Since the COVID-19 pandemic began, I have received a growing number of inquiries about collection issues. For a variety of reasons, many patients seem increasingly reluctant to pay their medical bills. I’ve written many columns on keeping credit card numbers on file, and other techniques for keeping your accounts receivable in check; but despite your best efforts, there will always be a few deadbeats that you will need to pursue.
Dr. Joseph S. Eastern
For the record, I am not speaking about patients who lost income due to the pandemic and are now struggling with debts, or otherwise have fallen on hard times and are unable to pay.
The worst kinds of deadbeats are the ones who rob you twice; they accept payments from insurance companies and keep them. Such crooks must be pursued aggressively, with all the means at your disposal; but to reiterate the point I’ve tried to drive home repeatedly, the best cure is prevention.
You already know that you should collect as many fees as possible at the time of service. For cosmetic procedures you should require a substantial deposit in advance, with the balance due at the time of service. When that is impossible, maximize the chances you will be paid by making sure all available payment mechanisms are in place.
With my credit-card-on-file system that I’ve described many times, patients who fail to pay their credit card bill are the credit card company’s problem, not yours. In cases where you suspect fees might exceed credit card limits, you can arrange a realistic payment schedule in advance and have the patient fill out a credit application. You can find forms for this online at formswift.com, templates.office.com, and many other websites.
In some cases, it may be worth the trouble to run a background check. There are easy and affordable ways to do this. Dunn & Bradstreet, for example, will furnish a report containing payment records and details of any lawsuits, liens, and other legal actions for a nominal fee. The more financial information you have on file, the more leverage you have if a patient later balks at paying his or her balance.
For cosmetic work, always take before and after photos, and have all patients sign a written consent giving permission for the procedure, assuming full financial responsibility, and acknowledging that no guarantees have been given or implied. This defuses the common deadbeat tactics of claiming ignorance of personal financial obligations and professing dissatisfaction with the results.
Despite all your precautions, a deadbeat will inevitably slip through on occasion; but even then, you have options for extracting payment. Collection agencies are the traditional first line of attack for most medical practices. Ideally, your agency should specialize in handling medical accounts, so it will know exactly how much pressure to exert to avoid charges of harassment. Delinquent accounts should be submitted earlier rather than later to maximize the chances of success; my manager never allows an account to age more than 90 days, and if circumstances dictate, she refers them sooner than that.
When collection agencies fail, think about small claims court. You will need to learn the rules in your state, but in most states there is a small filing fee and a limit of $5,000 or so on claims. No attorneys are involved. If your paperwork is in order, the court will nearly always rule in your favor, but it will not provide the means for actual collection. In other words, you will still have to persuade the deadbeat to pay up. However, in many states a court order will give you the authority to attach a lien to property, or garnish wages, which often provides enough leverage to force payment.
What about those double-deadbeats who keep the insurance checks for themselves? First, check your third-party contract; sometimes the insurance company or HMO will be compelled to pay you directly and then go after the patient to get back its money. (They won’t volunteer this service, however – you’ll have to ask for it.)
If that’s not an option, consider reporting the misdirected payment to the Internal Revenue Service as income to the patient, by submitting a 1099 Miscellaneous Income form. Be sure to notify the deadbeat that you will be doing this. Sometimes the threat of such action will convince the individual to pay up; if not, at least you’ll have the satisfaction of knowing he or she will have to pay taxes on the money.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.