With the significant healthcare market shift in payment models, there is an increase in patient responsibility for medical services due to more consumer-direct or high-deductible health plans. This cost shift will build a growing financial impact to rheumatology practices, and it’s important for physician practices to change how they view and collect co-payments, co-insurance and patient deductibles. This assessment should be looked at now rather than later, because it will have a direct impact on practices’ financial stability. In 2008, the Celent Group released a report indicating that each provider will be responsible for collecting approximately $317,000 in co-pays from patients in 2014.1
Due to the potential loss in revenue, providers will need to focus significantly on improving co-pay collections and educating patients on their responsibility. Patient collections will improve only if there is a positive change to the current method of collecting co-pays.
Establish Co-Pay Collection Policies & Procedures
A good collections process requires adequate communication between the physician, patients, staff and payers. Physician practices should understand and know what services Medicare or a third-party payer will cover, and patients must recognize what amount they will be responsible for paying for services that will not be covered by their insurance plan.
Office staff should be familiar with the insurance payment terminology for co-pays, deductibles and co-insurance to guarantee the correct payment is collected up front. A co-payment is the flat amount the insured is required to pay up front for medical services or medication; the deductible is a carved-out or percentage amount the patient is responsible for paying prior to receiving most medical services other than what is applied to a patient’s co-pay. The co-insurance is the amount the patient is responsible for after the deductible or co-payment is applied plus the balance remaining after the carrier’s payment.
To boost revenue in an office, there should be a written policy for both staff and patients to read and understand. A guideline should be established on when and how co-pays, deductibles and co-insurance will be collected.
All co-pays should be collected prior to services. Determining if an office will collect a deductible or co-insurance depends on how well the staff is trained on insurance verification. Staff members should verify benefits and patient responsibility prior to the patient arriving at the office; if there is a need to get up-to-date information, then it is imperative for this information to be reviewed and verified as soon as the patient arrives at the office.
All policies and procedures should be consistent and clear for everyone to understand. Office staff will need to notify patients of the policy to collect the full amount of the patient’s responsibility at the time of service. The office should make sure they understand this policy when they are scheduling appointments and make it a part of their script to let the patient know what to expect when they arrive at the office.
A Team Effort
Collecting the deductible and co-insurance at the time of service may prove difficult, but if office personnel are properly trained, then it should be a smooth transition. All co-pays should be collected prior to any services rendered by the physician or other healthcare professional.
It’s vital for rheumatology practices to create and enforce a policy specifying that the collection of co-pays is required from all patients before services are rendered, unless other arrangements are made prior to the appointment. Although some practices prefer to handle co-pay collection as part of the checkout process, it’s recommended that co-pays be collected in advance of the encounter. The best time to collect co-pays is when patients are in the office. Once they leave, collections become more expensive and more difficult. In fact, with forms, envelopes, stamps and staff time—the cost of collecting the co-pay after the fact can be nearly as much as the amount of the co-pay itself! The cost associated with any collections process, including staff time, is estimated at $1–2 per claim.
Co-pays can account for 20% of revenue in a rheumatologist’s office and if all co-payments are not collected, this could be a vast revenue loss. Not only will this hurt the practice overall, it also has the potential to jeopardize the physician contract with the carrier. Many contracts state the physician must collect the co-pay from each patient under their plan. Physicians are bound by the Office of Inspector General’s regulations, as well as private contractual obligations, to collect co-pays. Failure to collect co-pays is a violation of the False Claims Act. Providers who do not collect patient co-pays are subject to prosecution for fraudulent billing under federal law. Penalties include a maximum fine of $25,000, five years in jail or both for physicians who are found guilty of not collecting co-pays.
The key to running a successful practice is to handle it like the business it is. Physician offices should know that patient co-pays, deductibles and co-insurance are income sources for the business. Profit is not insignificant, because it enables a physician to keep the doors open. Co-pays are a big part of a practice’s revenue; don’t leave them on the table or let them slip away.
For questions or additional information on insurance and billing, contact Melesia Tillman, CPC-I, CRHC, CHA, at [email protected] or 404-633-3777 x820.
Collection Tips
Failure to collect co-pays, deductibles and co-insurance can greatly reduce the ability of a rheumatology practice to survive financially. Having an office plan and enforcing it can be a great start in running a successful practice. Below, are tips on how to organize and effectively collect patient responsibility in the office:
- Train staff on collecting co-pays up front and educate them that it is a standard business practice;
- Educate staff on verifying benefits and patient responsibility prior to patient date of service;
- Place signs in prominent areas of the office to notify patients that co-pays and deductibles will be collected prior to all services;
- Draft and mail new office policies to all patients or place document on practice website; and
- Remind patients when they call to schedule an appointment that co-pays and deductibles are due prior to service.
