Controlling A/R with Finance Options

Offering alternatives can keep the red off your face and away from your bottom line.

Patients today are faced with more financial responsibility than ever, but so too are practitioners. As practitioners, you want to provide optimal care and work with patients when their financial responsibility is too great to be paid upon delivery. But in taking on too many open patient accounts, you may be harming your bottom line.

"A common goal among practitioners is to return their patients to a normal lifestyle as quickly as possible with the best quality of care," says Elizabeth J. Carlstrom, president of O&P Business Solutions. "With that in mind, most practitioners want to be nice when it comes to patient financing. This can lead to ad-hoc payment plans, which can in turn end up as write-offs or endless payments. What the profession must realize is that although it is great to be nice, you have a business to run."

When it comes to the best way to run your practice, there are many opinions, guidelines, and options to help you find the approach that works best for your practice. Some practices set up payment plans for their patients, while others prefer not to. Other options, such as consumer credit cards, local charity funding, and CareCredit, can assist a practice in reducing its accounts receivables (A/R) while providing quality care.

Regardless of what approach or what finance options you offer patients, experts in the profession agree that diligence to paperwork and patient education are vital for a successful business.

Enviable Receivables "Some of the best performing A/R in the industry come from those practices that are cognizant of what their receivables balances are and the length of time for any open accounts. They are also proactive in ensuring successful insurance claims," says Jim Clifton, chief operating officer at BridgePoint Medical, Lexington, Kentucky. A critical factor to a practice's success is how well it communicates financial responsibility to the patient. Most people respect and are more apt to pay their bills if they know their responsibility up front rather than as a "surprise" later on, he adds.

BridgePoint is unique within the O&P profession because it purchases practices that are willing to adopt its business model, thus allowing practitioners to focus on patient care issues. "We have a complete back office package that focuses on running the entire administrative operations of a practice," says Clifton. "Our goal is to remove as much of the burden as possible from the practitioner."

There are four main aspects BridgePoint looks for in a successful practice before partnering:

Process documentation. BridgePoint prefers practices that have automated processing to monitor billing because it believes it costs less to fix a problem before it arrives. Diligence to A/R and managing account balances. Patient focus and dedication to patient education on financial responsibility. BridgePoint prefers practices that openly discuss payment arrangements and have a financial worksheet available. How soon the practice has the discussion with its patients about responsibility. Despite even the best intentions to follow this business model, there are always those cases where a payment plan is inevitable. "Try to exhaust all other options before accepting a payment plan and require a substantial portion up front to cover your out-of-pocket expenses," advises Clifton. In the event that you decide to offer patients a payment plan, there should be some guarantee that the patient will actually pay. "Set up a payment plan with automatic withdrawals from a credit or debit account, and take a 50 percent deposit up front."

Getting Paid As a practitioner, you provide a service and have the right to get paid for it. Each practice is unique in how it deals with payment, but there are two realizations in the industry: practitioners are not bankers, and patients should not have to shoulder the entire burden of obtaining financing, says John W. Michael, MEd, CPO/L, president of CPO Services, an independent clinical consulting firm located in Portage, Indiana.

When Michael started in the O&P industry more than 30 years ago, his second boss had an important lesson to impart. "His idea of a payment plan was to request payment in thirds. The first third at the time of impression, the next at time of fitting, and the last at time of delivery," he says. The patient was told not to pay if he or she was at all unhappy with what the clinician was doing. Not only did this make the clinician responsible to the patient, it made the patient responsible for payment.

"We have no business giving no-interest loans to patients. We are not bankers; we are practitioners," says Michael. With this in mind, there are tools that practices can use in order to avoid becoming a de facto banker. Most of these tools, including educating patients about their responsibilities and offering payment options, are fairly straightforward. "The problem I often find in some practices is that the staff has difficulty requesting payment," Carlstrom says. "If you don't ask, why should the patient pay?"

One simple way to address this is to simply ask, "For your convenience we accept cash, check, or credit card. How would you like to take care of this?" says Carlstrom. "If none of these funding options are viable, you can turn to payment plans or your local hospital to find out about local charity funding options."

Another option that has been gaining popularity in O&P is CareCredit, a non-recourse healthcare credit card that offers a lower interest rate than the industry standard and has no-interest plans available for specified amounts of time. The card works just like a credit card and can only be used for healthcare purchases. Once the card is swiped for a transaction, the practice will receive payment within two business days.

"I think finance options such as CareCredit are fabulous tools. The patient can apply for credit in your office and receive a response in a few seconds," Michael says. "What is so novel about this tool is that if the patient is approved, great, he is now obligated to the finance company. But if he is declined, this gives you valuable information about his financial viability and risk should you decide to extend him credit."

Alternate Funding CareCredit, a division of GE Money, works with healthcare professionals to offer their patients another funding source to prevent carrying A/R. By offering CareCredit to patients as a finance option, practitioners are removing themselves from the role of banker and assisting their patients in finding alternate funding sources. If a practitioner chooses to accept CareCredit at his or her office, the office is set up to run credit applications online or by phone. The application covers basic financial information, and a decision can be given in a few seconds, explains Rob Morris, vice president of marketing at CareCredit.

Tips for Successful Claim Payment Thoroughly and properly verifying claims will reduce your practice's unpaid accounts and any surprises for you and your patients. There are three stages to ensure that your claims are not returned, says Elizabeth J. Carlstrom, president of O&P Business Solutions.

Stage One Do an initial insurance verification to be sure that there is coverage available. "This is just the basics-nothing more than a verification of benefits," she says.

Stage Two This is where you find out the meat. Once the patient has been seen and L-Codes have been assigned to make the device, another call to the insurance company will yield more information. Go line by line and ask the customer service representative if each code is covered. "If you know ahead of time that three codes will be covered and one will not, there will not be a surprise upon delivery," Carlstrom says.

Once you have gone through the L-Codes, it is now time to "take charge of the conversation," she says. Ask the representative to scroll down the screen and let you know if there are any provisions or exclusions. "You will sound intelligent and learn about deductibles, out-of-pocket expenses, and any limitations," she says.

Stage Three The staff will want to call the morning of scheduled delivery to confirm that the patient's insurance is still active and that there has been no change to the policy. "A lot can happen at the beginning of a new month. The patient could have been terminated or there could have been a change in the policy," Carlstrom says.

There are several plans available that offer no-interest financing from anywhere between three and 18 months. "There are extended payment plans of up to 60 months at a fixed rate of interest to the patient of 11.9 percent that are very popular within O&P because of the larger balances," says Morris. In lieu of the practice carrying the account at a cost of 17 to 18 percent, CareCredit charges a one-time fee of 5 percent of the balance to the practitioner, and it is deducted from the practitioner's account the month after the credit, he says.

"The one drawback of CareCredit is that it can be a Catch-22," Clifton says. Even though CareCredit approves 55 percent of the applications it receives, generally the people who need the credit the most are most often denied. BridgePoint Medical does accept CareCredit, but it has had limited success with it because of this.

"CareCredit trains its practices to ask the denied patient if a friend or family member can co-sign, which in many cases allows the patient to get the credit he or she requires," Morris explains.

Dynamic Orthotics and Prosthetics in Houston, Texas, has been accepting CareCredit for the past two years and has had success with the card. Still, no real significant impact has been made on the company's A/R because "it has not been used enough," says Kathy Davis, business office director with Dynamic O&P. However, Davis says that Dynamic O&P is using Care Credit "more and more," and expects it to make a significant impact with an expected increase in referrals for the WalkAide® as well as other non-covered items for credit-worthy individuals.

Choosing Another Route "Obviously, there is no right or wrong way to run your business as long as your business is running well for you," says Michael. To give you a feel for the variety of approaches to A/R management, we asked several O&P practices about their model.

Tips for Cutting A/R Waste Reducing waste in accounts receivables (A/R) is far more effective than trying to chase patients for payment after delivery of the device. By eliminating some of the waste and lag time in filing claims with electronic billing, the practice can receive payment on claims in as little as two weeks, according to Roger C. Lehneis, MBA, vice president of administration with Lehneis Orthotics & Prosthetics Associates. In addition to the advice already provided, Lehneis offered these tips and suggestions for cutting waste in A/R and helping to ensure payment.

Set up electronic billing for all payers that accept it. Medicare makes electronic deposits and generates a remittance note, which Lehneis advises to treat like a check to verify that the deposit was made and rectify against the patient's account. Most third-party payers will accept claims electronically and generate a paper check. At Lehneis, the average turn-around time for payment from Medicare is three weeks and anywhere from two weeks to 45 days for third-party payers. Use electronic billing for third-party payers and a central clearinghouse, such as Emdeon Business Services, Nashville, Tennessee, to save time in batching and sending claims to several payers at once. Utilize filters to screen the claims for required information to reduce the number of rejected claims due to missing patient information. Lehneis points out that this is how his practice sets up its A/R and that practices should tailor the process to meet their individual needs.

At Ability Prosthetics & Orthotics Inc., based in Gettysburg, Pennsylvania, the focus is on patient care and building strong relationships with patients. "We have been putting controls on our accounts receivables, but it is important that we understand our patients' predicament and work with them to maintain our relationship," says Jeffrey Brandt, CPO, president of Ability P&O. To that end, Ability extends payment plans to its patients only after financial responsibility has been spelled out and a payment agreement has been put in place before delivery of the device.

"Healthcare should not be completely business focused," Brandt says. "It is important to consider each patient's unique situation. We train our practitioners to keep an open and ongoing dialogue with their patients regarding costs and outstanding balances."

Similar to the Ability model is Wright & Filippis Inc., Rochester Hills, Michigan, which also offers payment plans. "We generally want to collect in-house and will give the patient every opportunity to do so. If within the first 12 months the patient is delinquent or is unable to be reached, we will turn the account over to collections," says Terry Thomson, director of A/R with Wright & Filippis.

However, Lehneis Orthotics & Prosthetics Associates, based in New York, does "not offer patient financing in the form of payment plans because we are not a bank or a credit card company," says Roger C. Lehneis, MBA, vice president of administration with Lehneis. Instead, Lehneis starts discussing a patient's financial options from the initial visit and makes it clear that the financial responsibility after their insurance pays is theirs.

Whatever finance options you choose to offer your patients and how you handle your A/R, Carlstrom says it is important to "put yourself in the patient's shoes and treat them the way you would expect to be treated."

Kim M. Norton is a freelance writer based in Mount Laurel, New Jersey.

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