Patient statements: 5 tips and 4 challenges (2024)

5 tips for patient statements

1. Don’t delay sending statements.

There’s no reason to postpone putting a paper statement in the mail. The number of days you wait to send statements should be zero.

This is especially true because the likelihood of collecting decreases as time goes by. Delinquent accounts generally depreciate one half of a percent point per day past 90 days.

The bottom line: As soon as a patient acquires a balance, your practice should plan to send a statement in the next batch.

2. Only send statements for cost-effective amounts.

Consider setting a threshold for issuing paper statements. Going forward, only generate statements for balances greater than the determined amount. Also consider the actual cost to generate, print, and mail the statement. This will give you a better idea of when a balance merits sending a statement.

Family billing may be another way to trim expenses. Your practice may be able to reduce statement costs by grouping family members on one statement. Whether or not this option is viable for your practice will depend on your patient population. If you go this route, plan to generate statements monthly to ensure all family members are grouped on the same statement.

3. Know what to include.

In addition to the customary information that would appear on any correspondence — such as your practice’s name, address, and phone number — statements should include information to make it easier for patients to pay. This may include:

• Payment due date
• “Checks Payable To” and “Address to Mail Payments” indicated clearly
• The address of a website where a patient can pay online
• A section for patients to write credit card information to be processed in the office
• A phone number for patients to call if they have billing questions

Finally, if you assess finance charges, you must include a disclosure statement. Disclosure of finance charges is a requirement of the Truth in Lending Act.

4. Remove confusing information from the statement.

It can be hard for patients to make sense of the information on a statement. According to Instamed, 70% of patients are confused by the information in their medical bills.

To make it easier for patients to read statements, do not include “balance aging.” Some patients may misinterpret this to mean more time to pay if a balance is not in the last aging bucket.

In addition, the statement should not show credit, because this is not necessarily the amount due back to the patient. It could be, for example, an insurance credit. Or, it could be a credit that needs to be applied to a specific visit once insurance is paid. This can cause confusion for the patient and possibly a phone call demanding a refund.

Prior to processing statements, review credit balances and apply credits if applicable.

5. Opt for electronic statements.

Studies have shown large numbers of patients prefer to receive statements electronically. The Instamed report, for example, found that 77% would like to enroll in e-statements.

Practices also stand to benefit from e-statements. Sending e-statements eliminates costs associated with paper statements and often leads to faster payment, which gives staff time to work on other tasks.

There are many electronic options available. These include text billing, keeping payment cards on file, and e-payments — in addition to e-statements. As you explore these options, keep in mind the importance of a secure payment portal. Given the value of healthcare data, cybersecurity risks are high. Click here for cybersecurity best practices in the era of COVID-19.

4 collection challenges

Now that you have tips to improve your process for sending statements, let’s take a look at the common pitfalls involved in collections. Being aware of these challenges and the best ways to overcome them can help your practice achieve a smoother collections process.

1. Time-consuming and expensive collections

Most practices trying to collect have dealt with costly slowdowns. A patient with a large balance may be slow to pay or may not pay at all. Meanwhile, sending statements for small balances walks the line of being cost effective. Then there’s bad debt, which may yield pennies on the dollar if turned over to a collection agency.

2. Failure to confront and deal with issues

Practices should be prepared to collect at time of service. According to a Health IT Outcomes report citing Medical Group Management Association (MGMA) data, 30% of patients walk out the door without paying their bill.

There are many reasons you may hesitate to ask patients for older outstanding balances. You may have a long-term relationship with the patient or your practice may serve a small town or community. The collection process itself may even need a tune-up.

Pay attention to these warning signs that a patient may not pay:

• • No response to statements or phone calls
• Statement returned as undeliverable
• Pay plan agreement broken — received a partial payment or no payment at all
• Request for pay plan extensions or a lower payment amount
• Excuses for not being able to pay
• Patient doesn’t show for appointments

3. Rising healthcare costs and unemployment

The cost of healthcare is rising. The Centers for Medicare & Medicaid Services estimated national health care spending reached $3.81 trillion in 2019 and will exceed $4 trillion in 2020. Meanwhile, unemployment drives up balance write-offs.

For employers and employees, this means insurance premiums and out-of-pocket expenses are going up. Your practice can offer payment plan options or early pay discounts as an option for patients, following these best practices:

• Create clear, well-defined payment plans and discount policies.
• Offer them equally to all patients.
• Use these options to work with the patient directly — a more desirable route than claims court or collection agencies.

4. Understanding guidelines for aging patient balances

Practices dealing with aging patient balances must be aware of the statute of limitations, or the amount of time to initiate legal proceedings after an event. In the case of medical billing, this refers to the time frame for collecting medical debt. The statute of limitations for medical billing varies by state. Educate front office staff on your state’s specific guidelines. Remember, medical bills are considered a written agreement.

The Fair Debt Collection Practices Act (FDCPA) is the primary federal law regulating third-party collection agencies. Enacted in 1977, it is designed to help protect consumers from unfair and abusive collection practices.

In house vs. third-party collections

Practices must decide whether to use an in-house collection agency or enlist a third party. If you keep billing in house, your staff can continue to work on accounts and determine which are the most cost-effective to pursue. If the account balance necessitates working with a third party, follow these tips to find the collection agency right for you:

• Confirm the agency has the proper accreditation and licensing.
• Is the team experienced? How long has the agency been in business?
• Is the agency reliable? Ask for references.
• Get a sense of whether it’s easy to work with the agency.
• Look for professional affiliations such as the Better Business Bureau (BBB), chamber of commerce, Association of Credit and Collection (ACA International), and MGMA.
• Make sure the agency is compliant with all federal, state, and local regulations. These include the Health Insurance Portability and Accountability Act (HIPAA), Fair Debt Collection Practices Act (FDCPA), the Telephone Consumer Protection Act (TCPA), and Health Information Technology for Economic and Clinical Health (HI-TECH).

As you begin your partnership with a collection agency, be realistic. Not every account will be collected. These are considerations you should keep in mind:

• Skip tracing. Does the agency have access to multiple databases to help locate a debtor who left no forwarding address?
• Average recovery rate. Request documentation regarding the agency’s average recovery rate.
• Fee/cost for a traditional agency. Does the agency charge a flat fee or a percentage? The flat fee may be more cost-effective if the balance falls within 90-120 days. Contingency or percentage cost, meanwhile, is the most common way for an agency to charge. In this case, the charge usually falls between 25-45% of the total amount collected. These services tend to be more intensive and often include phone calls and involvement of the patient’s credit record.

Bringing it full circle with revenue cycle management

The complexities of billing and collection — coupled with the overall challenges of running a practice in today’s environment — lead many practices to enlist a billing service.

By partnering with Greenway Revenue Services, you gain access to a team of experts committed to your success. Your team can tackle delinquent claims, handle billing issues, and help your practice improve its financial health.

CLICK HERE to find out why practices like yours partner with Greenway Revenue Services to manage billing. Or watch our 3-minute overview video HERE.