Finances

Effective Billing Policies to Limit Collection Problems

By Pamela Miller, OD, JD

Establish policies to minimize uncollected revenues by requiring full or partial payment at the time of service or placement of orders. When unpaid bills mount, collection agencies and small claims court can help you recoup income—but the cost of collection may be too steep to be worthwhile.

Preventing outstanding bills begins by establishing effective policies in your office. At our office, patients are informed that they must pay the full fee for comprehensive examinations immediately after the service has been rendered–meaning before they leave the office. Before an order for eyeglasses or contact lenses can be placed, we require at least half of the cost of the product to be paid. The patient has the option of paying the other half when they pick up their eyeglasses or contact lenses. What is the billing policy at your office? And, just as important, is the policy consistently enforced? If your policy is reasonable, communicated well to patients and enforced by staff and doctor alike, your office should have no (or very few) accounts receivable.

ROB BOTTOM LINE
High Cost of Bill Collecting

The following case study illustrates why it is best to simply have the right policies in place in your office to avoid outstanding fees in the first place.

Case Study: $1,000 owed doctor

Collection Agency
Can take as much as 50 percent of collected fee, but let’s say the agency you found only takes 30 percent. That leaves the doctor with $700.

Small Claims Court (if the collection agency fails to collect)
Filing claim: $50 to $75 depending on your state’s courts.

Fee to serve patient (plaintiff) complaint and court summons: About $75 for process server; slightly less for a sheriff to serve papers.

Your time: As much as one full day of your time, which will need to be spent in small claims court instead of in your office seeing patients.

$75 filing fee

$75 process server fee

-the revenues you would generate from one full day of work (let’s say fivecomprehensive examinations at $300 each)=$1,500
=$1,650

Don’t Undermine Your Staff

What happens at your office if the staff informs a patient that she must pay in full for her professional services before leaving the office and she complains to you of the policy? If the patient has been a long-term, loyal patient, do you make an exception or back up your staffer in the enforcement of your policy? I recommend that you back up your staffer. Failure to do so will confuse your staff as to what is acceptable, resulting in the staffers themselves deciding to let things slide for their favorite patients. The rare occasion may occur when a loyal, long-term patient has fallen on hard times such as a difficult divorce, injury or sickness. In those cases, the best thing is still to stick to the established policy. But if you feel you must make an exception, be sure to let your staff know that you as the doctor are the only one in the office with the authority to make payment exceptions. On those very rare occasions when you feel you must make an exception, I recommend at least getting a commitment from the patient to pay the bill in increments over the next six months, such as $20 a month, until the debt is paid off.

Set Up Initial Staff-Led Collection

Once you have set up a policy to prevent or significantly reduce outstanding bills, decide how you want to handle the rare outstanding bills that arise. For example, you might decide to have the first line of action be an outstanding billing notice. It could say something like this: “Dear Mrs. Jones, Our records indicate that you have a current balance of $300. If payment for your balance is not received by Nov. 15, 2011, your account will be turned over to our collections agency.” Before turning the account over to a collections agency which could take as much as 50 percent of the collected fee, try giving the patient a call yourself: “Mrs. Jones, you’re a valuable patient to us, so I wanted to double-check with you personally about an outstanding bill you have. I thought there might be an out-of-the-ordinary problem that is keeping you from paying. Can we work something out?” Often, the personal touch from you, the doctor, can make the difference in getting a patient to make a commitment to paying off their debt.

Avoid Illegal Harassment of Patients

Consult with your state Chamber of Commerce or your attorney to determine what you or your staff is legally allowed to do to collect outstanding bills. For example, calling a patient at work is fraught with potential legal dangers. You run the risk of divulging personal information. Let’s say you call the patient’s workplace and a receptionist answers and asks what the call is in regard to and you or your staffer says “It’s a personal matter.” Just saying that much has alerted people in the patients office that a doctor is calling your patient about a personal matter, which in itself may be private information. If you or your staff must call a patient at their office and the patient is not there, it is better to simply ask when the patient will return and say that you will call back then and to request just that the receptionist let the person know you called.

The time of day the phone calls are made also matters. You may want to set up a rule that controls when staff can call patients. For example, you may want to only allow them to call patients between the hours of 8 am and 8 pm. In some states, patients may be able to claim harassment if they receive calls from your office early in the morning or late at night.

When you place the call, make sure that you speak to the patient with the outstanding debt directly rather than through a family member like a child or even a spouse. Just as you would when calling a patient at work, just identify yourself, ask the person who answered the phone of a better time to call, let them know you will be calling back and just ask that they let the person know that you called.

Honor a patient’s request if they ask that you or your staff not call again. Ignoring that request may be considered harassment in some states.

Enlist Collection Agency

If your staff has sent the patient a letter requesting payment, as well as called one or two times, it is time to decide whether it is worth sending the account to a collection agency. As noted, these agencies take as much as 50 percent of the patient’s payment, so you may want to make a policy that it is only worthwhile to send accounts of at least a certain amount to your collection agency. For example, it wouldn’t make much sense, would it, to send a bill of $5 to a collection agency? On the other hand, an outstanding bill for $2,000 should be pursued.

Final Recourse: Small Claims Court

If your office’s efforts have failed, you can turn to small claims court. There are many costs involved in this process, so, like the collection agency, you must decide what makes an outstanding bill large enough to warrant the expense. You must first file the complaint, which has a fee, of usually between $75 and $100. Then you must pay a sheriff or what is known as a process server to serve the complaint and summons to court to the patient with the outstanding debt. Unlike other courts, the doctor (plaintiff) and the patient (defendant) must represent themselves. That means you also must figure into the expenses as much as one full day of your time. If the judge’s decision is appealed by the defendant, the parties are permitted legal counsel at the next court level (i.e. municipal court), but appeals of small claims court cases are very rare.

The best line of defense in unpaid bills is not to have them in the first place. If you have not done so already, establish a policy for receiving payment directly following patient visits and before orders for any materials are placed.

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Pamela Miller, OD, FAAO, JD, DPNAP,has a solo optometric practice in Highland, Calif. She is an attorney at law, holds a therapeutic license, is California State Board-certified and Glaucoma-Certified to prescribe eye medications, and offers comprehensive vision care, contact lenses, visual therapy and low vision services. To contact her: drpam@omnivision.comE

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