The Keys to Effective Payment Plans for Patients

Doctor with MoneyWe know that the responsibility of paying for medical bills is increasingly shifting to the consumer. The growth of high-deductible plans - on and off the healthcare exchanges - has dramatically shifted the percentage of overall financial responsibility to patients over the last decade. Today, more than 25% of the average medical bill is to be paid by the patient. With these every larger medical bills, patients will increasingly require payment plans to meet their obligations. The days of collecting a $20 co-pay in cash at time of service may be coming to an end - replaced by payment plans for large deductible responsibilities. The practices that are realistic about the growing need for patient payment plans and building systems to effectively manage this process will have a distinct advantage in collecting more of the patient receivable. Here are some best practices for establishing and managing a payment plan process.

  • The time to start is before services are rendered!  Unless it is an emergent or urgent situation, have a discussion about the cost of services and the likely patient portion BEFORE rendering services. It is always best to have a "no surprises" policy. If you have a frank conversation with the patient about their ability to pay and their plan for payment, everyone will be on the same page about the need to meet this financial obligation.

  • Make sure to have a signed agreement that is executed by both the patient and the practice  This agreement should be in simple language and have clear expectations. It should include the following:

    • The payment amount and timeline. Both should be realistic and reasonable. No use setting the patient up to fail with an amount they can't pay and/or a timeline they can't meet. The practice should have a minimum payment amount that takes into consideration the transaction costs associated with each individual transaction. Along with a minimum payment amount, the practice should have a minimum balance that qualifies for a payment plan. There may occasionally need to be exceptions - so have an approval process defined around that situation. Set the payment plan amounts so the patient can realistically make the payment and it meets the practice’s minimum payment amount. The patient can always pay more than the scheduled amount or pay earlier should their circumstances change.

    • The consequences for failure to follow through on the agreement and pay on schedule. For example, the total amount becomes due unless patient gets back on schedule or if you offered a discount, they lose the discount. Or there will be an immediate transfer to a collection agency.

    • Any incentives to pay off total balance early. Offering incentives and discounts to pay can help you collect outstanding balances earlier in the payment plan. (Check your payer contracts to be sure you are in compliance with any discounts you offer). Discounts for prepayment should take into consideration the costs to collect outstanding balances (50% or more of the value of the balance with collection agency fees, mailings and staff time). Make sure to offer the discount at the end of the payment plan - not on the total amount or first payment). If you discounted the whole balance up front and then the patient fails 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 the patient more of an incentive to stay on schedule so they can get the discount at the end.

    • Ongoing payment process. The practice should require an automatic debit on the patient's bank or credit card. Debit the agreed upon amount automatically on the same day every month. This reduces the time involved in managing the process, the cost (and resources) of statements and will ensure greater adherence to the plan.

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 growing patient balances.

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