November 6, 2023

Many anesthesia providers often ask this question: if we have contracted with a full-service billing company, why do we need a collection agency? The answer is not always obvious but can be significant.

Comparing Efficiencies

Completely resolving all account balances requires the careful navigation of a challenging matrix of options. The scope of services offered by a billing company is always designed to maximize collections in the most compliant and cost-effective manner possible. In selecting a billing service, most practices focus on fee, which is typically defined as a percentage of net collections. Billing companies provide an efficient service that relies heavily on a balance between people and computer technology.

Collection agency fees are determined based on a completely different set of assumptions. While billing services have prescribed protocols based on the practice’s payer mix, collection agencies start by asking the question: why is the balance still unpaid? Their approach is considerably more labor intensive and is sometimes described as dialing for dollars. Agents go to great lengths to ferret out demographic details and to negotiate with patients directly. Because this model is considerably more expensive, collection agency fees are dramatically higher. It is not uncommon for a collection agency to charge 20 to 40 percent of what they actually collect.

No matter how effective the billing service, it is always useful to contract with a reputable collection agency as a fall back for exceptional accounts that do not respond to traditional collection strategies. Especially given the challenges of today’s market for medical services, it is always good to have qualified collectors review unpaid accounts, especially given that they may have different tools available to them. It should be clearly understood that whatever collections are generated by the agency will never be more than a small percentage of overall collections. In that sense, what the collection agency generates is sort of found money that would otherwise have been lost. It is the rare anesthesia practice that refers more than five percent of monthly accounts to an agency and rare that the agency collects more than 25 percent of what is referred.

The Agency Toolkit

What can collection agencies do that most billing companies do not do? Sometimes the most significant impact of a collection agency is the initial letter sent to the patient informing them that their account has been referred for collections. For patients who have been in denial about their responsibility for their anesthesia bill, the initial collection agency letter can be a wake-up call. Many patients hate the notion of having a medical bill be referred to a credit agency. In addition, though, most collection agencies provide the following services not typically performed by a billing company:

• Skip tracing to identify demographic details not previously provided by the facility or not otherwise available to track down and contact the patient.
• Aggregating claims when the agency works with other providers or the facility in an effort to make a more compelling claim.
• Filing legal claims that will compel the patient to pay the balance due.
• Reporting to credit agencies so that their delinquency will affect their credit report for high balance accounts.

Collection agencies have developed unique strategies for some of the most challenging aspects of the collections process. There is no greater challenge than the pervasive use of cell phones with caller ID. Most people do not respond to calls from numbers they do not recognize. A major challenge today is patient understanding of insurance coverage. Too many patients assume that having insurance eliminates their responsibility for payment. Too often, patients look at their explanation of benefits and decide the provider has been paid enough. This is when and how the legal battle begins.

Which Agency is Right?

A review of Coronis clients reveals dozens of collection agencies across the country. All claim they can resolve the toughest accounts, but their results vary considerably. The bottom line is that, if billing has exhausted their efforts, the collection agency may not have great results. What you hope for is that they have managed to resolve accounts where either the information was either incomplete or the patient was particularly intransigent. The key to an effective relationship is complete transparency and effective reporting.

Some agencies are more aggressive than others. Many make bold promises of performance. A written agreement is always recommended; but, in addition, it is important to make sure that the approach and strategies used by the agency are consistent with the core values of the practice. An overly aggressive collection agency can cause unnecessary problems with administration. If you are concerned about the performance you are getting from your current agency, and you are interested in hearing about other solutions Coronis Health can offer, please contact your account executive.

With best wishes, 

Rita Astani
President—Anesthesia