Establishing Collections Policies

Establishing clear and solid collections policies is one of the keys to success for any medical or dental practice. As a Denver/Boulder, CO area attorney who works primarily in the healthcare field, I’ve assisted many physicians and dentists in establishing new or modifying existing collections procedures. When drafting collections procedures for your practice, it’s important to remember these key elements:

The Collections Policy Should be Effective

The main objective in establishing a collections policy is not to destroy your patient’s credit; it is to collect the fees that are owed to your practice. In many instances, a visit to a doctor or an emergency trip to the dentist may be an unexpected expense for your patient. Therefore, it is beneficial to the long-term financial goals of your practice to allow a reasonable amount of time for a patient to pay a bill after it’s been sent. Often it is best for doctor’s offices start out with a reminder notice, move to a second reminder notice, and then eventually a “last chance warning” before submitting the bill to an attorney or outside collections agency.

The Collection Policy Should Be Disclosed to Patients

When you send a patient to collections, even if you succeed in collecting the full amount, you will most likely have to pay a percentage of any amounts collected to a collections agency or attorney. Since you will already be losing part of your collections, you will want to make sure you can get everything you are entitled to. If you want to collect interest, your costs and attorney’s fees it is best to put this information in your financial obligation paperwork signed by the patient or their responsible party prior to your office providing care. Courts may not award interest all the way back to the date of service if you did not make the patient aware of it at the time of service. In addition, it is very common for an adult child or other relative to bring in an elderly or disabled or other family member who is without resources to pay for your healthcare services. If you do not get that individual to agree to be the financially responsible party in the event the patient does not pay, you may never get paid. Therefore, it is often best to incorporate these policies in to you intake paperwork and get the appropriate signatures at that time.

The Policy Must Not Drive Away Reliable Patients

Obviously, patients who don’t _ever_ pay their bills are detrimental to your business—but so is driving away good patients who are just a little slow to pay. A harshly worded letter may get a patient to pay his or her bill, but it may also drive him or her to another healthcare provider who is deemed to be more compassionate. It is important that the language in your reminder notices is professional and firm, but not overly harsh or accusatory. In addition, the mailing schedule for reminders should be applied equally to all patients. As a doctor, you may not be able to discuss one patient’s bill with another, but there’s nothing to prevent two of your patients from talking about your collections policies with one another. Treating patients differently can lead to dissatisfaction and allegations of unfairness.

Consider the following example:

Two adult sisters from Boulder use the same OBGYN in Denver. One of the sisters is chronically late on payment, while the other sister is usually on time with her bills. Because of the former sister’s consistent tardiness, the office staff drafts a more harshly worded letter for her. The usually current sister receives the standard reminder notice. When the two compare notes, the tardy sister feels that she’s being treated unfairly. The Denver OBGYN may end up losing one or both patients over this.

Your Policies Must Always Comply with Colorado and Federal Laws

In addition to the Fair Debt Collection Practices Act, medical practices also have to adhere to HIPAA and a plethora of other regulatory laws. Any unauthorized disclosure of protected health information to a third party can open up a doctor and his or her office to legal consequences.

Collections and Medicine are two of the most highly regulated fields in the country. Because of the complexities involved in medical billing and collections, it’s highly recommended that medical and dental practices contact a Colorado attorney who is knowledgeable in state and federal laws prior to drafting a collections policy.

Nothing in this article is intended to be legal advice and no attorney client relationship is formed by reading this. If you are seeking specific legal advice, you should contact an experienced attorney in your jurisdiction to discuss these matters and to determine what is in your best legal interest.