COLLECTING PAYMENTS FROM ANESTHESIA AND PAIN MEDICINE PATIENTS
May 21, 2012
Patient AB underwent a rotator cuff reconstruction in January, more than four months ago. You billed the health plan that Mr. AB’s hospital record indicated. The health plan denied the claim on the ground that Mr. AB was not enrolled. You then billed Mr. AB directly for $1072.50 your usual and customary charges for anesthesia for a 120-minute open procedure on the shoulder joint (CPT™ code 01630, 15 units x $75 conversion factor) and an epidural for post-operative pain (CPT™ code 64415, $97.50).
You rebilled the patient in March, in April and again on May 15th. Your billing office reached Mr. AB on the telephone on May 16th and was told that (1) his insurance was supposed to cover everything, (2) no one had told him to expect a bill for anesthesia separate from the hospital and surgeon statements and (3) he was now unemployed and did not have the money. On the same day, your office found out that Mr. AB had received a check for $650.00 from his health plan, representing 70% of an alleged UCR amount.
How do you improve your odds of receiving payment from patients like Mr. AB? There are a number of options.
- Help patients plan their finances by notifying them to expect a bill for your anesthesia services as early as possible. In some instances it may be possible to arrange with your surgeons, or your ambulatory surgical center or even your hospital, to include in the pre-operative information packet a routine “Dear Patient” letter describing generally the anesthesia care that patients will receive, the types of anesthesia personnel who will provide that care and the patients’ responsibility for any statement balance not covered by their insurance. The letter should also state in friendly but clear terms that the group does not participate with certain health plans, and what that means.
A chronic pain medicine practice will register patients itself, or otherwise have a chance to speak with them, before providing services. Ideally there will be sufficient time to verify insurance coverage, with the payer directly if possible. The front office staff should note the payer and the copayment amount in the patient’s chart. The copayment should then be collected at the time of every service. The staffer who has the initial contact with the patient should understand the practice’s payment policy so that he or she can make sure that the patient understands:
- When the co-payment is due (e.g., at time of service);
- When the balance will be due (e.g., within 30 days of receipt of the bill, unless a payment plan has been signed);
- That the practice will bill the patient’s insurance, if any, but that “If you are not insured by a plan we participate with, payment in full is required at each visit.”
The patient should receive a copy of the policy. It may become useful to be able to point to the written policy to refute any assertion that the patient was unaware of his responsibility.
Post-Operative Strategies to Prevent Default
- If you know that the patient is enrolled in a health plan in which you do not participate and that will send the reimbursement check to the patient and not to your practice, bill the patient immediately, before the check arrives from the health plan. This should encourage patients to focus on their financial liability, says Kathleen D. Hodgins, Accounts Receivable Manager in ABC’s Western office,
…before they are tempted to buy that big screen TV on impulse. It certainly doesn’t work all the time but it sets expectations in the beginning and sometimes helps. Our system is capable of transferring balances to the patient balance immediately after transmitting the claim to the insurance carrier. A special message appears on the statement and/or a letter can be generated that explains that we have generated a courtesy bill to the patient’s insurance carrier..
- Alternatively, you might send a personal letter (rather than a bill) to the patient when you submit the claim to the health plan to let him or her know that you have billed the patient’s insurance as a courtesy even though you have no contractual relationship with that health plan and the patient is responsible for the bill. In the letter, inform patients that they should expect to receive a check from their health plan representing payment for the anesthesia or pain services that you provided to them. Ask them to endorse the check to your practice and to mail it. It may be helpful to follow up with a telephone call within two to three weeks and then again in approximately the same amount of time, when the patient will have received the reimbursement check.
- In pain medicine practices, or other circumstances where patients receive multiple services over a period of time, it is important to keep up to date on patient balances. You should have a solid tracking process in place to prevent accounts from falling through the cracks—and to prevent balances from growing so large that they cannot be pursued in small claims court, which only handle cases where the amount claimed does not exceed a certain limit, e.g., $5,000 (California). Depending on the carrier, you should be following up on each claim every 20-30 days until it has been paid.
Strategies after Patient Default
At the outset, you must define “patient default.” When is an account “past due” and when do you need to escalate collection efforts? Some practices give patients as much as 90 days after sending out the bill. The first warning letter is followed by a second, and then by a final notice letter sent 10, 20, 30 or more days after the date of service. The second letter may be the final one. There is considerable variation among anesthesia practices in this regard.
- The final notice letter may offer the patient an option to establish a payment plan, which will entail signing a promissory note. The patient may sign an authorization for automatic monthly charges to his credit or debit card or withdrawals from his bank account. Sometimes patients will respond to a firm demand for payment with a request for a payment plan. Many practices will offer a payment plan if asked, but not if the patient has been reimbursed by his or her insurance and has not forwarded the check or the funds received.
- The letter may also advise the patient that:
- If he or she does not respond within, e.g., 14 business days of the posted mailing date, the practice will refer the account to a collection agency; and/or
- The delinquent account will be reported to the credit bureaus (most collection agencies will report delinquencies to the credit bureaus automatically, but some anesthesia and pain practices prefer to make this a separate, optional step in the escalation); and/or
- The practice is withdrawing from further management of the patient’s pain care (hospital service requirements usually make it impossible to reject anesthesia patients prospectively); and/or
- The practice will inform the patient’s health plan that the patient has been reimbursed but refuses to pay for the corresponding anesthesia or pain medicine services (ABC account managers often find that fear of being reported to the health plan, and the possibility—real or imagined—of losing coverage as a result produces the payment to the practice); and/or
- The practice will report the debt to the Internal Revenue Service as “income” on Form 1099.
Many practice administrators have found that notice of the consequences of continuing not to pay gets patients’ attention and leads to full or partial remittance of the balance owed. The warning notices above may appear aggressive, but the patient who keeps insurance reimbursement money while evading his or her obligation to pay the anesthesiologist for services received is not a very sympathetic character. He or she also happens to be protected by the federal Fair Debt Collection Practices Act and state law; medical practices should be familiar with these limits on collection activities. It is also the case that many anesthesiologists and pain physicians do not like jeopardizing their relationship with their patients through active collection efforts, and it is certainly their right to be gentle.
If a practice goes through all the steps in its own payment policy and still receives nothing, it may exercise the option of turning the delinquent account over to a collection agency. Sharing any recovery with the collection agency will reduce the amount received by the practice to 30%-60% of the bill. Recently, organizations that buy the delinquent accounts outright have begun to appear. The amount of payment will be a fraction of the charges, but the practice will have its money and be able to clear the account quickly.
In a handful of states, statutes bar physicians from pursuing managed care (preferred provider organization or, more commonly, HMO) patients—who go out of network, either directly or effectively. Colorado, for example, has one law that requires managed care organizations (MCOs) to arrange for enrolled patients to receive care from out of network providers if the health plan does not maintain an “adequate” network, and another law that requires MCOs to hold patients harmless from excess costs if they use a non-network physician at a network facility. The practical effect is to make the MCO essentially responsible for resolving the bill before the physician pursues action against the patient. Typically, the MCO either pays the billed charges or comes to an agreement with the physician for less.
In most states, without balance-billing legislation, MCOs often send the check to the patient in order to pressure physicians to sign participation agreements, leading to the necessity for practices to collect directly from the patients. This is a most unsatisfactory situation, but we hope that the strategies identified above will help you in your efforts to collect your fees from the patients holding the checks.
With best wishes,
President and CEO