10 steps to getting debtors to pay up faster
Paying the piper
Everyone in the practice knew there was a problem with accounts receivable, but no one knew how big it was until Stuart Akeson, MHA, senior health care consultant with the Houston accounting firm of O’Neal, McGuinness & Tinsley, went into the practice and looked at the situation.
"They had a whole systemic problem in the way things were collected," he says. "For instance, if something was refused payment, no one followed up on it. If something was filed late or incorrectly, there was no way to check it."
That meant a lag time of up to 75 days from the second billing before the the money collected. Along with the lost use of those funds, the practiced was forced to expend staff time correcting problems which shouldn’t exist.
Six months from entering the office, and less than four months into a new system, the situation has turned around dramatically. The old average daily cash flow of about $15,000 in daily deposits is now up to more than $25,000. He expects that to increase as more system refinements are put into place.
Akeson says there are 10 methods that any practice can implement to improve the speed at which bills are paid both by insurance companies and private pay patients, as listed below:
1. Flowchart your system.
The first step in improving anything is to know what you are doing now, Akeson says. Develop a chart that includes every step taken, from who takes paperwork from the patient, who inputs it into the billing system, and who mails any copies to payers.
Just having a chart can pinpoint problems. For instance, Akeson noticed that the same person was not collecting all of the billing information and entering it into the computer. That not only led to errors but also delays. Now, one person handles all of these tasks, and bills can be posted in a timely manner.
2. Make staff accountable for errors.
One big problem that Akeson found was that receptionists were not asking patients if any insurance or billing information had changed. In order to impress the importance of it on them, the receptionists were given the responsibility of following up on all claim denials. Akeson also implemented a program that alerted physicians when payment on a particular patient was delayed because of a clerical error. "That made them more aware of the effect a mistake has on cash flow."
3. Cut the time it takes to close the books on a business day.
When Akeson walked into the client’s practice, he found it was taking four days to close out a particular day’s business. "Until that was done, we couldn’t file our charges," he says. By increasing expectations of staff members, streamlining some tasks such as having the same person get billing information and entering it into the computer he was able to cut that to one day. Charges are now filed within 24 hours, he says.
4. Give your staff incentives.
Incentives don’t have to be cash bonuses, says Akeson. There are even reasons to avoid creating a "commissioned" group of collections staff. "If you do that, then they are less likely to want to handle routine matters because it distracts from work that could give them bonuses," he explains.
There are other rewards which can be just as meaningful to staff, however. For instance, the staff wanted to have casual dress Fridays. "I wanted to say yes, but instead I made it a reward. If they collected a certain amount of money by every Thursday, then on Friday, they could dress down."
5. Call on every claim after 30 days.
While there is no alarm that goes off on day 30, Akeson has made the collections staff in the practice aware that the squeaky wheel gets the grease. After 30 days, debtors get called. "We want to be first on the list. We want them to pay us so they don’t get bothered by our staff."
6. Be aware of your accounts receivable aging.
No primary care practice should have more than two months in the accounts receivable (A/R) file, Akeson says. For a specialist, it shouldn’t stretch beyond three. "Just take your A/R balance and divide it by an average month’s charges. If the answer is more than two, you have a problem." You should also be aware of the percentage of older accounts you have, he adds. "No more than 20% of your outstanding accounts [should be] more than 90 days old."
7. Focus on the high payers.
While you should never let a large, unpaid private pay bill go unnoticed, you stand to gain most by focusing on getting insurance companies to pay on time. (See sample collection letter, inserted in this issue.) Make sure that you know where the bulk of your money comes from and concentrate on getting those payers in the habit of paying on time.
8. Make sure patient statements are clear.
For your private pay patients, and for patient responsibility bills, make sure your statements are not confusing, Akeson warns.
One way to have less patient bills to collect is to set an amount below which you expect patients to pay at the time of visit. At the client practice Akeson works with, that limit is $200.
9. Find creative ways to encourage prompt payment.
A new procedure which Akeson has started implementing may help get money in from patients whose checks have bounced. Previously, such patients were assessed a $25 charge on a returned check. Now, if the patient brings cash or a money order to pay the bill within 10 business days, the bounced check charge is reduced to $10.
10. Hire temporary staff.
Akeson says having the best staff is the best way to ensure that your A/R stays current. But training can be difficult, so he recommends hiring temporary-to-permanent staff from an agency which specializes in medical collections. Often, the agency has trained them in the appropriate computer systems, which can save up to two weeks in training time, he says.
The new system Akeson put in place at the practice took some three months to develop and still has some flaws. Recently, he says, there was a relapse in collection problems. "We realized that although the electronic claims clearinghouse has confirmed receipt of our claims, they were not reaching the payers."
How was this discovered? Through the calls made on claims that were older than 30 days. "We are dealing with the problem," says Akeson, "but it just goes to show you that A/R management is never ending."
• Stuart Akeson, MHA, senior healthcare consultant, O’Neal, McGuinness & Tinsley PLLC, Houston. Telephone: (713) 993-0847.
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