheduling system, albeit with considerably more effort and resources due to the increased time involved in estimating the self-pay portion. One New England-area hospital without a computerized scheduling system put together a list of deposits required at the time of service. If the patient was to have any estimated balance, each department established a deposit that was required at the time of service. The increased cash flow quickly justified the additional efforts.
Benefits to patients
In many cases, all patients require is the knowledge that they are expected to take care of their responsibilities at the time of service, and they will do so. If payment is not requested, it certainly won’t be received. Some patients will be offended by the request. The provider should explain that the facility has changed its policy, that payments can be made by cash, check, or charge, and that payment plans are available.
The advantage of creating a dialogue of financial responsibilities and clinical expectations is that it opens the door to obtaining funds for patients who may qualify for Medicaid, unemployment security benefits, and risk-pool dollars.
Providing the patient with a cost estimate will help hospital staff answer the question: "Are we providing good overall care to our patients if we are not also considering their financial needs?" Patients will be responsible for the bill shortly after the service, regardless of whether the estimated balance was discussed before. Isn’t it preferable for the patient to have an idea of what he or she may have to spend before incurring the expense?
Critical to the success of an aggressive upfront cash collection policy is verification of eligibility and benefits with a third-party payer for all of a patient’s scheduled appointments. A financial counseling unit should be established, with counselors responsible for verification procedures and dealing directly with patients and physicians’ offices.
Two to three days before the date of service, financial counselors should review the prereg istered accounts. This includes checking any outstanding balances as well as verifying, electronically or by telephone, eligibility and bene -fits with third-party payers.
Referrals and precertification authorization also should be verified at this time. Finally, calls should be placed to the patient if it is expected that he or she will have a co-payment or co-insurance over a certain dollar amount. Smaller amounts generally are collected at the time of service, if the patient is aware. A threshold of $50, for example, may be a good place to start.
In addition to the estimated amount due, referral tracking should be available in a scheduling package. The scheduler should have the information available to inform the patient that a referral is required based on the third-party payer and the type of exam the patient is scheduled to have. There must be a mechanism available in the managed care portion of the software to record referrals to individual providers and to determine the number of visits left on a particular referral.
This information needs to be available easily when the appointment is made so the scheduler can relay the need for a referral as early in the process as possible. This reduces the number of visits that may have to be postponed until a referral is received, and it reduces the number of visits rejected due to the lack of a referral.
It is important for financial counselors to be aware of state laws, pending legislation, managed care contracts, and funds available to patients. Compassion and an approachable manner also are traits that should considered when selecting counselors. Not only are financial counselors required to bring dollars into the institution, they provide assistance and support to patients in the sensitive matter of finances.
If the provider does not use financial counselors, additional personnel may be warranted. Generally, however, the solution is to move staff from chasing dollars on the back end to collecting cash upfront. For successful implementation of upfront cash collection, one of the following likely will be required:
• use of financial counselors, potentially the addition of full-time equivalent positions;
• reallocating resources from what typically is the patient accounting area to the patient access services area.
It is more difficult, but not impossible, to collect upfront payment from patients who arrive at the facility unexpectedly. Again, the way in which the request is handled is vital to its success. At the time of registration, the registrar should call the third-party payer to verify eligibility and benefits. The requested co-pay or co-insurance would be estimated more loosely due to the restrictions with which the registrar has to work. One solution is for the institution to establish a requested deposit for general procedures. If patients are unprepared, the registrar should inform them of the hospital’s new collection policy and ask them to be prepared to make a deposit on their account the next time they are in a similar situation.
When a patient states that he or she is unable to pay for the deposit or services, the registrar should refer the patient to a financial counselor. If circumstances don’t permit an immediate meeting, the counselor could contact the patient in the near future to determine if he or she qualifies for some type of aid.
As we see more of our colleagues unemployed and our hospitals closing, the importance of maximizing the dollars that can be collected becomes more apparent to hospital administrators, employees, physicians, and patients. For patients, knowing what is expected is often enough to acclimate them to the new processes.
(Editor’s note: Joanne Blanchette is a management consultant with Superior Consultant Company Inc. in Southfield, MI. She holds the CHAM certificate from the National Association of Healthcare Access Management. She is recognized as an authority on upfront cash collections. Her other areas of expertise include project management, information systems implementation of enterprise scheduling systems, physician practice management, reengineering within hospitals and physician practices, corporate compliance, and continuing staff education.)