Maximizing Collection of Deductibles – 10 Thoughts

Although we’ve heard a lot about covering the uninsured lately, another equally valid concern is the problem of the underinsured. Underinsured patients have some coverage, but the coverage is insufficient to meet their medical needs and financial obligations. Patients who are covered by an insurance policy with a deductible but without the means to pay for it are among the underinsured.

What steps can a provider take to minimize the risk that it will be unable to collect a patient’s deductible – either at the time of service or later?

Although policies with deductibles are nothing new, the deductibles are getting higher and the policies are becoming more common. Federal law created an incentive for high deductible health plans by allowing tax free health savings accounts. Under federal law, a person enrolled in a qualifying high deductible health plan can contribute up to $2800 if he has an individual policy and up to $5800 for family coverage. The reality, however, is that these accounts are not always funded and some patients enroll in high deductible products without any means to pay the deductible. Still other patients enroll in products with deductibles that are higher than the health savings account funding limits. The funding limits above are for 2008 and are indexed to the inflation rate.

What steps can a provider take to minimize the risk that it will be unable to collect a patient’s deductible – either at the time of service or later?

1) Gather as much information as possible on the health plans being offered in your area so you have a clear understanding of the common benefit designs and which plans impose deductibles. For high deductible plans, what services are considered preventive care and not subject to the deductible?

2) What is each insurer’s policy on collecting deductibles from its insureds?  Know the insurer’s policies concerning collecting deductibles at the time of service. Check the insurer’s policy manual and identification cards. Some insurers’ policy manuals prohibit collecting any deductible until the insurer adjudicates the claim and sends its explanation of benefits. Even those insurers who don’t have restrictive policies may have language imprinted on their ID cards forbidding collecting deductibles at the time of service. Any of these can frustrate your ability to collect. More importantly, what tools and assistance do they provide to help you collect?

3) Communicate payment expectations to patients early and consistently. Do you begin the payment discussion at the time the appointment is scheduled? If possible, estimate the amount that will be due at the time of the appointment, including any past due balances. Consistently reinforce payment expectations through brochures, website, and statements of patient rights and responsibilities. Offer financial counseling early and often. 

4) Whenever possible, tell the patient when the deductible is NOT owed. If you can determine with reasonable certainty that a service will be considered “Preventive” by the patient’s insurer, and therefore NOT subject to the deductible, tell the patient this when confirming the appointment. It can reduce the risk of “no shows”. 

5) What information does each insurer provide at the time of service on how much of a patient’s deductible remains due?  

Last April, the New Hampshire Department of Insurance, which regulates insurers, said that if a provider collected “any deductible from a patient in advance of service without actual knowledge of the patient’s outstanding deductible” amount, it would be considered collecting a deposit in violation of RSA 420-J:8(a). Bulletin 07-043-AB The Bulletin states that “actual knowledge requires confirmation from the carrier of the amount of the deductible that remains unpaid at the time the service is provided.” Does this insurer provide timely information on deductibles? Does your patient financial services staff have instructions on how to access this information for each patient at the time of service?

6) Does your patient financial services staff gather information on the patient’s health savings account, and other means available to pay the deductible? Do they have the ability to determine a patient’s credit worthiness at the time of service? See HFMA’s 12/2006 P&P Board Statement 15. 

7) Do you have procedures and guidelines for setting up patient payment plans and monitoring whether they are followed? As part of the payment plan process, do you require patients to complete a credit application? The credit application should be completed early enough to be evaluated and considered during the credit counseling process. You need to know what the patient’s assets and other obligations are in order to set a realistic payment plan that will not sink the patient or unnecessarily delay payment to the provider. Does your credit agreement allow you to charge a reasonable interest rate and collection costs if the patient fails to make payments when due? If it is silent about these expenses, you may not be able to charge them to a patient. 

8)  Know when you may NOT collect a deductible. Of course nothing can be collected before the provider satisfies its obligations under the Emergency Medical Treatment and Active Labor Act. 

9) Can you quickly determine at the time of service whether a patient qualifies for charity care? Do your charity care policies make sense when applied to underinsured? 

10) Gather information on whether and how insurers track collection of deductibles. Typical insurance policies tell the patient that the deductible is the amount the patient must pay before the insurer has any obligation to pay claims. Will the insurer permit you to determine that some or all of the deductible is uncollect-able without jeopardizing your ability to collect the balance? 

Most patients want to, or at least are willing to meet their financial obligations if they can. By taking these steps, you place your organization in the best position to collect the amount due and you help the patient to fulfill his responsibilities to pay for his medical care.