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The best piece of advice for those starting an upfront collections program is not to call it that, says Lori Zindl, president of Outsource Inc. in Pewaukee, WI. It can be a patient service program, a patient information program, or a patient financial services program, she adds. "I really haven’t come up with a catchy name." The point, Zindl says, is that by implementing such an effort, you are actually trying to inform patients of their financial responsibility for a service they’re receiving. "Collections," she adds, "is a by-product."
At a recent meeting where Zindl spoke on the subject, she notes, "a good 25% of the 100 or so attendees" indicated their hospitals were making some effort toward upfront collections.
The tack that access managers wanting to follow suit should take when selling such a program to administrators, nurses, and physicians, she advises, is to emphasize the customer service aspect. "It should be something that sounds like a benefit for patients because that’s what it is. It’s a communication of what their insurance payments are."
While popular wisdom holds that registrars will alienate patients by informing them of what they owe and asking them to pay it up front, she points out, her experience has been that the alienation is already happening on the back end of the revenue cycle when patients are surprised by a bill weeks after their hospital visit.
"They think [upfront collections] will chase patients away, but in fact, we are chasing them away, and it’s happening from the billing side," Zindl says. "I constantly hear complaints of, Nobody told me my insurance wouldn’t cover this.’ Patient accounting becomes the bad guy, the bill becomes bad debt, and the patient doesn’t come back for service." The answer to objections or questions about starting the upfront program, she adds, should be that it is "due to popular demand. The patients asked us to do this."
At hospitals where Zindl has helped establish upfront collections programs, the response "is amazing," she says. "Once you start collecting, they are willing to pay. They’ve been paying in the physician’s office for years, and it’s mostly our fear that’s stopping it [from happening at hospitals]." She suggests that registrars say to the patient something along the lines of, "We’ve contacted your insurance company and they’ve stated that you have a $50 copay. We can accept that payment in several ways."
Another strategy Zindl suggests is, in the case of insurance companies that are problem payers, to hand patients a letter stating that "we have trouble with your insurance company; they don’t pay on time, and if we don’t have payment within 45 days, we’ll have to bill you." This underscores the fact that the upfront program is not just about collecting money, but is a customer service effort, she adds.
Zindl emphasizes that if patients "ever get the idea that money is more important than care," a facility is in trouble. How the situation is best handled depends on the timing, she notes. If the subject is broached during a preadmission telephone call, the registrar might suggest paying with a credit card or mailing the hospital a check. If the first encounter is at the point of service, Zindl adds, it’s a good idea to hand the patient a preaddressed envelope in addition to mentioning the credit card option.
Her hospital clients "have a lot of luck with those envelopes," she says. The ones distributed at registration should bear a special code, Zindl stresses, so they can be identified when the payment is posted to the patient accounting system. "You should track those payments because [upfront collections] should get credit," she notes. "Any time you get payment before the insurance [processes the claim], you’re doing your hospital a favor."
If the patient says he or she doesn’t trust your estimate of the copay or deductible and wants to wait to pay until the insurance payment has been settled, Zindl says this strategy is effective: "Have them sign something that says, I give you permission, when the insurance is processed, to charge this to my Visa [or MasterCard], as long as the balance doesn’t exceed [the estimate you’ve provided].’"
When money is collected up front on the basis of an estimate, a good refund policy is a must, Zindl says. "You will burn bridges if you make a guess and collect payment and then don’t refund promptly. Don’t make them wait 90 days for their refund."
Although infrequent, refunds are necessary occasionally, Zindl notes. One client, a four-hospital system in the Milwaukee area that began an upfront collections program in April 2000, had to issue about 20 refunds between then and January 2001, she says. That health care system collected $250,000 in upfront payments during the same period, compared to zero the previous year, Zindl adds. That’s a significant impact on the bottom line, she notes, particularly since some estimates are that every dollar collected up front is worth 12 times the value it has if collected after the typical billing cycle.
Personnel at the health care system mentioned above, Zindl says, attribute their program’s success to a "baby-steps" approach. It makes sense, for example, to start with obstetrics patients, she points out. "You can work it out with the physicians to notify the patients, and in most cases can send out a letter seven months ahead."
Another good place to start is with clinics where the copays are straightforward and easily calculated, Zindl says. "Even if you collect $100 a month up front," she emphasizes, you’re ahead of the game. "If your expectation is that you will collect all [that is due], that’s not going to happen. You have to be prepared that they won’t pay. Especially if they didn’t get advance notice."
With that in mind, she adds, the more conversations that take place about the program before it begins, the better. Zindl compares the effort needed to the notice that was given when hospitals went to a "no smoking" policy. "As a starting process, put up signs in the emergency department or the hospital six months in advance that, effective this date, copays or deductibles will be expected at the time of service," Zindl suggests. "You can also put the information on the patient statements for the same period, any communication you can do so that first telephone call in the preadmission process is no shock."