How to Develop an Upfront Collections Policy for Your Medical Office

For a medical office, upfront collections of co-pays are an important part of the revenue cycle. Upfront collections reduce the number of patient accounts that end up in bad debt or collections status. It is easier to collect from patients prior to services being rendered than 60 days later after insurance has finally paid.

Develop a System

Patient making credit card payment

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Your medical office or practice needs a system for upfront collections that is accurate and consistent. Your policy must go beyond simply ensuring patients are asked for their copay or fee when they arrive for their appointment or procedure.

Your system will start as soon as the appointment is scheduled so you know what the patient's responsibility is going to be. After you determine this, you need to ensure the patient knows what to expect for their financial responsibility in advance of the appointment. When they arrive for the service, you will again have procedures in place to consistently request payment and provide options.

Accuracy and consistency, along with a system for determining and collecting patient responsibility, are the keys to your upfront collections policy. When developing a policy for upfront collections for your office, be sure to include the following steps.

Step 1: Contact the Patient's Insurance Company Before the Visit

As soon as possible after the appointment has been scheduled, contact the patient's insurance company to verify that the patient is still covered and to make a check of any pre-certification guidelines. Find out the patient’s copay, deductible, and coinsurance information.

Step 2: Check Your Managed Care Contract

Check your managed care contract to determine what your reimbursement is for the patient’s visit, test, or procedure. You will need this figure to calculate the copay.

Step 3: Calculate the Co-Pay

Calculate the patient’s estimated responsibility. See the example below.

$100.00 Cost of Procedure
x 80% Contract Rate
= 80.00 Allowed Amount
- 50.00 Patient Deductible
- 10.00 Patient Copay
= 20.00
x 20% Patient Coinsurance Percentage
= 4.00 Patient Coinsurance Amount
+ 50.00 Patient Deductible
+ 10.00 Patient Copay
= 64.00 Patient Estimated Responsibility (Copay)

Step 4: Reminder Call to Patient That Includes the Expected Co-Pay

Include the patient's estimated responsibility in the appointment reminder call, email, and letter. When contacting a patient to confirm their upcoming appointment, make sure you remind them to bring their driver’s license or another form of ID and their up-to-date insurance card. Advise them that they will be expected to pay their estimated responsibility prior to having their procedure and list the accepted methods of payment.

Step 5: Request Payment at Arrival for the Appontment

The front desk staff must request payment when the patient arrives for the service before they are seen by the provider. Remind the patient that the amount they are paying is based only on an estimate. Never write paid in full on the receipts until after you have received payment from the insurance company and the patient’s responsibility is indicated on the explanation of benefits (EOB).

Step 6: Offer Payment Options

Offer payment plan options for high-priced test and surgical procedures.

Step 8: Post a Sign

Make sure signs are posted in patient waiting areas clearly stating:

 “Payment Is Due Prior to Services Rendered”

Note: Do Not Request Payment From Emergency Room Patients

Never attempt to collect payment from emergency room patients until after they have been seen by a physician due to EMTALA regulations.

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