The Intake

Insights for those starting, managing, and growing independent healthcare practices

A step-by-step guide to collecting patient payments

Learn how to effectively reduce patient payment frustrations and improve your practice’s revenue.

Best ways to collect patient payments

At a Glance

  • Develop key performance indicators directly related to payment collection.
  • Validate a patient’s insurance when the appointment is booked.
  • Educate staff and patients about available community resources.

With the ever-evolving landscape that is healthcare, independent practices face tons of challenges, one being medical billing. In fact, the cost alone of third-party billing and collecting patient payments has made it harder and harder for smaller practices. In 2018, JAMA Network reported that “of professional revenue, professional billing costs were estimated to represent 14.5% for primary care visits.” 

How do practices easily navigate the ins and outs of collections? Although there are many sticky situations to consider — complicated insurance rules, coding errors, high administrative costs, and confusing regulations — take time to focus on the best ways to collect patient payments easily. 

Set your practice up for success by evaluating and establishing systems, training both administrative and medical staff, and utilizing those in the front office as the first line of gathering the information needed to collect patient payments. 

Step #1 - Set up systems to successfully collect patient payments

The first step to collecting patient payments is to evaluate the existing system and adjust current policies and processes that are not effective or don't yet exist. This process breaks down into 5 steps.

What is the patient collection process and how can it be measured?

A practice should assess its success level by measuring and comparing key performance metrics. Here are some ways a practice might evaluate and monitor the success of its collection process:

  • Collection rate: This metric measures the percentage of outstanding patient balances that have been collected within a specific timeframe. A higher collection rate indicates a more successful process.
  • Days in accounts receivable (AR): Practices track the average number of days it takes to collect payments from patients and insurance companies. A lower number of days in AR is generally more favorable, as it suggests faster collections.
  • Aging of accounts: Practices may categorize outstanding balances by age (30 days, 60 days, 90 days, etc.). A successful collections process would show a smaller percentage of accounts in older aging buckets.
  • Percentage of write-offs: This metric measures the percentage of outstanding balances that are adjusted as uncollectible. Lower percentages indicate a more effective collection process.

Once the numbers have been calculated and compared, the results can be used to adjust the practice's current billing policies and protocols for a higher rate of success. 

Build a strong payment policy (and communicate it clearly)

Now that the performance has been evaluated, it’s time to assess the practice’s current financial policy or develop a new one.

Although not a comprehensive list, here are some starter questions that a payment policy could incorporate:

  • Will patients be required to cover copays during check-in?
  • Will patients be required to have a valid credit card on file?
  • Will patients be allowed to pay on a payment plan?
  • Will patients need an insurance referral (if required) to schedule an appointment?
  • How will communications regarding the balance be sent to patients?
  • What are the available payment options? Credit, cash, checks, debit, etc.?
  • What is the policy regarding non-payment?

Once your office has created or updated the payment policy, it’s time to communicate it. This involves training both administrative and medical staff to be able to clearly communicate with patients what the payment expectations are for any service offered at the practice.

Practices may embed a patient responsibility agreement in the registration forms and the patient portal.

For general communication, and to cover all bases, practices may include their payment policies on their website.  Practices can also display policies on the wall beside reception.

The more places the healthcare practice posts and communicates the policy, the less likely miscommunications will happen between patient and provider.

Use technology to increase collection effectiveness

In this digital age, practices can use technology to their advantage. Having the right tech tools may help increase patient payments and reduce the time and money spent on collecting.

For example, many practices are still using paper billing — as of 2017, it was 77%, to be exact. Use technology to reduce the cost of billing, thereby eliminating the need for paper statements. This can include:

  • Implementing online billing and collections
  • Storing credit card information for later use
  • Creating automated payment plans

As another example, practices can use technology to collect and verify insurance information, ensuring they accurately understand a patient's financial responsibility after applying insurance. This can reduce the time and money spent on administrative staff following up with patients.

More digitally inclined patients appreciate having a portal to:

  • Check in online
  • Share their insurance information
  • Provide an image of their card

Hosting a kiosk at the front office where patients can provide demographic and insurance information prior to their appointment is an excellent system to save the practice time and money.

Partner with a reputable, successful medical billing company

If your practice wants to make the collections process easier, partner with a reputable medical billing company with a high success rate. A medical billing company already has processes and systems in place to take on the administrative load that comes with billing. They may use technology, such as robotic process automation (RPA), to automate billing processes to:

  • Speed payments
  • Reduce expenses
  • Track metrics

Partnering with a successful medical billing company can help a practice have clean claim rates, reduce the number of days in accounts receivable, and increase net collections. 

Train staff to have the information patients need

Because the front office, medical, and billing staff communicate important information like the payment policy to patients, it’s very important to ensure they’re impeccably trained. As part of Becker's billing redesign contest, more than 60% of patients said they were confused by their medical bills and associated payment processes. Your practice’s staff needs to be able to disseminate complicated medical and billing information.

Your practice’s staff needs to be able to disseminate complicated medical and billing information.

A big piece of this puzzle is waivers.

When it’s clear the patient’s insurer will not reimburse for the service, your practice should obtain a financial waiver. Medicare requires the use of an Advance Beneficiary Notification (ABN) for certain services to alert beneficiaries of the possibility of financial responsibility. These waivers notify the patients upfront of their out-of-pocket financial obligation before performing the service. 

Medicare requires your practice to provide the ABN at the point of care. For example, if a patient wants a B12 shot, the tech who administers the shot must advise the patient (if applicable) that Medicare will not cover the treatment. This is why training staff at every level about payment policies is imperative for proper collection.

Step #2 - Front office: The front line for collecting information and educating patients

The front office team is the first line of defense in collecting correct patient information, leading to better collections. There are different ways to utilize the front office team to accurately collect patient information and offer education on collecting payments upfront.

Have a pre-intake checklist for collecting patient information

  • Verify patient information:  The first thing front-office staff must do when a patient walks through the door is verify their information — every single time. A practice can offer the patient a tablet, direct the patient to use a kiosk in the lobby, or identify some key questions to ask (patient name, date of birth, address, and phone number) to ensure everything is up to date. 
  • Check patient insurance: In a recent survey conducted by Tebra, 92% of medical billers who answered wished practices did a better job at verifying insurance information. Get into the habit of checking insurance information at every visit.
  • Communicate information for patients with no insurance: If a patient does not have insurance, communicate the process for payment, educate them on discounts offered, or refer them to community services as appropriate.
  • Communicate a summary of key points in the financial policy: It’s important to have several points of contact reinforce the financial policies of the practice to avoid misunderstandings, starting with the front office.
  • Ask for a credit card to keep on file: Just having a credit card on file can reduce patient debt by 36%. Practices can also verify the credit card on file at every visit.

Identify and offer resources to uninsured patients 

The Kaiser Family Foundation reports that nearly 1 out of every 10 patients lacks insurance coverage. Practices can identify and offer resources to the uninsured population in several different ways.

  • Develop a charity care policy: Practices can offer free or discounted medical care to people who can't afford to pay.
  • Educate patients about available community services: If a patient knows they won’t be able to pay for treatment, practices can refer them to local volunteer or free clinics as appropriate for the patient.
  • Refer to pharmaceutical assistance programs: Practices can refer patients to State Pharmaceutical Assistance Programs. These are state-run programs that offer financial assistance to certain populations to help pay for prescriptions. 

Step #3 - Time to collect patient payments

Once a practice has established successful systems, created a strong payment policy, trained its staff thoroughly, collected patient information, and educated its patients on its policies and discounted financial offerings, it’s time to collect payments.

What is the best time to collect patient payments?

A TransUnion Healthcare study found that nearly 68% of patients don’t fully pay their medical bills. Collecting payments at the time of service can reduce the need to follow up on payments later. Practices may be able to offer a discount for prompt payment, in the case of self-pay patients.  

Use clear language when collecting

Definitive language is key. Instead of saying, “Would you like to pay, Ms. Jones?” Use a script similar to, “Ms. Jones, how would you like to pay today?”  While speaking, write out the receipt, demonstrating the intention to collect. 

Set up effective payment plans

It isn’t always possible for a patient to pay their entire bill post-visit. A practice can set up payment plans, but they need to have effective terms.

Elements of an effective payment plan include:

  • Proactively asking the patient,  “How much more time do you need?” to establish clear timelines
  • Establishing a minimum monthly payment. Target payments of $25 or more, as that will cover the cost of administering the plan
  • Creating bi-monthly plans to align with patients’ payroll cycle

Monitor patient receivables

Once you have established a patient on a payment plan, you need to monitor the situation to be sure your practice receives payments. 

It’s a good idea to establish a protocol for tracking patient receivables. This keeps practices abreast of skipped payments. Create a separate category for patient receivables tied to payment plans, and monitor performance.

Ways to collect payments post-visit

With the recovery rate for debt collections at only 20% to 30%, upfront payment is the way to go. Because paying at the point of service isn’t always possible for a patient, practices need to set themselves up for success to collect payments post-visit. They may use a credit card on file, or send email and text reminders.

Dismiss for payment failure 

Establish a dismissal policy for non-paying patients. Otherwise, a practice is apt to see more and more non-paying patients, particularly as the word gets out the practice tolerates failure to pay.

Collecting patient payments effectively is the lifeline of every practice

Every practice needs to be effectively collecting payments to have a healthy revenue cycle. With a thorough approach to the collection process — evaluating and adjusting existing systems, using technology, clear communication, and effective staff training — healthcare practices can increase their collections, ensuring a healthier financial future for their operations.

Make collecting payments easy

Avoid medical billing headaches by partnering with us. Tebra offers billing and payment software to help easily collect patient payments.

Medical Billing Benchmark Report
Subscribe to The Intake:
A weekly check-up for your independent practice

Jenn Green

Jenn Green has been using her BA in fine arts from York University in Toronto to publish articles on The Intake, Homebase, Master School, and Airalo. Jenn’s personal health challenge that required significant medical attention drives her passion for writing about healthcare-related topics. She believes ongoing education is critical to successful outcomes and to ensure providers offer the best patient care possible.

Reviewed by

Elizabeth Woodcock

Dr. Elizabeth Woodcock is the founder and principal of Atlanta-based Woodcock & Associates. She has focused on medical practice operations and revenue cycle management for more than 25 years. She has led educational sessions for a multitude of national professional associations and specialty societies, and consulted for a diverse range of clients.

Get expert tips, guides, and valuable insights for your healthcare practice