The Single Most Common Billing Error You’re Inevitably Making

Most billing errors can be corrected and successfully resolved. If you inadvertently overlook a required modifier or use a diagnosis code the payer doesn’t like, you can bill a corrected claim or file an appeal, depending on the nature of the error, and you can usually get the claim paid.  But there’s one mistake that is often uncorrectable: failing to collect the patient’s portion at the time-of-service.

Why is this uncorrectable?
Simply put, some patients don’t pay their bills.  According to CNBC, medical bills are the single biggest cause of bankruptcies in the U.S.  The reality is that healthcare in the U.S. is expensive.  Regardless of whether it’s the premiums, co-insurance, or deductibles, many people who consume healthcare struggle to absorb the costs.  Another reality is that patients are never more motivated to pay than before they’ve consumed your services.  Once you’ve addressed their issue and sent them on their way, their motivation drops exponentially.  The more time that goes by since their encounter the less motivated they are to pay the bill. Plus other factors can interfere with getting them to pay such as employment instability or unexpected car repairs or other material expenses. They may have originally intended to pay your bill but circumstances change with time. It’s a well-established adage in healthcare that the older the unpaid balance is the harder it is to collect.  This is certainly true when it comes to patient balances.

Why do clinics struggle with this?
Most healthcare providers do a good job of collecting co-pays because they’re fixed amounts and easily determined.  Many healthcare providers struggle to collect co-insurance or unmet deductibles because the amount the patient will owe is variable and harder to estimate.

How do clinics manage this more effectively?
First, you have to accept the fact that you may not always estimate the patient’s portion correctly and that’s okay.  You may occasionally collect too much and end up having to issue the patient a partial refund.  While that may be burdensome, it’s better to collect too much and have to issue a refund than to collect too little and never successfully collect the rest of what you’re owed.

Second, there are on-line tools that you can use to estimate the patient’s portion based on their percentage co-insurance or deductible.  Some commercial insurance carriers offer this and there are also products available for purchase.  Some work better than others.

That said, you can easily develop your own estimator for free in Microsoft Excel using simple formulas to calculate the patient’s portion by applying their percentage responsibility against your contractual rate for that payer and CPT code.  For specialties that use few CPT codes, this is a very practical approach.  For specialties that use dozens of CPT codes, it may be a little daunting but the approach remains sound.

If nothing else, come up with a default amount to collect upfront based on your average reimbursement per visit and collect that amount from all patients with unmet deductibles and collect the corresponding percentage of that amount for patients with co-insurance.  You will obviously have to reconcile these amounts with what the patients actually owed you once their claims are adjudicated but the fact that you collected a reasonable estimate upfront means that you’re less likely to have uncollectible bad debt.

So we didn’t collect at the time-of-service, what do we do now?
Start by sending the patient a statement showing their balance due and prompting them to pay upon receipt.  This is sufficient with many patients.  If they don’t pay within two to three weeks, send a follow up statement marked “past due” and call the patient to remind them about their balance due.  If the patient doesn’t pay after receiving two or no more than three statements, each accompanied with a reminder phone call, then discharge the patient from your practice and get a licensed debt collections agency involved.  The longer you wait the harder it is to collect the outstanding balance so time is of the essence.

As is true in most facets of life, it’s better to be proactive than reactive and this is never more true than when collecting patient balances.

David Allen, MBA
As President and CEO of Flatirons Practice Management, David and his organization process thousands of medical claims and hundreds of thousands of dollars in collections every day.  Flatirons Practice Management, through their rigorous policies and procedures, has been helping their clients maximize their collections for the past 20 years.