Deductible Season: How to conquer your Cash-flow

It is that time of year once again and, while the New Year may bring new patients and new cases to your practice, it comes with a caveat: Deductible Season. If your practice does not already have a strong system in place for collecting Place-of-Service (POS) payments, you may have noticed an increase in your patient AR over January—accompanied by smaller checks from Medicare and your major commercial payers. The good news, ladies and gentleman, is that it is not too late for you to mobilize and concentrate your practice’s efforts to conquer your cash-flow.

Understanding Patient Benefits

With POS collections, knowledge is power and understanding how a patient’s benefits work is the first step in deciding how much to collect in the office for their visit. There are 3 different areas of patient responsibility that can apply to a claim’s payment: copay, coinsurance, and the all-mighty deductible. Copays are a set fee established by the insurance plan that a patient is responsible for any time they receive that particular service—a $45 office visit copay, or $200 outpatient surgery copay, for example. Co-insurance represents a patient’s share of liability for the service or, more simply, a set percentage of the procedure’s allowed amount (established by the payer’s contracted fee schedule)—if a patient has 20% co-insurance on radiologic imagery and an x-ray of three views of the knee is ordered, they are responsible for 20% of whatever the payer allows for the 73562 CPT code. Deductibles, however, are a set amount that the patient must pay before insurance will kick in and make payments for any services that are subject to the deductible.

Medicare Part B is the simplest example of the deductible/coinsurance benefit system. Medicare Part B, for 2016, has a $166 deductible and, after that is met, 20% co-insurance. Commercial plans, however, may have benefits that include a yearly deductible, copays for specific services, and co-insurance for which the patient is responsible after they meet their deductible. For this reason, it is extremely important for your front office staff not to throw in the towel after they verify patient eligibility and to go the extra mile to record a benefit summary in the patient’s chart i.e. John Smith’s benefit for physician services-office are 100% of the allowed amount after the specialist copay of $30; or, Jane Doe’s benefits are 20% co-insurance subject to an in-network deductible of $500. For these examples, the front desk would know to only collect John Smith’s $30 copay and all other charges will be covered 100% by his insurance; whereas, Jane Doe must meet her $500 deductible before her insurance will pay a dime.

How to Collect

Knowing and understanding the patient’s benefit will only get you so far. The hard part is deciding if, and how, to collect the money. Copays are easy, but deductibles and co-insurance present serious challenges. For this post, I am focusing on deductibles and will present you with some strategic policies you can consider implementing in your practice.

For Medicare patients, POS collections have a few simple steps:

1. Call the IVR—this will tell you:
   1. If the patient is eligible
   2. If they have elected an HMO (and therefore to file to the HMO and NOT Medicare)
   3. How much of their Part B deductible has been met
2. Do they have a Medigap Medicare Supplement plan?
   1. Unless they are on a Plan C or Plan F, they still owe the deductible **see the table at the end of the post for more information**
   2. If they have another commercial secondary: try and collect, but give the patient the benefit of doubt if they insist their plan will cover it
3. Look at the superbill
   1. I recommend making a chart of the Medicare fee schedule for level 3 and 4 office visit for a New and Established patient, and the most commonly used radiology and injection codes used in the office.
   2. Compare the superbill to the fee schedule and to the remaining deductible
   3. If the estimated Medicare allowable for the visit is higher than the deductible, go ahead and collect the full amount remaining on their deductible
   4. Here is an example of how that should work: Jane Doe has $112 remaining on her Part B deductible. She has a Medigap Plan K policy through AARP and was seen as a new patient. She also had 2 views taken of her left shoulder. I know that Plan K will not cover her deductible and, looking at the Medicare fee schedule, that the allowable for her visit is at least $112; therefore, I will ask Ms. Doe if she does not mind paying $112 today and we will bill her for any overages.

Commercially Insured Patients

For patients with commercial plans, you have a few ways of going about the POS collection process. Option 1: you can go about it the same way as Medicare, but this would require knowledge of the fee schedule. Depending on your payer mix, you may choose this method for your top commercial plans.

Otherwise, the best option to consider is a deposit system. For the deposit strategy, you are still going to need to research their benefits. If they have an office visit or outpatient surgery copay, it is usually best to just collect that and bill the patient for the remainder later. However, if the patient has a strict deductible/co-insurance plan, you may want to establish a deposit policy for certain services. An example of this strategy: Mr. Smith has an 80/20 plan with a high deductible. He must meet his $2000 deductible before his insurance will kick in and cover 80% of his fees. If Mr. Smith comes in for an office visit only, we collect $50; $75 for an office visit and x-rays; $200 for a fracture treatment; we will charge cost+25% on any DME he receives; collect a $500 surgery deposit before he is ever scheduled for the procedure. In any of these cases, Mr. Smith will probably still end up being billed for the remainder of his charges, but the important thing is: we at least collected something. The idea of the deposit strategy is to minimize the risk associated with billing patient’s after-the-fact.

Cash Flow Conquered

With these tools at your disposal, you now have the opportunity to control your own destiny—to some degree—as far as your average collection period is concerned. Think of this: by employing these methods, you can collect $75 immediately for Mr. Smith’s exam and x-ray vs. before when you would file his insurance, wait 30 days for the EOB, and THEN bill Mr. Smith for the $100 that was applied to his deductible…and hope he is an upstanding gentleman who pays his bills on time (or at all). As healthcare providers, you assume a financial risk anytime you provide a service and let a patient walk out the door without paying. Unfortunately, that is just part of the business we are in; but, as I have shown you here, you do have the opportunity to minimize that risk as much as possible if you put the right policies in place. So, I challenge you: mobilize your staff; hold a meeting and educate them on the strategies I have discussed; put the procedures and policies in place; and, together, Conquer your Cash-flow.