A major collection-policy goal for a practice should be to collect something from every patient who comes to the office for an appointment, unless payment is not allowed by law. For example, you generally cannot collect monies from Medicaid and Workers Compensation patients. Improving front desk collections improves the cash flow of the practice and saves it costs at the same time. If charges can be collected by the front desk, they obviously do not end up in the accounts receivable management process. This means that staff time is not wasted on these normally small account balances and the office does not have to spend money to print account statements and mail them out. This is especially true for larger medical groups.

Most practices think they do a pretty good job at front desk collections but in reality, the opposite is true. The main reason for this is simply that responsible office personnel and their business advisors usually do not pay attention to, manage, or review this part of the billing and collection process very well. To determine how well a practice is performing in this important area of practice operation, there are a few simple analysis procedures you can do right now to see how well a practice is collecting monies at the front desk.

Conduct a Front-Desk Collection Analysis

One way you can check the effectiveness of the front-desk collection policy is to analyze the percentage of potential office visit payments that are actually paid (at least partially) while patients are in the office. You can do this by using the following process:

Select a sample of patients’ office visits, generally covering 20 to 25 separate days. Count all the visits in which patients could have made payments, no matter how small. This includes patients who could have paid in full, made a partial payment, paid their co-payment, or paid their deductible. Exclude visits in which the office cannot legally accept payment from the patient (e.g., Medicaid and workers’ compensation). Count the number of visits in which patients actually made payments, regardless of the amount.  Next, divide the number of payments by the number of potential payment situations to compute the percentage of patients who made a payment at the time of their visits.

A practice should be able to collect some form of payment for at least 90 percent of the visits for which a payment can legally be accepted. If your analysis indicates a lower percentage, you should investigate immediately.

Review a Detailed Accounts Receivable Aging Report

Print a detailed aging of the accounts receivable. First, perform a visual scan of the report looking for small account balances. This gives you a feel of how many small balance accounts there are. Next, add up all account balances that are $150 or less. Divide this amount by the total of all existing accounts receivable. What is the percentage? You might be surprised how high it is. If the percentage is unacceptable, determine how many of the $150 or less account balances relate to uncollected office visit charges. This also may indicate a problem with front desk collection activity.

How to Improve Front Desk Collections

If front desk collections are poor, corrective action must be taken immediately. First, find out if the front-desk employee(s) has been properly trained on collections and whether the employee is complying with the office’s collection policy. You should keep in mind that some people feel uncomfortable asking patients for payment. This is why constant monitoring and training is so important. If this fails, someone else should be employed at the front desk. However, keep in mind that service-area politics often dictate the practice’s collection policy. In some communities, especially smaller ones, the standard is to bill a patient’s insurance first before attempting to collect directly from the patient.

The following is one collection method for the front desk: When the patient comes to the collection window the receptionist will inform the patient of estimated total due to for the visit. Say nothing; Wait for the patient to make the next move. The receptionist will then accept whatever the patient suggests. If the patient offers to pay a portion now, accept this portion and tell the patient the balance due. Wait for a response. If the patient will not pay anything, this is acceptable. Wait for the patient to tell you how and when it will be paid. This collection method is based on the principal that the patient will keep any commitments which the PATIENT makes. If the staff member suggests a payment plan and the patient mumbles "yes" this is not a commitment. But if the patient suggests a payment plan that is a commitment. Most people are honest and will keep whatever commitments they initiate. At the same time this takes the pressure of COLLECTING off the staff's shoulder. The staff simply has to learn the power of silence as a persuasive tool.

Of course there are many variations to the above suggestion. Do what you think is best for your particular medical office that you manage or consult with. However, keep in mind this essential main point: Front desk personnel must be trained to ask for payment from patients for each and every applicable office visit. Just make sure they are consistently asking for payment when a patient checks out. This sounds simple but in reality, not often carried out consistently day in, day out.

Another way to improve front desk collections is to set a policy for collecting managed care copayments. These copays usually range from $5 to $15. However, many patients with health insurance coverage provided by a managed care plan do not know what their copayment actually is. It should be printed on their health insurance card but many people do not carry their card around with them. In situations where a patient does not have their insurance card or does not know their copayment amount, front desk personnel still needs to try to collect something from the patient when check out occurs. This is why a copayment policy should be in place.

Many practices set the following copayment policy: If a patient does not have the insurance card or the patient does not know his or her copayment amount, front desk personnel are instructed to ask for and attempt to collect $10. In other words, the front desk should collect at least $10 from any patient with managed care coverage if the actual amount is not known or identified. Keep in mind this policy will sometimes create overpayments (when the actual copayment is less than $10) whereby the practice will have to issue a refund back to the patient. This should not be a problem for the practice because it has the money! In other words, the practice will not have to try to bill and collect for the small copayment amounts and incur the related overhead costs mentioned previously.

Collecting monies from Medicare patients at the time of their office visit has always been a sticky problem for many practices around the country, especially ones in rural areas. Most practices will bill Medicare, receive payment, and then turn around and bill the Medicare patients for their 20% copayment amount (unless of course the patient has supplemental insurance coverage such as a Medigap policy). If you talk to many practices, this has been the way they have always done it. However, to improve cash flow, practices should try to collect the 20% copayment just like they do for other patients.

However, trying to collect copayments from Medicare patients at the time of their office visit does create some problems for a practice. The biggest problem is how a practice’s competitors are collecting copayments from the Medicare patients. If a competing physician does not collect these payments, there is a tendency in some areas for Medicare patients to gravitate to these competitors simply because of their collection policy. In other words, Medicare patients as a group often don’t like making payments at the time of their office visit, especially when they have just received a prescription for an expensive drug that they have to pay for out of their own pocket when they leave the office and get the prescription filled.

If transitioning to a “payment of copayment at the time of service” policy, practices need to plan for it well in advance. Don’t suddenly spring this new policy on the Medicare patients because it is surely going to upset them. Instead, communicate this new policy in plenty of time before its implementation. There are two ways to do this. First, post a sign in the reception area like a client of mine recently did: Attention Medicare Patients: Effective July 1, 2003, the office will begin collecting copayments at the time of service. At the same time, a letter should be sent to each Medicare patient informing them of the new policy and why such policy has been implemented. Most Medicare patients are unaware of the many changes within the healthcare industry that effect the practice which in turn warranted the change in collection policy.

Next, the front desk personnel need to know what to collect from the Medicare patients when this policy begins. You do this by taking the office charge ticket and placing by each CPT code the 20% Medicare payment amount. Once this and the communication strategies above are implemented, the practice should be ready to try to collect Medicare copayments for office visit care. Just keep in mind Medicare patients may balk at first, but over time, they should begin to comply with this new policy.