With so many regulations surrounding the collection of debt within the medical industry, it can be difficult to understand what your rights and requirements are as a creditor. One of the most frequently asked questions that we are asked is: When can I send a patient to collections?
The Short Answer
You can send a patient to collections at any time, so long as it is in accordance with your organization’s financial policy. Payment for services rendered is due at the time of service or shortly after patient responsibility determination. If your healthcare organization has a pre-collect program in place that provides a time frame for patients to pay before the balance becoming delinquent, which should be outlined in your financial policy. Any balance left unpaid after that specified period of time can be considered delinquent.
Laws Governing First-Party Creditor Collections
Generally first-party creditors are not required to adhere to the Fair Debt Collections Practices Act (FDCPA) or some state laws that apply to third-party collection agencies. However, many states do treat creditors engaged in first party collections as debt collectors. These states include: California, Florida, Georgia, Iowa, Maryland, New Hampshire, Oregon, South Carolina, Texas, Vermont, West Virginia, and Wisconsin, as well as New York City and the District of Columbia. Whether you work in one of these states or not, it is very important to review your state’s collection laws to understand what you may or may not be required to do to pursue a past due debt.1
Patient Follow Up Best Practices
While there is no written law requiring private healthcare organizations to provide a certain time period or number of notices to a patient prior to sending them to collections, the IRS 501(r) regulations on non-profit hospital organizations do include communication requirements surrounding financial assistance policies as well as before an account goes to collections, or before any extraordinary collection actions can be taken. However even these regulations are non-specific on the number of notices that must be sent. With this in mind, there are some best practices to follow in order to maintain your relationship with the patient.
Follow your financial policy You must pursue all past-due patient accounts in accordance with your organization’s financial policy. Debt collection procedures should be outlined specifically within the policy, and should be acknowledged and signed by every patient before services are rendered.
Wait for insurance determination It is not recommended to send a patient to collections immediately if they do not pay their balance in full within a few days of their visit. Insurance determination can often take several days and sending a balance to collections before that determination is made could result in errors in the event that the patient’s coverage is different from what was initially estimated.
Follow up early and often Follow up early, often, and by phone. Sending a series of statements in the mail is not nearly as effective as calling the patient to discuss their balance with them. This gives them the opportunity to ask questions and air concerns that could otherwise lead to a decision not to pay the balance. According to the American Hospital Association, nearly 75% of best performers start collection follow up in less than 30 days from discharge, and 50% of best performers start follow up by phone in less than 20 days from service.
Waiting 60, 90, or even 120 days after the date of service before communicating with the patient about their balance is also not suggested. People pay their bills emotionally, and will prioritize the bills that are most important to them at the time. Their medical bills become less important as they start to feel better, so staying engaged with them post-service is key to recovering your balances in full.
The older a delinquent account becomes, the less likely it becomes that your practice will collect on it. Review the payment histories of your patients and determine the right amount of time for your practice to wait before sending a patient to collections.
Be a resource The best practice you can follow to recover more patient balances and maintain the relationships you have developed is to act as a resource and help them manage their accounts. Stay engaged so that you can answer any questions they have, and identify and overcome any barriers to payment, as they arise. You may also need to help them understand their coverage. It is not uncommon for employers, or even individuals in the marketplace, to change their insurance plans on a yearly basis. This can lead to a lot of confusion. Helping them to understand their responsibility is the first step to payment.
No matter what the circumstance, the most important best practice for collecting from patients is to always treat them with dignity and respect. Our mission is to do the right thing, 100% of the time and it is one of the keys to our success. When you show others that you care and are willing to work with them, they will be willing to do the same.
Looking for more help collecting from patients? Get tips, tactics, and insights for improving patient collections throughout the entire patient experience in our Collecting from Patients eBook!
Written by Ali Bechtel, Marketing Manager
This information is not intended to be legal advice and may not be used as legal advice. Legal advice must be tailored to the specific circumstances of each case. Every effort has been made to assure this information is up-to-date as of the date of publication. It is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own legal counsel.
