What is the Role of a Collection Agency?
Updated: Oct 25, 2019
In our last article, we made recommendations on how to monitor your billing company or internal billing clerk. We suggest that the owner not be completely removed from the billing process and advocate that they monitor AR days, Collection Percentage, Write-Offs, Adjustment Percentage, Date of Service Collections, and use an external CFO analysis as ways to oversee the billing system. Our poll questions asked if the owner approved all write-offs. Forty-three percent said "Yes', and 57% said 'No'.
Unfortunately, not all medical or dental bills incurred are paid in full by the patient and/or their insurance provider. Failing to collect at time of service, poor communication regarding the estimate of the patient portion, and failure to follow up on denied or unpaid insurance claims are among the top reasons that accounts go past due. Should an account turn into bad debt, it may need to be charged off to a collection agency. A collection agency should secure payment without overly jeopardizing your relationship with the patient and damaging your name in the community.
Roles of a Collection Agency:
Collect Bad Debt in a Timely Fashion
Contact patient verbally and in writing without threatening patient relation with healthcare provider.
Follow HIPPA Regulations.
Know debt collection laws in all 50 states in case the patient relocates.
Provide Guidance on Best Bad Debt Policy
Patient must sign financial responsibility statement.
Typically 30-120 days, however best range is 60-90 days.
Office needs to stick to guidelines in every situation so that it becomes a routine process.
Send written notification on debt to patient including amount, original creditor (practice name), and statements of rights.
Provide Monthly Reports to Practice Owner
These reports should include account name, amount, aging, activity and status of account.
This will help with to track and update accounts.
Return Bad Accounts to Practice After a Specified Period
If payment is not secured within 1 year of charge-off, account should be returned to office.
Assist with Reporting to Credit Bureaus
Accuracy of patient information should be verified.
Fees must be assessed and paid.
Share Bad Debt Information with Other Clients if Granted Permission to do so.
By sharing bad payer information with others, businesses can make an informed decision about doing business with that person.
Even if they do decide to work with that individual, they can gently remind them that they have a debt with another doctor.
Ideally medical and dental bills will be paid in full, but many times this does not happen for a variety of reasons. The longer the bill goes unpaid, the harder it is to collect. When an account goes 60-90 days past due, we recommend sending the account to a collections agency. This is because the office staff does not have the resources or time to spend collecting bad debt. As long as the collection agency is completing the above recommended tasks, they should be hired to collect your practice's bad debt.
The reason we are publishing these articles is so that your office can increase its success. We appreciate your feedback on how we can help you more and love it when you pass these articles along to other practice owners and office managers. If you have a question that you would like answers to in a blog post, please email it to email@example.com. If you have not signed up for our blog, please do, so you can continue to receive these important insights and participate in our weekly polls.
Doctors CFO has a CFO Management tool to help you track your KPIs. You might also be interested in our New Patient Tracking Solution and a Salary Planning Solution, to see these and other products please go to please go to https://www.drcfo.com/shop.
Developing a management report is not easy and Doctors CFO currently has a robust model for most practice types that is customized for our monthly and bi-monthly clients. If you have questions on how this model applies to your practice or you are interested in applying the Doctors CFO model in your practice, via one of our annual, bi-monthly or monthly assessments, please reach out to us as firstname.lastname@example.org. Doctors CFO provides financial analysis and valuations for doctors and dentists in the United States. We also offer programs for new patient marketing, revenue and collection management, medical practice consultant, dental consultant, and practice analysis.
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