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I routinely receive calls from CDA members or their staffs requesting a referral to a good debt collection agency. Always, my first question for them is, “Why do you need to send a patient to collections?”
If a “good” collection agency exists, I have not found it. All of them take too high of a percentage of the debt, use aggressive tactics and have very low success rates.
Every practice will come across a debt that needs to be sent to an agency, but such debt should be the exception to the rule. The goal should be to prevent accounts past due, not to collect on them.
A financial policy is pertinent to a practice’s success, and practices should have both internal and external financial policies. An external example is: We accept cash, check, credit card and CareCredit with all payments due at the date of service. Your internal policy will be much more detailed. It is communicated with patients, but not shared with them. An internal policy is generally discussed with patients during the financial arrangement and might include when payment is due, what the patient’s payment options are and details of third-party financing, if offered. Ideally, the sequence will be structured in a way that sets the practice up for optimal financial success, as well as for your patients to have access to the care they need. Offer your preferred method of payment first and move down from there to your other options, which may include patient financing.
Only you can decide your ideal financial policy for your patient base. Essentially, you should make it easy for your patients to pay you! The only option I would completely avoid would be a statement system, billing after treatment is complete or after insurance payment is received. Get in the habit of estimating and collecting co-pays on the date of service.
A policy is only effective if adhered to and communicated properly.
For patients with insurance benefits, your financial arrangement should contain a disclaimer similar to “Please note the dental benefit plan portion is an estimate. The patient is responsible for the balance upon receipt of payment and explanation of benefits from the dental benefit plan.” However, don’t rely on this disclaimer exclusively. Make sure it is signed, but also ensure that the patient understands the arrangement. This may mean including a short description of how the claims process works.
You want your patients to understand that while you work “with” their insurance company, you do not work “for” their insurance company. What is ultimately paid and left unpaid by the company is out of your hands and, if unpaid, that amount can, unfortunately, be billed to them. This extra effort will go a long way toward having a productive conversation with your patient who has an unpaid claim.
For several reasons, you’ll want the patient to sign the financial arrangement for accepted treatment. It serves as a record of treatment acceptance and payment, and it notifies patients of your fee, the accepted insurance fee, estimated insurance payment and patient co-payment. It also ideally has language to protect you against an unpaid claim, as I discussed previously. Also, be aware that the state of California has the Fair Debt Collection Practices Act, which allows collections efforts on signed agreements for four years. But unsigned agreements can only be pursued for two years, giving you another reason to obtain a signature from your patient.
Even with the best financial policy and financial arrangement, an occasional patient account will still end up past due. This scenario most often results when an insurance payment is below the estimate, as a good financial policy doesn’t allow for any other circumstance that would result in an unpaid balance.
Work with your patients in these situations. Send a letter to the patient advising them of their unpaid balance and payment options. Offer payment plans or, if your relationship with the plan allows it, discount the patient’s overall amount owed. Most debt collection agencies take a substantial amount of the debt collected, so I still prefer payment plans and negotiation to sending a debt to collections.
Nevertheless, it happens: Either you cannot reach the patient or they have flat-out told you they are not going to pay the amount. In these cases, I still recommend one more letter attempt, sent certified mail, advising them of their options to make payments or to pay a reduced overall fee, if allowable. Add a deadline to this letter, notifying the patient of the date by which they need to contact the practice to keep the account from being sent to a debt collection agency.
An account sent to collections is usually the end of that patient relationship. Assess the patient’s influence in the practice. For example, does the patient have family members who are also current patients? Is the patient a local teacher or politician or do they have ties to either or both? Also, sending the patient’s account to collections may prompt a negative review on popular social media sites like Yelp or Google. I’m not advising you to write off debts out of fear of retaliation, but I do want you to consider that retaliation is a possibility and to weigh the pros and cons of exercising further collection attempts.
If you decide you want to dismiss the patient from your practice, contact your liability insurance provider beforehand to discuss and obtain the appropriate dismissal forms and process.
As I stated at the beginning, I have yet to work with a debt collection agency that gets results. However, if you advise a patient that an agency will collect their unpaid balance, you need to follow through. When this happens, use a California-based company that is aware of the state’s collection laws, and ensure that you don’t breach HIPAA by sending protected health information. The agency should obtain from you only the patient’s contact information and the amount of their debt. Treatment details are not necessary for an agency’s collection efforts.
Good practice collections start before an account balance is due, not after. Give your patients several payment options, communicate them effectively and aim for a shared understanding of the insurance industry. This will result in a greater patient experience and practice success.
Visit cda.org/practicesupport for resources referenced in this article. Contact Lee Bentz with questions about collection agencies or for help drafting a financial policy.
This column was authored by Lee Bentz, practice analyst at CDA Practice Support, and originally appeared in the April issue of the CDA Update.