The Challenge of Patient Balances for the Anesthesia Practice

Summary: Collecting patient copays and deductibles, where applicable, is no slam dunk for billing services or collection agencies. Americans are increasingly reticent, and even recalcitrant, when it comes to their willingness to pay whopping medical bills. Today's article explains the current issues with collecting from patients and explores the question of solutions.

When it comes to collecting everything that is collectible for the valuable services anesthesia providers administer, there are three primary challenges that every practice must come to terms with. First, there is the fact that, as compared to office-based providers, anesthesiologists and CRNAs have no ongoing relationship with their patients; they rely on hospital staff to gather the critical demographic information necessary to submit claims and receive payment. Second, we live in a society where the expectation is that patients have insurance to cover their medical expenses; but patient balances tend to be looked at as incidental and of lower priority to the patient than other bills such as mortgage or rent, utilities, cable, car payment and groceries. Third, while there are numerous effective strategies to collect the allowable from insurance, there are relatively few approaches that result in consistent collections from the patients themselves. It is these factors that explain why collecting the patient's balance is often the Achilles heel of accounts receivable management.

Defining the Difficulties

The problem is further compounded by the challenge of defining patient responsibility, which falls into three distinct categories, each of which poses its own challenges. Usually, the largest category consists of patient balances after insurance. Most insurance plans will pay at least 80 percent of their allowable payment for a given service. Some patients will have secondary insurance or a plan that covers the 20 percent, but many do not. Obviously, collecting this patient portion is significant to the practice as no one wants to accept a 20 percent discount. Conscientious patients with the means will usually pay their portion. The reality is that, for many patients, the 20 percent due for the anesthesia bill is in addition to the 20 percent due for all the other specialists and the hospital. Even a relatively minor surgery can result in significant balances due from the patient. The number one reason for bankruptcy in the United States is medical bills.

And then there is the growing number of patients who do not have any insurance coverage at all or for whom there is no insurance of record. These are optimistically listed as self-pay patients. When there is valid insurance coverage, the provider at least gets something. When there is no insurance coverage, all bets are off, and the practice has no leverage to collect anything. Depending on the location of the practice, self-pay may mean no pay or discounted pay. The reality is that the cost of healthcare has gotten so expensive that the bills sent to them are cruel reminders of their desperate status. It should be noted that, in this era of cell phones with caller ID, most people do not answer calls associated with unrecognized numbers.

A third subset of patients fall into a category called pre-paid, typically associated with cosmetic services. This is usually a small percentage of practice patients, but it should be a model for the management of self-pay patients across the board. The ideal scenario would be to obtain payment up front before the services are provided. However, this is an option not available to most anesthesia practices. Unfortunately, most practices simply do not have a mechanism to get even a pre-payment. There have been some limited experiments by a few practices to have hospital employees ask for a pre-payment for anesthesia, but such experiments have been largely unsuccessful, except in the ambulatory environment.

In Search of Solutions

In most practices, unpaid patient balances are typically referred to collection agencies. The average collection percentage from such agencies may be as much as 15 percent, but this is an expensive option as most agencies charge 30 percent or more of net collections. What is the difference between what a billing company does to resolve patient balances and what an agency does? To a large extent, agencies have pools of employees who are dialing for dollars all day. It is an incredibly labor-intensive process with limited results. The hope is that collectors can find some undiscovered or unexploited resource, such as a previously unbilled insurance plan.

Without exception, American anesthesia practices are seeing their patient balances increase year over year. It has become one of the greatest challenges to the industry because there is no good solution, no magic bullet. Providers love to claim that their billing companies should make more collection calls. Most large companies have implemented automated dialing systems to accomplish this, but the results are simply not significant. Absent a desire or ability to pay their anesthesia bills, most patients have become very good at avoiding all interaction.

Just as most practices now turn to their hospital administrators for financial support in the form of subsidies and revenue guarantees, so too is it time for hospital-based providers to collaborate on a variety of other management issues, such as dealing with patient balances. Creative exploration of options may yield some promising results.

The key must be to triage patients early on in the revenue cycle, to identify those most likely to pay their balances and to accept the loss where payment is not likely to be obtained. In some states, financially challenged patients may be able to obtain Medicaid coverage. Medicaid payments are significantly discounted, but something is better than nothing. At the end of the day, though, practices must be realistic in their expectations for patient responsibility given the economic circumstances of their local market. Although collecting money from patients is an intractable challenge in the industry, the good news is that, at least for now, this affects a relatively small percentage of total practice revenue. If you would like more insight and understanding of your patient balances, feel free to discuss this with your account executive. You can also contact us at info@anesthesiallc.com.