By Rico Lopez, Senior Market Advisor at Kareo
During my consultant days, I gave my clients five tips for successful patient payment plans. Here they are:
- Always have a signed agreement. Have the patient sign an agreement with clear expectations that defines all the components laid out below.
- Choose a realistic payment amount and reasonable timeline. The patient can always pay more than the scheduled amount or pay earlier. Set the amount so the patient can realistically make the payment and it meets the practice’s minimum payment amount. The minimum payment amount is something the practice should set in advance for their staff to enforce. The timeline has to be acceptable to the practice as well. The payment plan cannot be $1 a month for the next 100 months to pay a $100 balance. Along with defining the minimum monthly payment amount, the practice should also set a minimum balance to qualify for payment plans. Exceptions to these rules should only be approved by the office manager or the provider. If you find that you are getting too many requests for exceptions, then maybe you should revisit your minimum balance and/or payment amounts.
- Define consequences for failure to pay on schedule. There has to be a consequence if the patient doesn’t follow through with the agreement. For example, the total amount becomes due unless patient gets back on schedule or if you offered a discount, they lose the discount. The consequences should be clearly spelled out in the payment plan agreement in writing. This agreement is signed by the practice representative and the patient.
- Offer incentives to pay off total balance early. Offering incentives and discounts to pay can help you collect outstanding balances earlier in the payment plan. Always check your payer contracts to be sure you are in compliance with any discounts you offer. Each practice has to decide how much they are comfortable discounting, but determining the costs to collect outstanding balances over time (or in some cases, the risk of never collecting the full amount) is a good basis for determining an appropriate discount amount. Consider this, a balance that you fail to collect that is later referred and recovered by a collection agency may cost you 30-40% of the collected amount. The amount could be more when you factor in your staff time and printing and mail costs over time as well. You could lose as much as 50% of the original amount by the time you get paid. So would you rather dictate your discounts early on or have them decided for you down the line?
- Offer the discount at the end of the payment plan. If you do offer a discount, discount the last payment (not on total amount or first payment). If you discounted the whole balance up front and then they failed to comply, it is harder to add back the discounted amount. It is much easier to waive their last payment or give them 50% off the last payment. This also gives them more of an incentive to stay on schedule so they can get the discount at the end.
More and more patients are paying a larger amount out of pocket for their medical care. Being prepared with clear guidelines for patient payment plans, a template for an agreement, and strategies to motivate patients to pay their bills can help you collect those patient due amounts.