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Should Your Practice Offer Patient Payment Plans?

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piggy-payment-planIt’s a straightforward question with tremendous impact on the revenue cycle: Should we offer payment plans to our patients? In one word, the answer is yes—but with a caveat. Not every type of patient balance should qualify. Practices must place some parameters around when a payment plan is appropriate.

Patient co-pays, for example, should be collected in full at the time of service if at all possible. It just doesn’t make fiscal sense to chase $20 over several months. On the other hand, it might be perfectly feasible to extend a short payment plan to a patient who can’t pay the $100 deductible upfront.

The key is to develop specific policies and criteria.

At one practice where I worked, any balance under $300 had to be paid within three months of the date of service. Larger balances had to be paid within six months. Furthermore, any payment plan agreed upon was put into writing for the patient to sign. This helped to increase not only the patient’s commitment to pay, but could be used as leverage if the bill was sent to collections.

Still, even written payment plans can’t guarantee 100% reimbursement. One effective option for patients who struggle with their payment plans is a quick-pay discount. Because these discounts are extended in exchange for immediate payment in full, they offer a solution that ensures partial collection while also relieving a patient’s financial anxiety. My former practice typically offered a 25% discount; managers could approve up to 40% and administrators up to 49%.

As with any financial policy, patient payment plans pose both advantages and disadvantages. There will always be those patients, for example, who want to spread a minimal balance over an unreasonable length of time. In the end, though, the advantages outweigh the disadvantages. Physician practices exist to care for patients; that commitment should apply to their financial health as well as their clinical well-being.