Co-Pay vs. Candy Crush

The Cost of Not Collecting at Time of Service Infographic


It is the mantra of practice managers and revenue cycle managers, and the headline of industry articles daily: collecting at time of service is important. But why?

You are competing with Facebook and Candy Crush.

With the introduction of FICO 9, the healthcare industry has come under fire in the news for the amount of medical debt dragging down consumers’ credit scores. It is true that nearly half of all collection tradelines that appear on credit reports are reported by debt collectors seeking to collect on medical debt owed to hospitals and medical providers. However, the reality is that more than half of the past due medical bills reported to the credit bureaus are less than many people’s monthly cell phone bills.

According to a recent study by the Consumer Finance Protection Bureau (CFPB), nearly one fifth of the consumers with reports at a credit bureau have a medical debt tradeline on their report.

Of those nearly 43 million consumers, the median amount owed is only $207.00, meaning half of all reported medical debts are less than $200.

What does this have to do with time of service collections?

People pay their bills emotionally, and will pay the bills they feel are most important first. When a patient needs care, that medical bill is important to them. However, days or weeks after the visit when they are feeling better and receive a statement, their co-pay no longer seems as important. Now the $200 owed to the provider is more likely to be used to pay another expense the patient feels they cannot live without, like a cell phone bill. Once they are feeling better, missing a Facebook update or losing their level on Candy Crush becomes the priority.

Reaching the patient for payment when it is most important to them, when they require the services, ensures a higher likelihood of payment.

Likelihood of receiving payment drops 50% as soon as the patient walks out the door.

The same CFPB study indicates that nearly half of the consumers with past due medical debt have otherwise “clean” reports, and are reliable payers with available credit. This proves that half of the people who do not pay their medical bills have the ability to pay them.

This does not mean patients intentionally choose not to pay their medical bills. It is more likely that the patient does not understand their statement or is not even aware that they owe a bill.

Failure to understand that a single treatment may result in multiple bills, or a misunderstanding with an insurance company over patient responsibility, can lead to bills in collections the patient did not even know they owed. The CFPB reported that by mid-2014, 20.1% of the complaints it received was from consumers claiming they thought their medical debt had been paid. This is more than twice as high as the same complaint received from consumers with non-medical debt. Another 14.5% of consumers with medical debt reported that they did not understand their bill, or were not given enough information.

These issues arise weeks after the patient has left the provider’s office and receive an EOB or multiple statements without an explanation. However, if payment is requested while the patient is in the office, they have the ability to ask questions about their balance and will leave with an understanding of the statements they will receive.

Asking for payment at time of service is not a guaranty.

Nearly 93% of patients have some form of payment on their person at the time of service. If patients are not asked for payment prior to services being rendered, the billing office will only receive about 50% of all dollars owed. There is only a 33% chance of receiving payment if the patient is not followed up with after leaving the office. Once a patient is sent to collections, it is unlikely that the provider will receive more than 16 to 18 cents on the dollar.

By not asking for payment at time of service, you are taking the risk of not receiving payment at all.

Remember, just because the patient has some form of payment with them and you ask them for it does not guarantee they will pay you. But, best practices indicate that if they are unable to pay while they are in the office, it is best to follow up with them by phone shortly after their appointment.

According to the American Hospital Association, “The best performers start all collection follow up earlier, and by phone, as opposed to written. Nearly 75% of best performers start collection follow up in less than 30 days from discharge, and 50% of the best performers start follow up by phone in less than 20 days from service.”

Not comfortable asking patients for money? Attend a Collector University seminar, we can teach you how!

Written by Ali Bechtel, Public Relations Coordinator

This information is not to be construed as legal advice. Legal advice must be tailored to the specific circumstances of each case. Although we attempt to provide up-to-date information, laws and regulations often change. We make no claims, promises, or guarantees about the accuracy or completeness of this document. For legal advice, please consult an attorney.

by BCC?