Most doctors encounter patients who frequently refuse to pay their fees or just neglect to do so. Every business has to cope with this issue, but medical clinics specifically struggle with unpaid bills. First, the service you rendered cannot firstly be recovered. Second, you should probably keep the patient as one of your patients unless they are deadbeat.

Is collaborating with medical debt collection agencies the best course of action for your clinic to resolve unpaid bills?

Know in detail:

Third-Party Collections vs. First-Party Collections

First-party collections are attempts to collect payment from patients made by doctors or a member of their staff. Using a third party to collect the money is referred to as third-party collections.

The Association of Credit and Collection Professionals (ACA) is the industry group for third-party collection companies in the United States. The main agency in charge of regulating third-party collections is the Consumer Financial Protection Bureau (CFPB). The CFPB oversees debt collectors on a federal level, but individual states also have their own rules. While some states adhere to federal regulations, others go above and above.

The Fair Debt Collections Act and the Consumers Protect Act are the two primary federal laws that the CFPB employs to regulate collection practices. These regulations forbid collection agencies from automatically calling consumers on their cell phones, even though the agencies are permitted to use an autodialer.

Currently, the CFPB does not cover the medical debt. The CFPB regulates credit reporting, and some lawmakers contend that if medical debt appeared on a credit report, it would probably affect the person's ability to obtain credit or a loan.

How Third-Party Collections Work

In general, third-party debt collectors are compensated with commissions, which represent a portion of the money they bring in. In the field of physician collections, rates are often privately negotiated and range from 10 to 25 percent or more, depending on the debt's size, nature, and easiness.

Negotiated is a crucial word. Instead of accepting the fee the collection agency gives, the doctor should be open to negotiating a fee. The time period covered by the outstanding debt will frequently serve as the basis for the negotiated rate. For instance, a commission would be smaller for a sum 60 days past due than one 120 days past due or more. The percentage the doctor will pay will increase if collecting the money is challenging because it requires more effort on the part of the medical debt collection agency.

Physicians frequently have a voice in how a collection agency pursues recouping cash, in part due to the individualized nature of medicine. Usually, these begin with letters and end with phone calls.

A collection agency's standard procedure is to start the collections after a predetermined time period, typically when the physician receives their initial payment statement. Alternating is one strategy. One collection agency, for instance, uses an alternation of three letters and two phone calls: letter, phone call, letter, phone call, letter. This strategy increases the urgency with which the doctor's office must be paid.

In order to prevent the patient from learning that the debt has been turned over to a debt collection agency, one collection agency strategy is to operate under the name of the doctor's office. In particular, if patients merely forgot or had a temporary problem resulting in lack of payment, they are less likely to be offended than if their doctor sent their accounts to a third-party collection agency.

Medical collection agencies' potential to provide services under their own names heightens the urgency. They switch between letters and phone calls once more. When patients pay, doctors have the option of sending a card or email that reads: I appreciate your money. The doctor may add further observations to the message: Please call if you need our services. We are honored that you have chosen us as your healthcare provider.

The necessity of the collection agency understanding the value of doctor-patient relationships is shown by this. Because they have a reputation to defend and maintain, collection agencies shouldn't damage a doctor's standing. The doctor-patient relationship is crucial to the brand's reputation and must be protected.

Representation and Respect

Remember that the debt collection agency you choose to work with speaks for you and your medical business. Each collection company is unique. The doctor must feel at ease with how the collecting agency does business and displays itself. Do they treat the patients with respect? Are they straightforward and honest? They're timely. How do they handle customer service?

Maintaining positive relationships with patients is important for doctors. You must avoid using a collecting firm that irritates them.

Ask your peers for advice when hiring a collection agency and find out if they are satisfied with the service.

Is the service effective?

Can you negotiate with them?

Does the agency represent your practice in a way that is appropriate?

With the transition from ICD-9 to ICD-10, medical debt has its own terminology and is now more intricate than ever. Find a medical debt-collecting agency that focuses on medical practices rather than just medicine. When it comes to handling hospital debts vs. medical practice debts, collection agencies operate differently. Hospitals are frequently quite active in collecting debt, in part because they deal with relatively large numbers of patients overall. On the other hand, private practice doctors may be more adaptable.

Offer Workarounds

One thing doctors frequently do—and ought to do—is work to prevent the need for a collection agency. Of course, a lot of modest payments that go unnoticed over time can add up to a lot, but it's necessary to look at the backlog of claims and determine which ones are actually receivable. Sometimes it seems sensible to write off an unpaid debt because it wasn't fair, was made in error, or is so insignificant as not to be worth the bother.

But if you miss too many payments, your finances can suffer. Think about haggling about payment with the patient. Suggest a payment schedule over the phone with the patient. Find out what they are able to pay. Unless it is clear that the patient is a deadbeat who has no intention of paying their expenses, it is a strategy to keep them engaged with the clinic.

Also, consider reviewing your front-office procedures. Consider obtaining the patient's credit card so that you can use it to charge the patient directly after the insurance company has made its payment. Then provide the patient a receipt confirming that their card has been debited in accordance with their insurance policy.

A patient's vital financial information, including their demographics and insurance information, should be fully collected by the office. Before the patient leaves your office, let them know how much they owe by letting them know how much the insurance deductible or co-pays are. To avoid having to hunt down unpaid debt later, be vigilant in collecting as much of it upfront as possible.

Find out as much as you can about the patients' refusal to pay. Do they have a job? Uncertain about their insurance policy? Or are they dissatisfied with the treatment they got?

This final concern can be challenging, but it underscores how crucial it is to comprehend the patient's nonpayment. You may be raising the risk of a lawsuit if, for any reason, the patient is genuinely dissatisfied with the standard of care and you submit the patient's bill to a medical debt collection agency.

It's wise to exercise caution when choosing which bills to pursue. And be confident that you've provided the greatest care possible for the patients while still being rewarded.