More than ever before, doctors are relying on patients rather than insurers for increased revenue. As recently as ten years ago, doctors collected a mere 5-10% of their revenue from patients; today they're collecting upwards of 30-35%. That number is likely to increase even more as many consumers face high deductibles and co-pays. In addition, the new industry emphasis on wellness-based care means more frequent doctor visits. Since the trend is so new, patients are only beginning to adjust to their increased out-of-pocket payment responsibilities.
Inefficient Collections Have Far-Reaching Consequences
Serious implications arise when providers are not proactive about maximizing revenue cycles.
Sometimes, when physicians don't attempt to collect right away, they never receive payment and feel compelled to write off co-pays and other costs. The consequences, however, go far beyond lost revenue.
- Some carriers, such as Medicare and Medicaid, do not allow doctors to waive deductibles and co-pays. Doing so creates an inaccurate record of services rendered, and is considered fraudulent. Likewise, commercial carriers will likely claim a HIPPA violation if they are billed for services for which no co-pay was collected.
- If insured patients claim financial hardship, carriers usually require documentation to prove it, if they allow co-pay exemptions at all. Providers must be especially intentional about collecting from these patients unless they qualify for a waiver.
- Over time, waived co-pays adds up to quite a bit of lost revenue. Allowing a patient to forego paying a mere $25 at point of service doesn't sound like much, but if several patients fail to pay in the course of even one day, the doctor is short-changed hundreds of dollars.
RCM analysts recommend collecting payment at time of service as much as possible, and offering a variety of convenient payment options for today's tech-savvy consumers.
- Statements are often difficult for patients to understand. To further complicate matters, physicians sometimes allow patients to have several visits before demanding payment. Higher balances can seem overwhelming and are less likely to be paid.
- Moreover, research shows that the chance of collecting from patients drops by nearly 20% as soon as they leave the doctor's office.
- Many patients do not make paying medical bills a priority. Sometimes they really do lack the resources to honor their financial obligations, but medical bills are often given less priority because consequences for non-payment are less tangible. Failure to pay a cable or utility bill, for example, has more immediate implications.
- In addition to delays and losses that result when collections are not made promptly, RCM is further compromised by administrative expenses. Costs for processing and mailing statements, which can range from $5-$10 per patient, detract from what providers would be able to collect if co-pays and deductibles were paid earlier and in-person. Additionally, when processing is especially cumbersome or staff have not been trained to be proactive about collections, they are more likely not to make them a priority, either.
Making prompt and frequent collections helps providers optimize revenue cycles. As paradigms regarding RCM increasingly parallel retail models, doctors should think of patients as customers and structure payment methods and expectations accordingly. Transitioning RCM from a back-end to a front-end operation enables providers to keep accounts current by outlining collection strategies ahead of time, training staff to make them a priority, and utilizing up-to-date technology systems to monitor and facilitate patient payments. Early collectment empowers patients to fulfill their financial responsibilities while minimizing losses for providers so they have the needed resources to keep pace with changing paradigms and practices.