Collections

Chapter 4: Revenue Management in Healthcare

Overview

  • Focuses on Insurance Claims, Denied Claims and Appeals, and Credit and Collections.

  • Importance of effective collections in maintaining the financial health of a healthcare practice.

Delinquent Claims

  • Definition: Claims pending reimbursement that have not been settled within a specific timeframe (typically 120 days).

    • Also known as past-due accounts or delinquent accounts.

  • Tracking delinquent claims is essential; practices often prioritize older claims (120 days or more) but may overlook newer ones.

Strategies for Preventing Delinquent Claims

  1. Verify Patient Information: Confirm health plan identification and coverage at each visit.

  2. Submit Clean Claims: Ensure claims are free from errors before submission.

  3. Confirm Claim Receipt: Contact payers to ensure claims have been received.

  4. Review Claims Status: Regularly check whether claims are paid, denied, or pending.

  5. Provide Documentation: Submit necessary documentation to support claims when requested by payers.

Accounts Receivable Aging Report

  • Used for tracking outstanding claims by date.

  • Helps in identifying and managing delinquent accounts effectively.

Outsourcing Collections

  • Practices may outsource delinquent accounts to collection agencies.

  • Collection agencies employ various tactics, including written correspondence and phone calls.

    • Must adhere to federal regulations (e.g., FDCPA).

Collection Process

  • Order of Collections: Begin with the largest past-due charges, typically organized in descending order (e.g., MCD, BCBS, AG, AETNA).

  • Skip Tracing: A method used to locate patients to recover bad debts, utilizing credit reports and databases.

Bad Debt

  • Definition: Accounts receivable that cannot be collected by the provider or collection agency.

  • Providers can only deduct bad debts previously included in their income, not those anticipated but unpaid.

Legal Aspects

  • Litigation: Taking legal action for debt recovery is a last resort, commonly occurring in small claims court.

    • Small claims limits vary by state ($2,000 to $25,000).

Example Scenario

  • Insurance reimbursement scenario where a patient spends the insurance check on personal expenses, leading to delinquent accounts.

  • Outsourced collection efforts may occur when payment is not received, resulting in bad debt status for the provider.

Steps for Effective Collection Process

  1. Initial Patient Contact: Call within one week post-service to confirm satisfaction and inform about invoice.

  2. Mail Reminder Invoices: Send duplicates of the invoice with 'past due' marking after due date, emphasizing urgency.

  3. Collection Calls: Conduct follow-up calls to obtain payment promises.

  4. Progressive Collection Letters: Send a second collection letter, then a final warning about agency involvement.

  5. Submission to Collection Agency: If payment remains unfulfilled after multiple contacts, submit account to collections.

Conclusion

  • Effective revenue cycle management is crucial for healthcare providers to minimize bad debt and manage denied claims efficiently.