The industry is in a huge state of flux, and we have our payer sources to thank for it. We now live in a world where we deal with competitive bidding
by LISA BARGMANN AND LISA CUSICK

The industry is in a huge state of flux, and we have our payer
sources to thank for it. We now live in a world where we deal with
competitive bidding and oxygen caps, and it seems like almost every
day we are threatened with more. Medicare audits, further reduction
in the cap months, accreditation requirements and other items that
will either cut reimbursement or increase costs keep coming.

While all our eyes and attention are on Medicare, we also
continue to get hammered by the other payer sources.

Medicaid cuts and changes are occurring across the country. In
the quest to do more business with non-governmental payers,
providers are tapping into commercial insurances. Along with the
growing need for sleep therapy, for example, there is a growing
patient base with commercial insurance. But this, too, is riddled
with issues.

Many of these payers require providers to be contracted with
them and limit how many they will allow in their networks. There is
little or no negotiation power with their aggressively low
reimbursement rates.

Then there is the final blow. What some may fail to realize is
that commercial payers are further whittling away at providers'
bottom line through higher deductibles and copays. (HME providers
who offer health care benefits to their employees understand this
all too well.)

To keep insurance premiums down, cost-sharing is up for the
patient. High-deductible health plans are a way of life for many,
and as the burden shifts to patients, it also becomes a larger
burden for their health care providers.

As a provider, you must now learn how to collect from the
patient — and that is a whole different ball game.

The Devil Is in the Details

The time has come when you must pay attention to recovering all
of your revenues, especially patient-owed receivables. Often,
providers may ignore these for reasons like:

  • “It's just small dollar amounts.”
  • “I don't want to upset the referral source.”
  • “I don't have time to deal with it.”
  • “I don't have a problem. The elderly are conscientious
    about paying their bills.”

The fact is, most providers are shocked after taking an honest
look when they realize how much money these receivables can
represent.

The typical DME has at least 10 to 20 percent of its receivables
tied up by patients, with over half of these amounts aged greater
than 90 or 120 days. Frequently, the patient is the second- or
third-largest payer category compared to all other payers. Yet many
providers are only recovering 30 to 50 percent of this revenue,
while others are collecting even less.

No provider can survive without taking this matter seriously
since it is the difference between profits vs. loss.

Getting Started on the Fix

Now that the issue has been identified, how do you get started
on correcting it? It is important to engage in an action plan that
will prepare you for success.

The first step is to figure out how you are currently performing
and what the impact of these results is. To do this, determine your
patient revenue amount, patient payment/recovery amount, total
patient accounts receivable and patient A/R greater than 90 days at
the end of each month.

This can be a difficult task, since most software systems do not
readily reflect how much revenue is generated each month through
deductibles and copay amounts. Work with your software vendor
and/or a consultant to determine what this amount is if you cannot
determine the number.

Next, calculate your recovery percentages and days sales
outstanding based on this information. Track and trend these
figures each month to understand the impact.

Change your mindset about the mysterious world of patient
revenue and accounts receivable. Do not treat patient A/R like
insurance A/R. Although both require tenacious follow-through and
negotiation skills, the processes are very different if you are
going to be truly successful.

Your Credit and Collection Policy

Implement a thorough credit and collection policy that touches
all stages of your standard processes in a way that will allow you
to optimize your results and maintain quality in your other areas
of service.

Your company's credit and collection policy should guide
everyone involved on what steps to take at all stages of the
service cycle.

Improve the intake process by realizing what elements are
important to gather. Much of the information you already obtain is
necessary, like patient demographics, insurance information and
alternate contacts, etc. The key is accuracy and verification of
this information.

Without the correct insurance information, there is no possible
way to determine patient responsibility. Implement or adjust
insurance verification practices to assure all necessary
information to make a valid determination. Also, make sure that
proper communication to the patient takes place.

Although it is not always feasible, it is best to perform
verification prior to the delivery of any services. If this cannot
be done prior to delivery, do it immediately thereafter. The
verification allows you to determine deductible amounts, copay
percentages, whether the patient actually has the insurance,
whether the insurance will cover the service and if there are
in-/out-of-network ramifications.

All of this information allows you to give the patient an
educated estimate of what he or she will owe you. Armed with this
information, you must inform your patients of their financial
responsibility. It is best to do this verbally and in writing prior
to service or, if necessary, immediately after.

Many providers feel it is insensitive or awkward to discuss this
payment at the beginning of the patient relationship. However, not
addressing their responsibilities up front often leaves patients
feeling like they have been duped or taken advantage of when
slapped with a “surprise” bill months after the
service.

It is not what you say, but how you say it, that will alleviate
some of the tension associated with this communication. Create
scripts for all staff who will discuss financial responsibility
with your patients. Always document all conversations with patients
and insurance companies as well.

Moving the Process Along

Development of payment terms and instituting progressive action
procedures will allow you to predetermine how you will move the
billing and collection cycle along.

Many software systems have limited options on how patient
invoices and statements look. Typically such statements are not
very easy for patients to understand. The education you provide to
the patient up front will help, but it is also important to
simplify the paper billing process.

Look for customization options with your software or create your
own templates to convey important information, such as due dates
and next steps.

Always provide the patient with a due date on all written
correspondence. Avoid nebulous comments like “due upon
receipt” or “due in 15 days” by including the
actual date by which you need to receive payment. Fifteen-day terms
are best.

Also include options that make it easy for the patient to pay
you more quickly, such as advertising credit card options and
providing a return envelope for payments.

You should determine when you will send past-due notices; what
you will say on statements at the various aging brackets; at what
age you will send these bills to collections; when and if you will
consider suspending service; and, most important, at what stage you
will pick up the phone and speak to the patient.

Talking to Your Patients

The most effective collection tool is the telephone. Not making
phone calls is the provider's greatest weakness. There are many
reasons why this important step gets left out, but one of the most
common is that appropriate focus and resources must be
allocated.

Another pitfall is not knowing how to speak to patients about
the payments you are due. Learning educative collection techniques
is not only the key to success in recovering your revenues but also
minimizes the risk of leaving your patients with a negative
feeling.

Taking an educative approach in all communications with your
patients allows them to understand how they became financially
responsible: why they have a copay, how much their deductible is,
why their insurance does not cover the item, what resources are
available if they say they cannot afford to pay.

Treat patients with dignity and respect when speaking with them.
Be careful of voice tones during these discussions. Ask a lot of
open-ended questions in order to avoid “yes” or
“no” responses. Learn to get to the root of why they
are not paying.

Create a list of common patient rebuttals about why they are not
paying, then devise sample scripts of how to address each of those
situations. Identifying contradictions in what the patient is
telling you can be an indication of which patients can or cannot
afford to pay.

Alert patients to their options (payment plans, methods of
payment, etc.) and what steps will occur — per your credit
and collection policy — if resolution cannot be made.
Remember that follow-up is critical. Lack of follow-through
illustrates to the patient that you are not taking the matter
seriously, so why should they? Consistent, persistent, courteous,
helpful follow-up can be a big factor in your success.

Keep in mind that not just anyone can perform these steps in
speaking to your patients effectively. Put the right people in
place who can perform these functions. Sometimes employees who do a
great job on insurance collections crumble when it comes to patient
collections.

Look for individuals who are patient, not frustrated easily and
tenacious. Provide tools and training that allow them to handle the
variety of situations that may occur. These people must also be
able to produce a high volume of calls.

If you do not have capable or enough staff, do not put a square
peg in a round hole. Find the right individual(s) to do the job, or
consider outsourcing options.

Pay Attention to All Receivables

Times have changed, and providers must evolve many processes for
survival. Paying attention to all receivables is necessary. Simply
ignoring patient revenues and receivables is a thing of the
past.

Invest the time that is necessary to develop your polices and
procedures in this area. Train your staff to bring those additional
dollars to your bottom line while preserving your focus on customer
service.

Specializing in HME and reimbursement solutions for companies
nationwide, Lisa Bargmann is president and CEO of Bargmann
Management LLC and Homecare Collection Service, a turnkey
patient-owed receivable management service. She can be contacted by
e-mail at lbargmann@homecarecollection.com, by phone at
330/645-8200 or through target="_blank">www.homecarecollection.com.

Lisa Cusick is corporate manager of training and education with
Bargmann Management. She specializes in consulting services that
revolve around reimbursement, system optimization and software
conversion and training services. She can be contacted by e-mail at
lcusick@homecarecollection.com, by phone at
330/645-8200 or through target="_blank">www.homecarecollection.com.

Your Action Plan for Recovering Patient Receivables

  • Determine your patient A/R results.
  • Do not treat patient A/R like insurance A/R.
  • Implement a credit and collection policy.
  • Improve the intake process.
  • Adjust insurance verification practices.
  • Inform the patient of financial responsibility.
  • Develop payment terms.
  • Institute progressive action procedures.
  • Learn educative collection techniques.
  • Put the right people in place.