A: We often look at accounts receivable through the view of a doctor, but the patient may have a different perspective. I was recently that patient. I was given the wrong information prior to receiving a procedure, and then received a bill for significantly more money than I was anticipating. When I called the doctor’s office, the staff took no accountability. I delayed sending payment while refuting the bill, and without notice they turned the matter over to a collection agency. I didn’t deny owing money and I intended to pay the bill, but the experience was tainted, so I won’t be going back to that doctor.

This experience taught me the need for better processes and communication on the front end to avoid an outcome like mine on the back end. Here are some suggestions:

COMMUNICATE WITH THE PATIENT

While hiring a collection agency is certainly an option, I recommend that you first take a few steps back and evaluate the current billing and collection process to uncover any problems that may be contributing to the dilemma.

Consider communication. In general, most people expect to pay for rendered services. What they don’t like is being surprised by a bill. Clear, transparent communication is needed. To accomplish this, make sure staff are trained in discussing payments with patients. For example, train front-desk personnel to communicate that upfront payment is required for optical purchases. (While some offices allow patients to pay a 50% deposit for glasses and contact lenses and pay the remaining balance upon delivery, it might be time to reconsider this course of action if it is contributing to problems with accounts receivable.) When properly communicated, most patients will agree to full payment upfront.

It’s typically not necessary to extend credit or payment plans. Most people have credit cards, and you can also offer a finance option. Other training points could include pointing out the ABN paperwork, discussing the difference between a vision plan and a medical insurance plan, etc.

Optometry is fortunate to often have the option of billing through a patient’s vision plan or their medical plan, depending on the reason for the visit. Unfortunately, patients are often uninformed about this when they present for an exam.

In the case of a medical diagnosis found during the exam, the doctor may need to discuss billing the medical plan in the future. For example, “Mrs. Smith, because we found evidence of dry eye disease today, I’d like to schedule you for a follow-up appointment to address these issues. We would bill this exam to your medical insurance provider vs. your vision benefits plan.”

If you sense resistance, I suggest putting the ball in the patient’s court by asking, “Are you OK with this?” and “Would you like to proceed?”

Patients (let’s call them health care consumers in this instance) want control over decisions that affect them, and it’s harder to refute a bill when the patient gives you verbal permission to proceed. If the patient declines, I recommend documenting and referring, if necessary. In most cases, patients will agree to receiving appropriate care, while also being better informed of their financial responsibility.

IMPLEMENT A PROCESS

In the same way communication with the patient is important to avoid delinquent payments, communication among your staff and the process that is expected to be followed in continuing this discussion with the patient is also important.

Here is a suggested approach to manage the early stages of accounts receivable in-house:

• Appoint an employee to be in charge.
• Develop a plan for when and how often to call or contact the patient. If a patient can’t be reached by phone, send a letter.
• Schedule regular meetings to review the accounts receivable report and to monitor efforts and progress. This is not a pleasant job, so staff can neglect if it’s not overseen by a high-level person (doctor or manager).
• For smaller amounts or older debts with less chance of collection (over six months old) in which the staff has made several efforts to contact the patient, determine whether it’s worth pursuing vs. writing off. Talk with your accountant about claiming a tax deduction.
• Document all calls, letters sent and promises made, and follow up on them in at an agreed-upon interval.
• Charge interest on past due amounts. People in financial trouble can ignore bills that don’t charge interest. Follow your state regulations in this regard.
• Address any internal problems causing higher than average accounts receivable, such as rejected claims (see below) or an issue with the collections process.
  A crucial element to this process is the manner in which staff discuss delinquent payments: They should always act in a friendly manner with patients. The missing money may be an honest oversight, and it’s also possible that your office was responsible for the oversight. Once staff and the patient agree the amount is owed, it’s time to come up with a plan for payment.
• Verify insurance coverage and benefits prior to the visit. Part of the issue with a growing accounts receivable could be insurance denials. Reducing this should be a part of the process in your practice. It’s possible the patient changed jobs, retired or experienced some other change that affected coverage.
• Prior to submitting the claim, make sure all necessary elements are included. This includes required patient information, appropriate codes and necessary modifiers.
• Remain knowledgeable of individual payer policies. Invalid or unspecified codes are often the reason for denial.
• If denied, review the claim or contact the insurance company to identify the reason and then resubmit.

CONSIDER COLLECTIONS AS A LAST RESORT

Formulas and opinions may vary on what a normal accounts receivable looks like, but a simple rule of thumb is that the total amount owed to the practice should be less than the average 30-day gross revenue. For example, a practice that has an annual gross of $900,000 has a monthly gross of $75,000. That would roughly be the maximum I’d want to see as the total accounts receivable for a healthy practice. This can vary depending on the amount of insurance billing.

Understanding that accounts receivable varies from practice to practice and that assistance may be needed, collection agencies should be utilized after multiple phone calls and letters have proved unsuccessful. As a last-ditch nudge, the final notification from your office should indicate your intention to turn the matter over to a collection agency if not rectified by a specific date. For smaller amounts, you may decide it’s not worth the effort and put a note in the patient’s chart that no further services will be rendered until their balance is paid.

While a collection agency may be successful in collecting payment, be aware that collection agencies often keep a significant percentage of what they collect, and the tactics used by collection agencies to collect payments may reflect poorly on your practice.

A process for communicating with patients and following up when necessary may drastically reduce accounts receivable, while maintaining the ability to control customer service within your own practice. OM

Read more from Dr. Vargo by checking out CEO Checklist, published monthly in Leading Off. 

DR. VARGO serves as Optometric Practice Management Consultant for IDOC. A published author and speaker with more than 15 years clinical experience, he is now a full-time consultant advising O.D.s in all areas of practice management and optometric office operations. For questions or comments about this article, please contact svargo@idoc.net.