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Self-pay accounts are increasing at such a rapid rate that they could easily become the largest financial class for hospitals, says Charles Seviour, vice president of Revenue Cycle at Array Services Group in Sartell, Minn. That's why it's important for hospitals to adjust their collection approach to meet the demands of today's patient. Seviour says the key to mastering self-pay collections is to move the collection process forward.

Gathering information about the patient prior to admittance and communicating payment expectations can dramatically improve the collection process.

Pre-contact work

You've heard the phrase "timing is everything," and working with self-pay accounts is no exception to this common belief. According to Seviour, hospitals need to gather information about patients before they arrive at the hospital.

Research should be conducted 48 to 72 hours ahead of time, beginning with the precertification and prior authorization process. It is crucial to contact the patient's insurance company to verify coverage and calculate the patient's remaining balance for meeting the deductible as the patient may not be responsible for the full bill.

Next, hospital staff should determine an approximate cost for the procedure and determine the out-of-pocket responsibility of the patient. However, before communicating the cost to the patient, the hospital must determine its expectations. What is the hospital willing and unwilling to accept for payment? As an example, is it acceptable for the patient to pay 80 percent? What kind of leverage does the front-end hospital staff have when setting up a payment plan? This must be decided before the patient enters the hospital so staff can set up a payment plan that is an acceptable solution for both parties. Determining appropriate expectations will vary by hospital.

As an additional tool to gather information about the patient, the hospital may also choose to use scoring or credit reporting to get a glimpse of the patient's financial situation. This information, combined with the pre-contact work listed previously, will be beneficial when meeting with the patient upon arrival.

Upon arrival

Now's the time to use the information obtained in the pre-contact stage when meeting with the patient in person or via telephone. Hospital staff should make sure information about the patient is readily available.

Seviour noted that hospitals have historically been afraid to contact patients before the procedure takes place.

"You have to change that. Over 60 percent of patients' primary concerns are what [the procedure] is going to cost them," he said. Communicating payment expectations up front is an opportunity for hospitals to ease patients' payment concerns.

Not only is it important to communicate out-of-pocket costs, but "Patients need to know there is an expectation for payment," Seviour advised. This is the hospital's chance to communicate any criteria for self-pay payment that was determined in the pre-work stage. Self-pay payment criteria will depend on the patient's financial situation and the hospital may need to use its payment alternatives (i.e., discounts, deferred payment, etc.) that were identified in the pre-work stage.

Knowing when to offer payment alternatives requires an understanding of the patient's financial situation. Is the patient really unable to pay or does the patient not want to pay? This is an important determination. Staff needs to ask questions about the patient's current employment status, outstanding debt, etc., to make a determination about the patient's ability to pay.

When presenting payment options, "Talk about ways you can work with the patient - not burden them," Seviour added. Establishing a trusting relationship free of resentment will move the collection process in a favorable direction.

After discharge

It's important to be proactive with self-pay accounts on the front end and back end of the collection process, said Seviour. Hospitals should start the collection process within 30 days of discharge.

This is the point where the hospital may want to consider outsourcing accounts to a collection agency immediately following discharge, which can often be done for a low contingency fee or hourly rate.

"Most outsourcing companies can be much more productive than hospitals," Seviour said. Collection agencies often employ automated dialers and other technology devices that expedite the follow-up process. For example, a collection agency might make seven to 10 contacts per hour while a hospital may make three to four contacts depending on its resources.

By outsourcing the back-end collection process, hospitals can focus their efforts on the front-end process and potentially achieve greater results.

Important considerations

Due to the nature of healthcare, it is important to choose an appropriate collection agency, said Seviour. "The agency must be able to show compassion, dignity and respect to the debtor."

ACA International has a voluntary set of guidelines its members can sign to show their collection practices are aligned with those of the provider. The Healthcare Collection, Servicing and Debt Purchasing Practices - Statement of Principles and Guidelines were developed in February 2007 to assist ACA members in demonstrating their commitment to collecting healthcare accounts in a legal, ethical and professional manner. To view the guiding principles, visit ACA's Web site at http://www.acainternational.org/codeofconduct.aspx?cid=10280.

© 2009 ACA International. All Rights Reserved. Reprinted with the express written permission of ACA International.

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