Finding Receivables Management Help

• By Lisa Bargmann
• Apr 15, 2008

Providers looking to outsource their Receivables management should focus on HME-specific firms.

HME/DME providers have consistently lost profit margin by ignoring patient co-pay’s and deductibles, and these unpaid balances currently comprise 10 percent to 35 percent of a provider’s accounts receivable. Patient-pay balances are traditionally high-quantity, low-dollar receivables that do not always consistently received the attention they deserve from providers due to the significant time required to manage these accounts.

That’s no surprise, considering that providers are faced with competitive bidding, accreditation, reduced government and private insurance reimbursement, as well as a rapidly aging population reliant on Medicare. By 2030, the aging Medicare population will increase from 36 million aged 65 and over in the United States to more than 72 million, according to studies from the U.S. Department of Health and Human Services, Administration on Aging.

This demographic shift will provide significant profitability challenges for those that resist new approaches to recovering this receivable, yet create significant opportunities for those that institute proper protocols in the collection of patient receivables. The time is upon us for a provider to create lean organizations, increase efficiencies and find ways to offset reduced reimbursement. Proper patient receivable management is now essential as payment responsibility shifts from payers to patients.

Managing Patient Receivables
The task of patient receivable management can be time consuming, tedious and, with limited in-house resources focusing on insurance receivables and not properly trained on handling difficult patient communications, a burden that most providers can sometimes be tempted to ignore. Providers that recognize the importance of these receivables often dedicate valuable internal insurance billing specialists to print, manually fold, and hand-stamp past-due notices on invoices and statements, as well as toil with billing software systems that are not designed to adequately manage patient receivables. Account tracking, patient follow-up and result monitoring is virtually non-existent in many of today’s software packages.

Patient-owed receivables continue to increase with the expansion of Health Savings Accounts (HSA) and new lower cost insurance products. In 2005, enrollment in HSA’s increased 220 percent, and the trend continued in 2006 with a 43 percent increase, according to “HSA enrollment growth slows but is still high,” by Doug Trapp (American Medical News, May 2007).

Furthermore, in “FactSheet: Dramatic growth of health savings accounts (HSAs),” The U.S. Department of Treasury forecasts that 14 million HSA policies will cover nearly 20 percent of the commercially insured population, representing 25 million to 30 million Americans over the next two years. The HME/DME industry must immediately counter-act these changes, or will find themselves with rapidly increasing bad debt expenses and profit-threatening situations.

Ill-Suited Solutions
For years, many providers have tried in vain to utilize outside debt collection agencies specializing in medical collections to recover their aged patient receivables.

However, sourcing the a reliable medical collections agency can be a fruitless search. Many of these specialists are used to working hospital, practitioner or large facility collections, but might not understand the complex world of DME/HME billing, or fail to give proper attention to a HME/DME provider’s receivables. Active rentals, purchase options, denials, and covered equipment are foreign to a traditional collection agency, and some do not understand the intricacies related to not alienating a provider’s valuable referral sources through aggressive collection tactics..

If a provider picks one that is not familiar with the HME/DME space, it runs the risk of being left frustrated by a paltry small percent in recoveries, and providers have bounced between agencies without success.

Other providers utilizing outsourced insurance billing companies have turned to these entities for help with their patient receivables. However, these companies provide one of two types of service, neither of which results in significant results. The majority will send month-end statements (at a fixed cost charged to you per statement) to the patient for three months, and then return the majority of outstanding patient receivables back to the provider after ninety days upon non-payment.
Providers would thusly be left with large volumes of aging receivables on their balance sheet, as well as a patient who has now lost direct contact for three months. Other insurance billing companies will strictly not deal with patient receivables, opting to send the statements to the provider, who must then in turn mail to patients, creating unnecessary delays in time and cash flow.

HME/DME-Focused Service
Where is a provider to turn? The utilization of a turn-key receivable management service focused on HME/DME is the solution to enhanced provider financial profitability.

Search for a partner who will work directly from your billing software via remote desktop or VPN connections. This is crucial to having successful returns, as all billing notes, insurance information, and patient history is available to educate the patient on the details of their account. Make no mistake – outgoing phone contact with your entire patient base, regardless of balance size, and over varied date/time schedules is mandatory to provide significant returns for ongoing patient receivable management solutions.

This article originally appeared in the April 2008 issue of HME Business.