Collecting overdue patient balances is a task that few relish and one that often gets thrown onto the infamous “to do” pile. With ever shrinking operating margins in private practices, and patient liable amounts increasing annually, it is crucial that you take steps to capture these payments. The easiest and most cost effective way to do this is to capture patient payments up front at the time of service. This isn’t always possible but every reasonable effort must be made. For times when it’s not, and the patient is given sufficient time and notice, a healthcare debt collection agency becomes the avenue of choice. If done correctly, a collection agency is selected and then used for many years to come. Any mistake made here will be compounded many times over through the years. Take the time to carefully evaluate your options and select the one that best fits the needs of your practice.
7 “must ask” questions when comparing medical collection agency offerings:
1. What states do you service?
Not all medical collection agencies can collect in all 50 states. Start by asking if they can collect in your state and surrounding states. If not, the rest is irrelevant.
2. Are you HIPAA compliant?
Deal breaker number two is HIPAA compliance. They must be in compliance with all HIPAA standards or you can’t even consider them. Generally, if they are, they will post a HIPAA statement prominently on their website.
3. How do you collect data?
This is one that is often overlooked. Focusing on cost alone is not enough. You also need to factor in your time. Do they provide a HIPAA compliant method of data transfer? Ideally it would be a Web portal or encrypted transmission over fax and mail.
4. What data do you require?
In addition to how you get the data to them, you also want to ask what data they require. While it is okay to provide PHI to a HIPAA compliant third party with BAA in place, the general rule is to always give them the least amount of information needed to do their job.
5. Do you have a good reputation?
You may be contracting with a third party to do your collections, but many patients will not distinguish between them and your office. Do some internet research to verify the reputation of the company. Do you see a lot of patient complaints or bad reviews? The patients will do similar research. Put yourself in the patient’s shoes. Would you trust someone calling you out of the blue and send them money? They need to be reputable and easily confirmed by the patient as legitimate? This should be done before contracting with them and on an ongoing basis. The best gauge of customer service is if the patient feels comfortable returning to the practice after dealing with the agency?
6. What services do you provide?
Following up on healthcare related bad debt is more than just sending out a few letters. You need to carefully compare services provided. Some of these make things easier for you and some make things easier for the patient.
- Do they take steps to find a patient that may have moved?
- Do they send out customized letters?
- How/when are phone calls made?
- Can patients make Payments via a portal, IVR, or 24 hour live support line?
7. How much do you charge?
Most collection companies will charge you a percentage of the money that they collect. Your first instinct would be to compare the fee percentages across different companies. While that is one gauge that you should be looking at it may not be the most important. A better “apples to apples” comparison may be the recovery rate for certain age brackets. A collection agency is not going to have one recovery rate percentage because the law of diminishing returns applies to bad debt. The recovery potential per dollar past due declines as the debt ages. You want an agency that targets the older balances just as aggressively as the newer ones. An agency with a lower fee percentage that only collects on the most recent balances may not be the better option. For this reason, you may run into agencies that charge different collection fees for different age brackets. Be sure to ask.
As you can see, choosing a healthcare related bad debt agency takes careful planning. With average patient liability increasing annually and the law of diminishing returns eroding that debt daily, tackle that to do pile today.