Collecting small patient balances is sometimes more work than it’s worth.
To avoid losing money while trying to collect balances that won’t cover the cost, it’s helpful to have a separate policy for your staff in place.
Define a cutoff for your small balance policy
First, you need to define the cutoff for “small balances”.
It may be helpful to calculate the cost per invoice, and the average number of invoices you send per patient. This will give you some guidance as to what will be an appropriate benchmark for your practice.
Without doing the work, a $100 cutoff is usually good enough for most practices.
Offer prompt payment discounts
It’s best to avoid the billing process altogether for small patient balances. You can achieve this by collecting full payment on the day of the appointment.
One way to encourage this behavior is to offer a discount for patients without insurance who choose to pay in full.
Use an effective script
Scripts can be a helpful training tool for your front-desk staff. Effective communication goes a long way towards collecting patient balances.
Avoid open ended questions that give the patient an easy way to avoid payment.
Don’t say, “Can you pay your balance today.”
Instead say, “Your balance today is $50. How would you like to pay that today?”
Shorten the billing cycle
If full payment at the time of appointment is not possible, agree to a date on which the payment will be paid in full – preferably within 30 days. Note this date on the patient’s bill.
For small patient balances that do go through the billing process, use a shorter billing sequence.
For example: 30 days, 10 days, 10 days, 10 days.
The last bill should read “Going to agency in 7 days.” Then telephone contact or referral to an agency should take place.
Write-off considerations
When these tactics fail, a policy for writing off very small patient balances should also be considered.
You need to evaluate when it is no longer worth the time and money of your staff collecting small patient balances.
Phone contact should be limited perhaps to bills exceeding $200, and should begin only after all statements have been sent. This happens usually after 90 days have elapsed from the date of service.
The total time lapse from the day of service to telephone contact or referral should be 70 to 95 days. Set a final write-off for bad debts – usually 120 days after receipt of service.
Conclusion
Collecting small patient balances is part of a comprehensive accounts receivable management strategy.
You don’t want to spend a lot of time and money working balances that won’t cover the cost. Instead, focus on improving the front end of your process to collect patient copays and deductibles on the day of their appointment.
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