Point-of-Service Collections in Healthcare: Why It’s Important and How to Do It

Although point-of-service collection in health care isn't a new concept, most medical practices don't implement it efficiently or consistently. When you understand its value and how to use best practices, you'll improve the financial health of your practice and the experience of your patients.

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Can doctors and providers collect deductibles upfront?

Yes, doctors and providers can and should collect deductibles, co-pays, and out-of-pocket bills upfront. The advantages of collecting payment upfront extend to your practice and patients. Combining good faith estimates with upfront payment keeps your patients informed about their financial responsibility and improves the effectiveness of your medical billing department.

How common is point-of-service collection among practices?

Several variables affect whether practices collect upfront payment for services. Practices that serve a high percentage of patients who use Medicare and Medicaid are less likely to collect payment upfront. However, nearly half of practices have point-of-service collection procedures in place. Upfront collection methods are even more common, with 67% of practices either contacting the patient up to two weeks before the appointment or asking for payment when the appointment is made.

Point-of-service collection procedures are more common among organizations that provide walk-in or emergency services since there is usually no advanced patient contact before an appointment.

Why point-of-service collections are important for your practice

With more patients using high-deductible insurance plans or paying out of pocket, collecting directly from patients is becoming more common. Without solid upfront collection procedures, you'll often be forced to chase down payments long after services are rendered. Upfront collections in healthcare provide several important benefits for your practice and your patients.

Reduces cost to collect

Every dollar you collect upfront is one you don't have to spend time and resources collecting after the fact. If you have systems and procedures in place for collecting upfront or at point-of-service, it simplifies the process. You don't have to pay employees to deal with redundant bills and late accounts. Adding upfront collection practices to your existing workflow can easily be accomplished with little extra effort or expense.

Decreases accounts receivable days

The number of days a patient account remains in accounts receivable (AR) is the primary measure of the performance of your accounts receivable efforts. The longer an account sits in AR, the more your medical billing department will perform poorly. Collecting payment upfront reduces or eliminates the days an account is in accounts receivable, thus boosting the performance of your medical billing department. Medical billing best practices call for reducing aged accounts by shortening the time they spend in accounts receivable.

Mitigates bad debt and write-offs

Collecting payment upfront also reduces bad debt that you have to write off. Providing patients with an upfront estimate and collecting payment before services are provided lets your patients know what they'll owe before they receive a product or service. They're able to make an informed decision before they're hit with an unexpectedly high bill that they can't pay.

Patients who can't afford a service can look into other options or financing to avoid unpaid bills. Engaging in an open dialogue about payment is not only beneficial for you, but it also improves your patients' experience.

How to start collecting upfront

The landscape of health care is changing. More patients are approaching health care from a consumer standpoint. They're using digital tools and processes to find and access healthcare providers and services. This shift in mindset has primed patients to think of health care like any other service. They wouldn't expect to take their car to the mechanic and receive a surprise bill until after the work has been performed.

The opacity in the healthcare industry regarding pricing can make it seem arbitrary and exploitative. Providing an estimate and collecting payment upfront is standard in other industries and moves towards transparency in pricing for everyone. If you don't have procedures in place for providing upfront estimates and collecting payment, you may receive some pushback.

Following the best practices of point-of-service collections can help you get everyone on board and improve the financial health of your practice.

Understand why patients should pay in advance

Without a clear understanding of the benefits of having patients pay in advance, it can seem like a heartless practice. Healthcare providers are in the business of caring for people and are often uncomfortable with financial discussions. Make it clear that collecting payment upfront doesn't necessarily mean that patients who can't pay in advance are denied the services they need. They can be referred to a financial counselor to explore their options for financial assistance.

Patients feel empowered when they're given clear, easy-to-understand information about their bill, including a breakdown of costs. They deserve to understand the financial obligation related to the health care services they're receiving. Many patients put off medically necessary procedures and treatments because they fear they can't afford them. Providing an upfront estimate ensures they understand the actual costs and that they're aware of the financial assistance options.

Having patients pay in advance also benefits your practice by eliminating the worry over how you'll collect the patient-pay portion of the bill, avoiding future collection difficulties.

Set office-wide goals to follow point-of-service best practices

If everyone isn't aligned, you won't achieve the best results. There are a lot of moving parts involved with providing estimates and upfront collections. Your staff will need to set expectations at every point of the patient interaction. Ultimately, your goals should include:

• Check insurance, eligibility, authorization, and benefits for all of your patients
• Ensure a funding mechanism for all of your patients before services are provided
• Tell all of your patients what they owe before they receive a service or before discharge

Your patients should be able to access and pay their bills for healthcare services as easily as they can pay for any other service.

As part of your effort, you'll need to include all of the elements of a successful POS collection system, including:

• Data
• High-level support
• Buy-in from everyone
• Official policies, procedures, protocol, and scope
• Patient education

Train your staff in compassionate collections

Set guiding principles and communicate the importance of point-of-service collections to all of your staff. As part of your guidelines, establish roles and responsibilities to ensure accountability. Update your written policies, procedures, and job descriptions.

There's no denying that health care differs significantly from other industries. Your staff will need to be trained to have difficult financial conversations while respecting patients and their sometimes emotional situations. Patients may not fully understand what their insurance covers and why they owe the amount they do. If your staff hasn't been trained to effectively handle upfront payments, they may be tempted to skip these challenging conversations and agree to bill the patient later.

While this avoids issues in the office, it sets your billing office up for collection issues later. Your staff should be trained to ask for payment upfront and encourage a compassionate financial experience without postponing the conversation. Part of the problem may be that your staff doesn't understand how to refer patients who can't afford to pay upfront or at the point of service.

Outside training organizations can be highly beneficial for training your staff. They can offer specialized training and opportunities for your staff to practice in realistic scenarios. Once they become comfortable during training sessions, having these conversations with patients will be easier.

Know your data

To accurately evaluate the success of your point-of-service collection efforts, you'll need to collect data and follow metrics. The data you need to follow include:

• Billed revenue
• Reimbursement
• Upfront collection
• Uncollected debt write-offs
• Payer percentages, including self-pay and uninsured
• Ages and costs of accounts
• Patient types
• Procedure types
• Access points and volume in different areas

Gathering detailed data allows you to:

• Identify your baseline starting point
• Establish priorities
• Focus your efforts
• Set concrete goals
• Determine what you need to accomplish your goals

Big data can provide you with information and trends that can help you make informed, data-driven, and strategic decisions. When you don't take advantage of the data you're producing, you put yourself at a competitive disadvantage.

Point-of-service (POS) collection software

A modern point-of-service collection software can considerably simplify implementing your upfront collection procedures. When you're evaluating a POS collection software, look for a solution that offers:

Ease of integration

A POS collection software should integrate with your current systems, such as registration, eligibility, billing, and document imaging systems. These systems will play an essential role in POS collection since you'll use this data to determine what your patients owe. Such provides them with the correct estimates.

Automatic data entry

Relaying patient information is redundant and tedious. Your POS collection software should eliminate the need for duplicate data entry by drawing from existing account information.

Automatic capture

Similarly, your POS collection software should automatically capture and store payment information, generate receipts, post payments, and create reports.

POS tools

Although your solution should be specific to medical practices, it should still have standard point-of-sale capabilities. It should be able to balance accounts, print receipts, and have drawer-closing procedures.

Payment transactions

Your office staff should be able to process all payment types with your POS collection software, including deductibles, co-pays, out-of-pocket balances, co-insurance costs, and prior balances.

Outstanding balances from different sources

Make sure your software can review and collect outstanding balances for specific departments, groups, or health systems.

Follow-up activity

Your software should be able to link to follow-up activities to ensure accurate collection efforts.

Start a front-office policy of asking for payment upfront

One of the most effective policies to improve your upfront payment collection efforts is to ask every patient to pay before they receive services or at the point of service if there is no prior contact. Consistency between the front office and the back end of the revenue cycle will also increase your billing department's efficiency. If your front office is providing estimates and your back office is driving collections, misalignment can cause patient frustration.

For instance, if your front office provides an estimate that turns out to be inaccurate and the back office isn't aware of it, they may try to collect without informing the patient about the reason for the discrepancy. Your point-of-service collection software should facilitate communication between all departments.  

Already collecting upfront? Best practices for point-of-service collections in healthcare

If you already have procedures in place for collecting upfront but aren't seeing the results you want, tweaking your system may improve your healthcare revenue cycle management. You can strengthen your point-of-service collection strategies by focusing on key areas where your implementation may fall short.  

Front-office training to assess and counsel about patient financial responsibility

Thoroughly training your front office staff is vital to your success in point-of-service collections. However, many organizations will introduce their new policy, provide a slide show presentation, and call it a day. Your staff needs intensive training in how to handle conversations, including opportunities to practice with trainers. Once they feel comfortable having emotionally-charged financial conversations, they'll still need ongoing training.

Many of your front-office staff may have previously worked in similar administrative roles where they were required to ask for money. However, asking for payment for health care services is different and can feel awkward and uncomfortable. If you don't feel equipped to provide proper training in-house, bring in a third-party training agency to do it for you.

Additionally, your staff will need to be trained in providing good faith estimates and using your point-of-service collection software. They should be able to easily navigate among your systems to access the information they need.

Make it convenient for patients to pay

Make sure you're set up to accept a variety of payment methods. Patients are used to having multiple options when paying for goods and services. If you only accept checks or credit cards, you're making it harder for your patients to pay you. Your patients should be able to pay in your office or online.

You should also offer options for paying with their smartphone or other payment apps. When you send out confirmation texts or emails, you want to make it as easy as possible for your patients to pay their bills. Don't unnecessarily limit their options.

Leverage price transparency, including Good Faith Estimates, in the POS process

As part of the No Surprises Act, providers and healthcare centers are required to provide good faith estimates upfront to patients who are uninsured or paying out of pocket. Since you have to establish the systems and processes to offer this to some patients, it's a good idea to do it for all. Giving patients accurate estimates allows them to anticipate the costs of services and gives them the confidence to proceed with upfront payment if they know they can afford it.

Most providers aren't providing transparent pricing that's easy to understand and access. Opaque pricing models make it difficult for patients to compare prices for similar services. Prices can vary dramatically from one provider to another and from one part of the country to the next. Insurance coverage provides another layer of complexity since the coverage for one patient receiving a service may vary from the coverage for another, even if they're receiving the same service from the same provider.

Providing price transparency and clearly explaining the reason for price differences gives patients faith that your prices are fair and honest. With health care moving towards health consumerism, it makes sense to move towards more consumer-oriented practices. Some providers offer DIY cost-estimate tools on their websites. Thus, patients can see the variables that affect the price they pay and have confidence in the accuracy of their bills.

If you aren't ready to implement a cost-estimate tool just yet, you can improve the accuracy of the estimates you provide to patients by using historical claims data. Getting information directly from payers can be challenging. But software tools that analyze historical data on claims and allowable expenses let you bypass the red tape and access the information directly.

Next Steps in Point-of-Service Collections

Implementing a cohesive point-of-sale upfront collection strategy may seem like an overwhelming task. However, with the good faith estimate requirements of the No Surprises Act and the price transparency legislation, many of these processes will have to be incorporated into your workflow. By creating a culture of upfront collections and extending good faith estimates and price transparency to all patients, you can use the best practices with just a few extra steps.

The increased work involved will be worth it in reducing costs associated with collecting payments long after services have been provided. Clear policies and goals, comprehensive staff training, data collection, financial counseling, and varied payment options will work together to help your practice achieve success in point-of-service and upfront collections.