Topics : Primary Practice Finances
Co-pay Collection Best Practices
By Rhondda Francis and Sarah Breshears
How many patients left your office today without paying their co-pays? Three? Five? Eight? Do you even know? Improved co-pay collection starts with practice leadership setting the expectation and is remedied by taking just a few concrete steps to set policies and procedures, train and educate staff, and educate and inform patients.
Just a few years ago, co-pays were $5. Today, $30 co-pays are the norm. Health care coverage is trending toward larger co-pays and patients are shouldering a larger percentage of health care costs, including purchasing high deductible health care plans where the patient is responsible for 100% of the cost of non-preventive care up to the deductible limit.
TransforMED's Jim Arend says, "Consider this assumption, if the average co-pay is $20 and each provider has 25 patients per day that is $500 of co-payments per day. Further, if there are 200+ workdays in the year, co-pays account for over $100,000 for each provider. This is a significant amount of revenue." See sidebar at right >>
Arend says he believes co-pay collection habits
among the TransforMED National Demonstration Project practices at the
outset of the pilot improvement project were "sporadic", adding
diplomatically "Some did well – others not." But TransforMED
has been effective in helping practices get their co-pays collected consistently.
"Often times," says Arend, "it was a simple matter of no
one monitoring the collections."
Establish Co-pay Collection Policies and Procedures
The best time to collect co-pays is when patients are in your office. Once they leave your office, collections become more expensive and more difficult. In fact, with forms, envelopes, stamps, and the time spent – not to mention re-billing – the cost of collecting a co-pay after the fact can be nearly as much as the amount of the co-pay itself!
Develop a written policy – to be shared with your staff – that collection of co-pays is required before the patient's appointment. Some practices prefer to handle co-pay collection as part of the checkout process, but TransforMED recommends co-pays be collected in advance of the encounter. This written policy helps ensure that all staff members and patients are aware of expectations and know and understand the policy. Make the policy available to patients on the practice website and make sure it's communicated in person to new patients. Get signatures from new patients acknowledging that they accept financial responsibility for services.
Arend cautions that getting a handle on your co-pays is more than words on paper. In addition to policies, you need accounting controls. "Co-pays need to be controlled carefully. This is especially true because they may be paid in cash." He recommends three basic policies and procedures to control co-pay cash (see sidebar) and also advises practice leaders to seek guidance from their accountant.
Front office staff at the reception desk should be accountable for collecting co-pays and performance measures should be included in their job descriptions. Arend suggests that collections be tied to an incentive pay plan that dovetails with continuous monitoring of performance. "Someone in the practice needs to monitor the collection performance of the staff. Leadership needs to impress upon the staff that collections are important. They can do this by making it a habit of monitoring performance. Posting the collection metrics for each week also provides a visual of performance." Be sure your front office staff is robust enough to handle the task. If your staff is stretched to thin, it can negatively affect co-pay collection performance.
A Team Effort
Reception staff should be accountable, but they are just one facet of the office's co-pay collection team. When patients schedule appointments their insurance and co-pays should be confirmed. They should be reminded to bring their insurance card and their co-pay to the visit. If your practice uses practice management software or an EHR, billing staff can prepare daily reports for front office staff to refer to as patients are checked in.
"How will you be paying today?"
Another important aspect of co-pays policies and procedures is providing for convenient transactions. Installing a credit/debit card machine makes collecting co-pays even easier and is a must for practices that are serious about co-pay collection. Some practices have even gone so far as to work with local banks to install ATMs in the lobby. This gives patients options and eliminates any embarrassment of arriving unprepared. (It also gives you the opportunity to negotiate automatic billing for future services.) While credit/debit allows you to collect funds immediately it does come with a cost. Banks charge 2-3% of the transaction cost plus additional fees around $.25 per transaction. Wholesalers like Costco typically charge slightly less.
Train and Reward Your Staff
Now that you've established a solid foundation,
your staff needs to understand why this policy is important. Share the
numbers with them and discuss how to talk to patients. Role-playing and
scripted "lines" are both excellent methods to train your staff
to be more effective. Jim Arend flashes a smile as he says, "I learned
collections from an expert, my wife, Linda. She works in a dental
office. She will always say to the patient, ’"How will
you be paying for your services today, cash, check or credit?"
She does not give them an option not to pay. You need to train the
patient to know that payment is expected."
Collecting co-pays should be part of the routine for your front office staff, as normal as documenting insurance coverage and scheduling appointments. Train your staff to be professional, courteous and kind but also to be consistent and firm. Everyone on the team needs to recognize that co-pays are a significant amount of the total revenue of the practice-- and that impacts everyone's paycheck.
And speaking of paychecks...Your staff should be thanked and rewarded for their successful efforts in collecting co-pays. Design a fun and rewarding incentive program where staff can earn prizes for increasing their collection rate. Make sure the goals are measurable and then track progress. The resulting increase in revenue will more than offset any costs.
Communicate With Patients
Telling your patients about your new policy is the next step to successful implementation. Remember that your communication to patients should point out the benefits of the new policy, some of which also benefits them by:
- Eliminating the hassle of billing and mailing costs (which also reduces office costs).
- Recognizing business norms. Collection of co-pays is a standard business practice (most services are paid for at time-of-service).
- Fulfilling obligations. Insurance contracts obligate patients to pay co-pays and doctors to collect them.
Several means of communication are available:
- Place prominent but tasteful signage in the office that says, "Your insurance company requires that we collect your co-payment."
- Draft a formal letter outlining your new policy and mail it to each patient.
- Develop a brochure concerning the new policy (and perhaps includes other policies as well) and display it prominently in the waiting room and at the check-out window.
- Post your policy prominently on your website.
- Include an announcement about your new policy on your recorded telephone message.
- Upon check in, have patients read and sign a form outlining your new policy.
- When a patient calls to make an appointment have the scheduling desk remind them of your policy and indicate what they'll owe.
A key to running a successful primary care practice is to handle your practice like the business it is. You need to know your income sources, know your overhead and understand financial benchmarks. "Profit" is not a four-letter word. Profit enables you to keep your doors open and provide for you and your staff's families. Profit allows you to focus on your passion - giving medical care to those in need. Co-pays are a growing part of your financial picture and are part of your earned income. Don't let them just walk away.