We have discussed the important questions to ask when analyzing and selecting a healthcare collections agency and went over some of the keys to finding the right partner for your organization. But once you’ve made your selection, how do you know which accounts should be sent out for collection? And maybe more importantly, how do you know when to suspend your internal collection efforts and send in the experts?
To help, we put together the three questions you should answer before outsourcing an account out for 3rd party collection:
Question #1: Who is responsible for the unpaid bill?
Before you send one of your patient’s accounts to a collection agency, make sure you do everything on your end to make their job as easy as possible. Gather all the relevant patient demographic and contact information and provide the collection agency with this crucial data so that minimal time will be spent locating and making contact with the patient. Here are some of the key pieces of information to verify and provide:
- Contact information (name, address, phone number, email etc.)
- Account status (current balance, service provided, payment history, amount paid by insurance etc.)
- Insurance status (policy type, available coverage, deductible/co-pay level etc.)
Also, don’t forget so send over a summary of all your collection efforts to date like the number of billing statements you’ve sent to the patient or the number of phone calls that have been made in pursuit of the debt. Doing so will save your healthcare collections partner critical amounts of time and effort and will also strengthen your own internal collection procedures in the process.
Question #2: How much is the account for?
“Small balance” accounts (usually considered around $75 dollars or less) are generally not accepted by medical collection agencies because the costs of collection will often be more than the potential yield (amount paid) from a successful recovery. Because of this, low balance accounts such as these are best worked by your internal administrative staff. These accounts typically are simply forgotten co-pay or deductible payments and can be swiftly recovered by you or your front desk staff with a quick phone call.
Accounts exceeding $75 dollars will commonly require more effort and are more suitable for transfer to an outside collection agency. These larger balance accounts may require a strategic collections approach and the resources/expertise only a professional collection agency can provide.
Question #3: How old is the account?
It is fairly standard at most medical practices to pursue unpaid patient debt internally for approximately three to four months (typically not more than 120 days) before sending an account out for collection. Many doctors and office managers suggest however that accounts be turned over faster (before an account is 60 days past due) due to the fact that the longer a medical bill goes unpaid, the less likely it is to eventually be collected.
The graph below shows this relationship between time and successful recovery and can be used as a reference when setting your accounts receivable and patient collection goals:
Healthcare collection professionals commonly request that accounts be placed within 90 days of service so as to maximize the likelihood of recovery. When YOUR medical practice chooses to outsource delinquent patient accounts will ultimately depend however on the bad debt levels and recovery rates your business office is trying to achieve.
Before you send one of your delinquent patient accounts out for collection, just remember to answer the three questions above. By answering these key questions, you will know whether an account should continue to be pursued by your internal staff or if the account is more suitable for a professional healthcare collection agency. By keeping these best practices and industry norms in mind, your medical practice will be well on its way to maximizing recovery rates and minimizing delinquent patient debt.
YOUR TURN: How long does your healthcare practice usually wait before sending accounts out for collection? In your experience, does sending an account out sooner rather than later increase your chances of recovery?