A new national survey administered by Emerald A/R Systems www.emeraldar.com shows that the majority (77.3%) of radiology practices are receiving only a 12% rate of recovery from collection agencies working on their behalf. The remainder of the practices are receiving even less, with more than one-third (33.6%) reporting that their collection agency delivers a rate of recovery of between zero and 10%. Let’s think about that for a moment. The vast majority (52%) of practices surveyed turn over between $50,000 and $200,000 in monthly debt to collection agencies. So that means that a practice is happy with their collection agency recovering a maximum of $5,000 on a $50,000 debt? Given the 1% to 2% profit margin of most practices that just doesn’t make sense.
The survey indicates that billing and collection practices need a wholesale overhaul. Practices are struggling, patients aren’t brought into the financial responsibility loop early enough, billing isn’t handled efficiently (or sometimes fairly) and communication breaks down. Emerald conducted a survey of exclusively for RBMA http://www.rbma.org/ members to ask about those issues. It is the largest national survey of billing and collection agencies to date, with more than double the respondents participating than in previous, association sponsored surveys.
The results are both troubling and reassuring. Here is what Emerald discovered.
The survey found that 3/4s of practices carry large amounts of monthly bad debt.
The industry has long suspected that practices are struggling with billing and collections but remain hesitant to hire a collections expert. Our survey found that the majority of medical practices (62.6%) wait more than 3 months to turn over monthly medical debt ranging from $50,000 to $200,000. In the meantime, they are using precious time and energy to collect bills on their own. Three-quarters (72.4%) of the practices use in-house billing systems and are employing multiple tactics to collect bad debt:
What you don’t know can hurt you
The survey uncovered a surprising number of practices that don’t know what specific collection actions are taken on their behalf, despite entrusting agencies with the collection of up to $200,000 in monthly debt.
The majority of practices don’t know if their collection agency complies with the Federal Telephone Consumer Protection Act (TCPA) http://w0e.397.myftpupload.com/2015/05/08/patient-portal/ , which can cost the practice thousands of dollars in fines.
When asked, “Has your collection agency changed their autodial process to comply with the increase in TCPA class action lawsuits?” 62% of practices said they are not sure if their agency complies with TCPA, 32.8% said yes they are sure and 5.2% said no.
Talk about leaving money on the table:
Let’s talk about these two. First, Medicaid eligibility.
It is a well-kept revenue secret, but one in which we happen to specialize. http://w0e.397.myftpupload.com/2015/01/17/working-from-new-workspace/ As of January 2015, 28 states authorize entities to conduct presumptive Medicaid eligibility (hyperlink:http://kff.org/health-reform/issue-brief/medicaid-moving-forward/) determinations for patients. If you are enrolling patients in Medicaid at the time of treatment, you can bill for any services delivered to them during the previous 90 days. How many claims do you think that represents? For one client we found 300 claims a month, the majority of them Medicaid, to rebill, at an average value of $100 per claim for a grand total of $300,000. You can read more about Medicaid eligibility in our blog on the topic. (Hyperlink: http://w0e.397.myftpupload.com/2015/01/17/working-from-new-workspace/)
Secondly, credit reporting agencies.
Nearly 9 percent (8.6%) of surveyed practices are unsure if their collection agency sends medical debt to a credit reporting agency. Why does this matter? Because medical debt and medical debt collections are rising. (You can read more in our blog. http://w0e.397.myftpupload.com/blog/ Medical debt is the leading cause of bankruptcy in the US. Given the numbers, it’s easy to see why.
The Kaiser Family Foundation reports that most Americans have less than $3000 to cover out of pocket medical costs- yet the ACA requires an individual to pay up to a cap of $6,350, $12,700 for families. (KFF hyperlink: http://kff.org/private-insurance/report/medical-debt-among-people-with-health-insurance/) This is why it matters if your collectibles are sent to a credit reporting agency. It has become more than a financial question- it is now a philosophical and ethical question as well. http://w0e.397.myftpupload.com/emerald-services/bad-debt-recovery/
Some Reassuring Signs
The good news is that survey results indicate that some practices are well informed and on top of collection efforts.
Questions remain on debt levels and recovery
Throughout the survey some questions were not answered by many participants. That is to be expected. However, a larger percentage of participants did not answer two specific questions:
The amount of outstanding debt and the rate of recovery achieved are important revenue management issues for any practice. We suspect that some left these questions unanswered because they believe their debt is too high, and they have no idea what their rate of recovery is.
If this is true then we reaffirm what we have stated here; it is time for practices to seek expert collection agencies to reduce their medical debt, and they should not settle for a recovery rate between 10% and 15%.
We believe in compassionate collections. We do not believe that is an oxymoron. We believe that medical debt can be recovered efficiently and professionally. We do it every day. Yes, the industry as a whole needs repair but while it’s undergoing construction – at the very least- we can demand excellence.
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