For medical practices, a clear and transparent financial policy establishes clear protocols for handling billing and insurance issues and sets fair and reasonable charges for services. A sound policy helps patients understand their financial responsibilities as patrons of your medical practice, which helps reduce conflict and increase compliance when it comes time to pay.
On the other hand, a poorly designed financial policy not only negatively impacts the patient experience, it can also end up costing a practice significant time and expense through uncollected fees, repeat statements, and sometimes even collections actions.
Investing careful time and thought into examining your practice’s current financial policy and making improvements to its language, its scope, and even the way it’s communicated can lead to significant increases in revenue and patient satisfaction.
Assessing Your Current Financial Policy
The first step in improving your financial policy is to understand where it’s currently falling short. Are there areas of confusion or lack of transparency that cause headaches for your staff and patients? The best way to find out is to gather direct feedback on their experiences with the policy.
A simple patient survey might ask if they know where to find a copy of the policy, a few multiple-choice questions about things like the amount charged for no-shows or document requests, and to share specific instances where something has been confusing or unclear in their experience.
Staff members who are responsible for collecting payments from patients will be able to outline the questions and confusion points they hear most often. Set aside time to have honest conversations with staff members one-on-one or in small groups to learn more about how they think the current policy could be improved.
Developing a Clear and Transparent Financial Policy
Components of a strong financial policy include:
Payment Due at the Time of Service
The most important part of any financial policy is clearly stating that payment is expected at the time of service. For traditional insurance plans and capitated insurance situations, that means collecting co-payments upfront. For high deductible plans, you might charge a standard new patient or established patient fee. If the visit isn’t overly complicated in terms the number of codes you’ll be billing for, you may consider collecting the actual amount upfront.
Billing Fees
If a patient doesn’t pay the amount due at the time of service, add a billing fee of $5 or $10 that’s in addition to the clinical charges. This helps incentivize patients before they leave the office, and helps the practice recoup the cost of sending each patient statement.
Billing Schedules
Good faith attempts at regular intervals to collect payments are essential. That might include billing the patient like clockwork every 21 or every 28 days, with two or three statements featuring increasingly stronger language about the amount that is now due for services rendered. The invoices should clearly explain the services provided, and how many times the patient has already been billed, with the last statement indicating that the account will be sent to collections if there’s no response.
Collections Fees
State and local laws vary, but many will allow you to add a collection fee to the amount that gets referred to collection. Many collection agencies charge a fee of up to 40% depending on the size of the balances being referred, which significantly reduces the total received by the practice. For bills destined for the collection agency, add one-third of the total bill to the amount due, which puts the responsibility on the patient for covering the added expense due to their non-payment.
Returned Check Fees
Most banks will charge a practice for patient checks that are returned for insufficient balance. To cover this cost, your financial policy should include a returned check fee equal to the amount your bank charges. One way to avoid returned check fees, which are a headache for both the practice and the patient, is to accept as many forms of payment as possible. This variety allows patients to easily pay their balance in the office using methods that might include Apple Pay, Google Pay, all credit cards, and HSA debit cards.
Form fees
Requests for copies of documents that include large numbers of pages, such as records that need to be printed out of an EHR or copied from paper records, cost the practice in both supplies and staff time. It’s reasonable to charge a fee per page to fulfill these document requests.
No-Show Fees
A “no show” is usually defined as a patient failing to notify the practice 24 hours before an appointment if he or she is not able to make it. The fee is typically around $50, but specialists whose services might be in higher demand often charge more. Three no-shows in a year might result in the patient being discharged from the practice.
Self-Pay Fee Schedule
A self-pay fee schedule establishes payment expectations that allow out-of-network carrier patients to be seen at the practice.
Small Balance Policies
If it costs $5 to send out a bill, you might want to establish the idea that balances OR overpayments of less than $5 won’t be issued a patient statement or refund. If it’s less than $5, it’s a wash—you’re not going to collect and you’re not going to refund. Double-check to make sure your small balance policy complies with state and local laws.
Payment Plans
Payment plans establish clear parameters for regular payments distributed over anywhere from two to six months, including specific information about how and when payments will be made and in what amount. Clear payment plan policies are especially helpful for patients with high deductible plans.
Implementing a Financial Policy
With a sound financial policy drafted and ready to go, there are a few essential elements to successfully implementing the policy within your practice.
Legal Review
First and foremost is to have your attorney review the policy to make sure it complies with local, state, and federal regulations, and that the language included is clear enough to protect the practice in the event that legal action is required.
Communication
Communicate the policy clearly to patients and staff, including posting it in exam rooms, on the practice’s website, and within the patient portal online. The policy is public information that should be accessible at all times. By being upfront about the rules, regulations, and fees associated with receiving medical care in the practice, you’re more likely to avoid confrontation and surprises when it comes time to collect payment.
Patient Consent
Make sure each patient is given the opportunity to read and understand the policy before receiving services, with a signature acknowledging that they’ve read, understand, and agreed to the policy. This helps avoid disputes and friction down the road when a practice charges fees that are clearly stated in the policy agreed to by the patient.
Once the patient has signed off, a copy of the signed policy should be kept on record with both the practice and the patient. Electronic health record platforms can store these consents by scanning them into the software, where they can be accessed by the practice.
If the patient electronically signs the policy in the office and it’s not available to them online, you'll also want to give them a hard copy so they can review it when they get home. Not only does a signed copy of the policy aid in patient understanding and compliance, but it is also required to back up their debt legally. If the account goes to collections at some point, you’ll need proof that the patient agreed to the policy before receiving medical services.
Enforcement
Policies that aren’t enforced are about as useful as having no policy at all. Practices that don’t enforce their payment policies by actively billing for amounts due or sending accounts to collections when needed, risk developing a reputation for being lenient in requiring patients to pay. As word spreads, a practice might find itself full of people who aren't paying their fair share of the bill, a reality that hurts the delivery of services for everyone long term.
By developing a clear and transparent financial policy, implementing it carefully, and holding patients accountable at each step, medical practices can establish a strong financial understanding that improves both patient satisfaction and revenue.
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