Successfully managing a practice can present challenges in terms of setting appropriate prices, identifying bad debt, monitoring employee efficiency and more. Here’s a look at the answers to a few frequently asked financial questions to help guide your practice’s financial health.
FAQ 1: What is the common practice for establishing “charges”?
While it is up to each individual practice to determine how it chooses prices, a frequently used approach is to set charges at 200 to 400 percent of Medicare reimbursement, with the low end of this range for office visits and the high end for surgeries. Outside of that, the main “rule of thumb” is to set charges higher than the highest commercial reimbursement. If your practice chooses to offer discounts for upfront payment, a 30 percent rate is common.
FAQ 2: How do we determine which patients are considered “self-pay”?
Self-pay patients fall into two categories: 1) the patients without insurance who are responsible for their entire bills; and 2) insured patients who have financial responsibility after their insurance pays a portion of the claim. Because the latter type of patient isn’t identified until after insurance has adjudicated the claim, patient receivables often are much higher than a practice realizes.
FAQ 3: How long should a practice allow a patient to be in a payment plan?
While a maximum of six months is a good benchmark, practices may want to consider asking patients how much time they need to fully pay a bill. This can allow a patient to define his or her own workable timeframe. Since each circumstance is unique, your practice should be flexible in this area. For example, if it takes a patient two years to pay his or her balance but payments arrive regularly, then allowing this extended timeframe is more than acceptable.
FAQ 4: What is the minimum dollar amount appropriate to send to collections?
Although the costs associated with different collection agencies vary, it is reasonable to send balances over ten dollars to collections. Balances less than ten dollars can be written off; however, if the patient returns to your practice for care, you should be sure to attempt collections. Practices should write off bad-debt on a monthly or even weekly basis.
FAQ 5: Is there a way to keep accounts that were written off to a collection agency from appearing on A/R aging reports?
This is a question you should ask your practice management system vendor because all practices set this up differently in their systems. Some practices have different payer categories that allow monies to be reported separately. Your vendor should be able to help you run reports about “inactive” A/R. The important thing to remember is that these debts must still be accounted for and reported.