In 2011, U.S. hospitals provided $41.1 billion in care that was not compensated. This represented nearly 6 percent of the annual hospital expense. The average recovery rate for a hospital is just 11.3 percent. Non-hospitals are able to collect 16.7 percent of the money that is owed to them.
All of this money that is owed to hospitals and other healthcare providers stems from not collecting money from patients on the date of service. The further a patient moves from the date of service, the more likely they are to not pay what they owe. In 2012, the annual out-of-pocket responsibility for families that had employer-sponsored health insurance was $4,316. For a family of four, this comes out to be slightly over $1,000 per family member.
While the numbers may seem discouraging, there are millions of people working on paying off their medical debt. In 2012, that number was 44 million people compared to 37 million in 2005. While 75 million reported issues paying their medical bills, more people out of that figure find themselves working toward paying off their medical debt. This shows that there are individuals out there working to pay off their medical bills, but it is still not enough. Plus, many of these individuals are fighting paying their medical bills because they were not required to pay for any part of the medical care they received on the day it was provided. The further they move from that date, the less likely they are to pay or be delayed in paying the bill.
Financial Implications of Not Collecting on Date of Service
When a person is sick and they need medical care, it is true that they may not always have the money to pay for the entire appointment upfront. There is also the fact that there are a high number of uninsured individuals at this time.
By not collecting something upfront, especially from the uninsured, the financial loss becomes deeper than it would be if just something was collected. For instance, there are many hospitals and healthcare providers that have sliding fee scales that are based on income. If a person is low income, but not low income enough to receive Medicaid, then they can turn to the sliding fee scale to pay for care at a reduced cost.
For those that are insured, it is very important to collect the co-pay upfront. If the co-pay is not collected, it may never be collected. Since many co-pays equal up to $30 each visit, not collecting on just two $30 co-pays in a single day constitutes a $60 loss. That constitutes a $300 loss per week if it happens every day. This is why it is important to have a procedure on the front end that ensures that all money that can be collected is collected. Even if a person cannot pay for the entire appointment upfront (depending on the type of practice and the discretion of the physician or office manager), going ahead and collecting what can be collected can minimize the loss. This will streamline your medical billing system.
Collecting What is Owed
The cost of healthcare is increasingly shifting to the patient, which is why up-front and accurate payment collections have become more important than they ever have been. Such patterns as waiving co-payments can actually be considered healthcare fraud. After that, attempting to obtain payment after the visit can be rather expensive and labor intensive. To get a hold on your medical billing system, you can opt for healthcare consulting that focuses on front-end processing and how to cut your losses. The following are some of the ways that this can help your medical practice or facility:
- Verify insurance before the patient visit – Doing so manually or electronically will ensure that the services that are to be provided are covered, thus minimizing loss. The healthcare provider also has co-pay information and other applicable information.
- Understand the insurance – It can be difficult to determine patient liability before services are rendered, but understanding the insurance can give an idea of what co-pay to collect (sometimes there are varying co-pays based on services).
- Document the reason for the visit – The reason for the visit needs to be clearly documented so that it is understood what is covered and what isn’t.
- Understand your office’s specialty – The exact specialty can impact the co-pay amount.
- Know when to collect – Depending on the set-up of the office, it may be advantageous to collect co-pays after the visit because it can sometimes be difficult to determine the scope of the provided services until the patient is in the exam room. This is something that requires careful evaluation to ensure patients do not go out the door without paying.
These are just some of the tasks that can help you establish a method for ensuring the money that is due is collected, thus minimizing the financial damage and keeping medical costs low for the patients that do pay what they owe.
MD Pro Solutions has helped private practices and healthcare facilities fine-tune their front-end collection procedures. If you are ready to reduce the financial losses of your practice or facility, call us at 508-946- 1665 or fill out the form on our contact page.