The 2013 HME Handbook: Accounts Receiveable

Co-Pays Hit Critical Mass

How to leverage third party services to improve A/R performance.

Accounts ReceiveableCollecting co-pays is a lot more critical now than a few years ago, because reimbursement has gone down and providers continue to take funding cuts. The net is that revenue has decreased, yet costs are the same. So, providers had to get more effective at collecting co-pays in order to either maintain margins, or to simply remain profitable.

Patient co-pays can amount to a sizeable amount of money each month, however, in the past providers were sometimes content to let them fall by the wayside because the effort and money needed to collect them could be better spent on other tasks.

Unlike going to a doctor, where in many cases the clinic is collecting the co-pay before a patient even sees the doctor, it can sometimes take months for a patient to see a bill from an HME provider. And a patient is far more likely to pay a bill from last month than they are for one from four months ago. Even if a provider can collect a co-pay from a patient’s first visit, HME products are often rentals so the providers still have 12 months of billing the insurance and collecting payments from patients.

Being able to staff a team to take care of patient co-pays is very challenging. Finding people that are good collectors, knowledgeable, know how to treat the patients appropriately and can get the right correspondence out in a timely fashion is a challenge for HME provider.

So with all this in mind, many providers turn to a third-party to outsource the handling of the A/R component of their business. A third-party can offer expertise, proven methodology and a follow-up process that isn’t typically available with the typical billing systems without a lot of labor. Thirdparty services have both technology and automation to make collections a simpler, automated process, so the provider doesn’t have to worry about it. Providers can evaluate as needed and choose take action when there are exceptions to the automated process.

So how does a provider determine whether it is worth it to utilize a thirdparty collection service? The answer is found by looking at the cost factor involved. Look at the labor savings, and whether can a third party do it more efficiently, that is, collect more with less labor.

When it comes to integrating a third-party service into their business
processes, there are some easy ways to make sure the services complements instead of conflicts.

  • Evaluate the third-party service. It should be a company that is dedicated to the HME market, has a substantial history and lots of installations.

  • It is important to strike a good balance of the third party matching up with the provider’s process or being able to complement the process and fit in. Basically, one that avoids disrupting the current process, and one that can integrate cleanly, not create a lot of issues and have a very simple implementation.

  • Find a service that won’t require the HME provider’s IT team to do a lot of things. Seek out a service that doesn’t require the provider to take a lot of action, such as ongoing running of reports or sending files. Those components should be automated, so they do not take time and labor off of the HME staff.

  • Ensure that all roles and responsibilities are well-defined. Have good training from the third-party that outlines what the best practices are, what the provider’s staff should continue to do and what the third-party outsourcer should do.

  • Make sure the third party utilizes an invoice process as opposed to a monthly statement process. Invoicing is very challenging to do from a provider’s perspective, as often the tools aren’t there in the software and follow up after sending an invoice is labor intensive. If an invoice overlaps with a monthly statement, it’s confusing to the patient. There has to be a different methodology than the monthly statement, and that’s where an invoicing process with past due follow up from a third party can be more effective than what a provider can do internally.

Ultimately providers need to determine if sending bills out should be part of their core competency, and in many cases, it isn’t. If an HME provider’s focus is on taking care of patients, sending bills out to patients shouldn’t necessarily fall in their core competency. Third-party providers can provide bills with a better, more understandable format — something that incites the willingness to pay from patients.

Points to take away:

  • The third-party service should match up with a provider’s process or able to complement the process and fit in.
  • Look for a service that requires little to no effort on your IT team.
  • Ensure that all roles and responsibilities are well-defined.
  • Look for a service that has a substantial history and lots of HME installations.

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This article originally appeared in the June 2013 issue of HME Business.

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