How to Handle Problems With Self-Pay Patients


Fam Pract Manag. 1998 Sep;5(8):13-18.

Are you having trouble collecting debts from patients who pay for their own care? Considering the pressures of today's health care market, you need to collect all fees owed you, even those owed by what may be a comparatively small group of your patients.

Self-pay patients fall into two general categories: those who aren't enrolled in health plans and those who have payment obligations outside their health plans. The latter group includes patients whose plans require them to pay part of their bills (e.g., co-pays and deductibles) and those who simply try to game the system.

Put it in writing

The first step in collecting what your self-pay patients owe you is to have a formal, written payment policy. The purpose is to ensure that everyone understands it's ultimately the responsibility of the patient (or guardian or caregiver for dependent people) to pay for your services.

In addition to this point, any formal payment policy should contain these elements:

  • Patients not enrolled in health plans are responsible for the entire amount of their bills.

  • Patients in health plans are responsible for any amounts the plans don't pay, up to the entire amount.

  • Payment is due the day you provide the service unless other arrangements are made in advance, put in writing and signed by you and the patient.

  • Payment must be made in a form specified as acceptable to the practice. The policy should state whether you accept payment by credit cards, debit cards and checks. If you do accept credit or debit cards, list the ones you accept, and make it clear that you accept only these. If you accept checks, specify what identification you require.

Payment problems usually arise because patients don't understand what's expected of them. When a new patient makes an appointment, your staff should outline your payment policy, including the rate for an initial visit. You might want to mail, fax or E-mail your written payment policy to the patient before the visit.

It's also important to spread the word in the office. Post copies of your policy. Put copies for patients at the reception desk. At a new patient's first visit, have a staff member explain your practice's ground rules, including your payment policy. When you are sure the patient understands and agrees, have him or her sign the policy.

Getting uninsured patients to pay

If uninsured patients can't pay your fee in full, your staff should ask them to sign promissory notes before you deliver services. Establish a plan with regular payments; set both due dates and the amount due. Ensure that the patient understands the schedule, agrees to it up front, expects to be able to make the payments and signs the promissory note.

The patient should be asked to make a down payment before you start an involved or expensive treatment protocol. If the patient is seeking nonurgent treatment, delaying it gives the patient a chance to assemble a substantial down payment. Remind patients that the larger the down payment, the smaller the installments will be.

To spur uninsured patients to make their payments, send routine payment reminders. If a patient fails to make a scheduled payment, your staff should call and try to find out why — in a cordial way. Don't chastise or threaten debtors; just seek information. If the patient is unavailable, reluctant to talk or unwilling to make a payment, your staff should send a letter. If the patient has unexpected financial troubles, such as a change in employment or marital status, you may need to work out a new payment schedule.

Advocacy with the uninsured

Many practices are finding that it makes sense to hire a patient advocate. These staff members direct patients in managed care plans to the right referral specialists, pharmacies and ancillary centers, thereby boosting patient satisfaction and helping to control costs.

But a patient advocate also has a role to play with uninsured patients: advising them on payment issues. With an advocate to counsel your uninsured patients, you can capture substantial revenue that you might otherwise have lost and help patients who have fallen on hard times. If you can't afford to hire a patient advocate, at least adopt a part-time advocacy program and have one of your staff — perhaps your billing coordinator — oversee the program and act as the patient liaison.

Whether full- or part-time, your advocate must know about available charity and medical assistance programs, such as Shriners' Hospitals, your local hospital's programs and Medicaid. He or she should know the eligibility guidelines and benefit schedules and be prepared to direct patients to the resources they need.

Insured self-pay patients

Collection problems with patients who do have insurance tend to arise because the patient's payment responsibilities aren't addressed up front. Rather than simply asking the patient about his or her deductible and co-pay obligations, many practices bill insurers for the entire fee, receive an explanation of benefits a month (or two) later and then ask the patient to pay the balance. By this point, the patient has already received treatment and may well have recovered fully. He or she has little incentive to work with you to establish a payment schedule. Your options may be limited to calling the collection agency or writing off what the patient owes.

Instead, before you provide an expensive service, determine exactly what will be covered and what you expect the insurer to pay. Then share this information with the patient, and make sure the patient understands his or her obligations. This way, you can establish payment arrangements and avoid surprises down the road.

The key is knowing the pertinent information — allowable charges, required deductibles and co-pays, and amounts paid toward the deductible — in advance. Your patient advocate, business manager or billing clerk should have this information or at least be able to get it.

Cheats and deadbeats

Yes, there are deadbeats and scam artists out there, and some may be your patients. If you have doubts about a patient's intent to pay what he or she owes, consider collecting his or her share of the charge before you do any work. But if the strong likelihood of nonpayment leads you to decide not to provide care, exercise caution: There may be legal ramifications (see “Dismissing patients who don't pay”).

As you may have learned the hard way, some patients try to get their health plans (or you) to pay for services they know their plans don't cover — or to get care under a health plan they no longer belong to. For each plan in which you participate, make sure an eligibility verification system is in place. Then use it. Many health plans are now using plastic swipe cards to enable practices to verify eligibility in advance. Others offer Internet access to their databases. If your plans don't provide such a system, press for it.

Dismissing patients who don't pay

Joan M. Roediger, JD, LLM

You can terminate your professional relationship with a patient who doesn't pay you — with certain exceptions. Most obvious is your obligation to provide care in a crisis. You also must continue to provide services in ongoing care situations.

But this doesn't mean you have a life-long commitment to care for a patient who doesn't pay you. Just as it's reasonable to dismiss a patient who is noncompliant or disruptive to your practice, you may also dismiss a self-pay patient you have treated for a long time (perhaps a year) if you've received no payments despite your office staff's collection efforts. Under these circumstances, you must send the patient a letter via certified mail, requesting a return receipt, stating that you can no longer provide services to him or her as of a certain date. It's very important that you give the patient a reasonable amount of time to find a new physician. Four weeks should be sufficient in most cases. You also should offer to give the new physician a copy of the patient's records.

Before you take this action, ask an experienced health care attorney to advise you about the particular procedures you must follow in your state. Also, if the patient is a member of any health plan, check the contract before you dismiss the patient. You may have unexpected obligations under that contract, and you also need to follow the health plan's mechanisms and procedures for dismissal.

Joan Roediger is a consultant with The Health Care Group and an attorney with Health Care Law Associates, PC, based in Plymouth Meeting, Pa., and Greenville, S.C.

Occasionally, a valid enrollee may appear to be ineligible. A variety of causes may be at work: computer glitches, the patient's movement from one branch of his or her company to another, the patient's switching health plans or the implementation of changes in coverage within the patient's plan. But when eligibility verification systems don't work, it's usually because the patient's employer is slow to report membership changes to the plan. Swipe-card and online systems are starting to deal with eligibility problems, but a clever cheat can still game the system (see “How some patients get more than their money's worth”).

If you treat an ineligible patient without verifying eligibility, don't expect the plan to come to your aid. Insurers rarely will accept any responsibility if you provide services to an ineligible party. On the bright side, you will be able to charge the patient your usual and customary fees when you try to collect.

How some patients get more than their money's worth

It's April 16. One of your patients is planning to quit his job on May 1, but he knows his employer reports eligibility changes only once a month, on the 15th. Today, the employee calls your office and schedules complete physical exams for all six members of his family, who are also covered under his health plan. The patient says the family is taking a vacation overseas and needs to have the exams done before May 15.

Trying to keep the “customer” satisfied, you change your schedule to accommodate the family and perform the exams on May 2. A week later, a staff member calls the patient with lab results. Although the patient has already quit his job, his former employer hasn't yet reported the change in his eligibility — and won't for another week.

With the $2 co-pay you received for each exam, you have provided several hundred dollars' worth of services for $12.

When you contract with an insurer, try to enlist its help with patients who fall through the cracks. Occasionally, a practice properly verifies a patient's eligibility up front, but the insurer subsequently denies the claim. When you negotiate with insurers, strive to include in your contracts a provision saying that the insurer will pay claims when eligibility has been verified.

You also can take a number of steps on your own with patients who don't pay. Be aggressive. Make phone calls. Send letters. Have your attorney send letters. Send the account to a reputable collection agency. If necessary, take the matter to small-claims court.

At a time when earning a living as a family physician is becoming more and more challenging, you can't afford to lose money because your self-pay patients — deliberately or not — fail to pay what you're entitled to collect. Capturing this revenue requires some extra work by you and your staff, but you'll thank yourself for it when you look at your bottom line.

Robert Connelly is a consultant with The Health Care Group, a national medical practice consultation firm based in Plymouth Meeting, Pa., and Greenville, S.C.


Copyright © 1998 by the American Academy of Family Physicians.
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