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May 2011
Volume 32, Issue 4

Multi-Step Protocol to Collect What You Produce

Penny Reed Limoli

In the dental world, one of the few things better than a stellar production month is a stellar collections month. After all, it is more fun to actually get paid for what the practice produces. While some dental offices do a phenomenal job of discussing treatment and financial options with patients, others struggle with financial conversations, or feel they are at the mercy of dental insurance companies. There is, however, a better way to implement effective financial policies and manage collections.

Outlining Office Financial Policy

Parameters for the financial options offered to patients must be developed internally, and should include a discount for pre-payment or payment in full at the time of service. Discounts should be applied to the full fee, not only to the patient’s "estimated portion." The practice must define the in-house options it will extend.

Handling the Patient’s Insurance

Approximately 45% of the average dental practice’s reimbursements come from dental plan reimbursement. As such, the patient’s benefit plan cannot be ignored. However, the role that insurance plans play in the office can be managed if the doctor and team are clear on how the patient’s insurance will be handled.

Most practices accept assignment of benefit on the patient’s primary plan. It is wise to avoid getting involved in secondary claims, which can create confusion as to who receives the overpayment refund. Secondary claims should simply be filed on behalf of the patient, and patients reimbursed directly through the secondary plan.

Implementing Written Financial Agreements

By using written financial agreements, practices can help eliminate much of the patient’s confusion regarding his or her financial responsibility. Discussing financial options and commitments with patients is very important, and it is imperative that patients be held accountable for their treatment. Smart practices use a dedicated financial agreement form that includes options for discounts, multiple methods of payment, and specific dates when payment is expected. Practices should set floor limits for the treatment amounts that require a written financial agreement. In many dental offices, a written financial agreement is completed if the total treatment exceeds $500.

Deciding What "Healthy Accounts Receivable" Means

Healthy parameters need to be set for accounts receivable (A/R) totals. Ideally, a practice’s total A/R should not exceed its average monthly production total. For example, if a practice produces $100,000 per month, there should be no more than $100,000 per month in A/R. Next, the "30-to-60 days" and "60-to-90 days" categories should range from 10% to 13%. Accounts with balances that have not changed in more than 90 days should make up less than 8% of the total A/R. Meetings including the practice’s financial coordinator or office manager should be held at least monthly to monitor these figures.

Making A/R Housekeeping Routine and Easy

Insurance claims should be processed daily, and filing electronically can make that process much simpler. With a few clicks of a mouse, the claim is sent out for payment and can be easily tracked by a financial coordinator. The e-claims market continues to get more competitive. Practices can leverage that market saturation by seeking an e-claims provider that offers affordable pricing and extra services such as tracking down "missing" claims.

Insurance aging reports should be run weekly. Claims that are more than 30 days old should be followed up on immediately, starting with the practice’s e-claims vendor and, if necessary, the actual insurance company. Simply re-filing the claims should be avoided, as this can actually delay payment and might cause the practice to be billed multiple times for filing the same electronic claim.

Patient statements should be sent at least once per month. This service can be outsourced in order to ensure that professional statements are sent without significantly disrupting the practice’s operations. Another option is to send statements to patients after a final payment is received from insurance. Sending a short letter to the patient is recommended, along with a copy of the explanation of benefits and a statement. This provides clarity and can reduce the length of time it takes to receive the remaining balance from the patient.

Following Up On Past Due Accounts

A combination of telephone and written follow-up with the patient should be done when the practice has not received payment on an amount due in 30 days. The steps in this process are detailed below, and each step assumes that the previous measure did not resolve the balance. A copy of the patient’s statement should accompany each letter. All correspondence should be sent certified, with delivery confirmation requested.

A friendly letter should be sent to ensure that the patient is receiving his or her statement. The patient should also receive a phone call. If the office speaks with the patient, the patient should be informed that the call is in regard to his or her account balance and the amount owed. In many cases, patients have no idea that their insurance has paid its portion, and will inform the caller that they will pay the balance.

A soft collection letter should be sent. The tone of this letter is still friendly, but states that the balance needs to be resolved. The letter should also ask the patient to call the office to make arrangements or send payment within 10 business days.

The next step is to place a "firm" phone call. This call should be firm, polite, and professional. The patient should be made aware of the practice’s concern, and the caller should listen for opportunities to ask the patient when the past due balance can be resolved.

A direct collection letter lets the patient know he or she is valuable to the practice, and that the balance needs to be resolved within 10 days to avoid sending the account into collections.

The final phone call should maintain the polite and professional tone of previous attempts to resolve the issue. The focus of this call is to determine if and how the patient plans to pay the balance. If the patient is not willing to make a commitment, the next step must be taken.

The final written notice is a firm letter with "Final Notice" as the header. The final letter should outline the previous attempts made by phone and mail in an effort to reach the patient. The final written notice also informs the patient that the account will be turned over to a collection agency and credit-reporting bureau if the matter is not handled within the next 14 business days.

Once these follow-up steps are completed, it is time to turn the patient’s account over to a collection agency. State dental associations can recommend local agencies. A dental practice would be wise to use a collection agency with experience in the dental industry.

Making financial agreements and managing monies owed to the practice may not be the most glamorous job in the office, but consistency is the key to doing it well. Each of these steps is important, yet many can easily be put off or overlooked. Whether following the plan outlined above or tweaking it to fit an individual office’s needs, a dental practice must be consistent in order to prevent dust from collecting on past due balances.

About the Author

Penny Reed Limoli is a dental practice management consultant from Arlington, Tennessee.

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