Joseph Eastern, MD

After a recent column about the dilemma of dealing with patients who refuse to be vaccinated against COVID-19, several readers raised the question of how to properly dismiss patients from a practice, for that or any other reason. Specifically, most asked: “How do I dismiss a patient without violating any laws?”

Contrary to what seems to be the popular opinion, there are no statutory laws that I am aware of that directly apply to patient dismissal, beyond the obvious ones prohibiting discrimination that I’ve discussed many times. The more realistic concern is leaving yourself vulnerable to civil litigation – usually charges of abandonment.

Criteria will vary by region, jurisdiction, and practice. Since there are no hard and fast rules, your reasons for dismissal should be determined in advance, written out, and included in your practice manual. Once you have laid down your rules, follow them. Exceptions should be rare and made only under extraordinary circumstances.

Most patients are dismissed because of interpersonal conflicts between physician or staff members. Usually, that involves noncompliance with a reasonable treatment plan (including vaccinations), but there are other valid reasons. These include threats of violence, inappropriate sexual advances, providing false or misleading medical history, demands for inappropriate treatments or medications, and repeated failure to keep appointments or pay bills. And most ethics experts agree that you can dismiss someone who insists on treatment outside your area of expertise, or at a location other than your private office.

Even when circumstances warrant, dismissal should be a last resort. As with most interpersonal conflicts, your best option is usually reconciliation. Sit down with the patient, explain your concerns, and discuss what must be done if your doctor-patient relationship is to continue. Often, such patients are not aware (or willing to admit) that they are violating your office policies. Honest communication will often save such relationships. But be sure to make it clear that failure to address the problems you have outlined will result in dismissal from your practice. Document this conversation in detail in the patient’s chart, and follow up with a written communication reconfirming what you discussed.

If, despite your best (documented) efforts, the problems continue and dismissal becomes necessary, following a few generally accepted guidelines will help keep the process smooth and consequence free.

First, try to avoid dismissing a patient in the middle of a course of treatment. If that is unavoidable, you might want to contact your malpractice carrier and review the case with them prior to doing so.

Inform the patient, preferably by certified mail, of your decision. Spell out your reasons, with a reminder that these problems were discussed, and that a warning was issued and not heeded. If the patient belongs to a third-party health plan, be certain that you are acting within the stipulations of your contract with that plan, and inform the payer in writing of your action.

Once again, you must clearly document in the patient’s chart exactly how he or she violated your office policies. This will minimize grounds for charges of discrimination of any sort. Be especially diligent about this step if the patient has any known physical or mental disability.

Give the patient a reasonable amount of time (30 days is common) to find another physician, and mention that you will address any emergent problems within the scope of your specialty within that 30-day period. To minimize any potential allegations of abandonment, include a list of competent physicians in your area (without any guarantees) who might be willing to assume the patient’s care. Alternatively, you can list the phone number or website of a local medical society that they can contact to find a replacement. Offer to transfer medical records to the new physician upon receipt of written permission.

File a copy or scan of the letter, the certified delivery receipt, and the returned signature card in the patient’s chart. While the law states that a first-class letter, properly addressed and stamped, is presumed to have been delivered, you don’t want any question as to whether the patient received written notice of dismissal.

Forcibly ending a physician-patient relationship is a significant event that should not be undertaken lightly. Again, dismissal should be a rare occurrence, a last resort.

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 [email protected].

After a recent column about the dilemma of dealing with patients who refuse to be vaccinated against COVID-19, several readers raised the question of how to properly dismiss patients from a practice, for that or any other reason. Specifically, most asked: “How do I dismiss a patient without violating any laws?”

Contrary to what seems to be the popular opinion, there are no statutory laws that I am aware of that directly apply to patient dismissal, beyond the obvious ones prohibiting discrimination that I’ve discussed many times. The more realistic concern is leaving yourself vulnerable to civil litigation – usually charges of abandonment.

Criteria will vary by region, jurisdiction, and practice. Since there are no hard and fast rules, your reasons for dismissal should be determined in advance, written out, and included in your practice manual. Once you have laid down your rules, follow them. Exceptions should be rare and made only under extraordinary circumstances.

Most patients are dismissed because of interpersonal conflicts between physician or staff members. Usually, that involves noncompliance with a reasonable treatment plan (including vaccinations), but there are other valid reasons. These include threats of violence, inappropriate sexual advances, providing false or misleading medical history, demands for inappropriate treatments or medications, and repeated failure to keep appointments or pay bills. And most ethics experts agree that you can dismiss someone who insists on treatment outside your area of expertise, or at a location other than your private office.

Even when circumstances warrant, dismissal should be a last resort. As with most interpersonal conflicts, your best option is usually reconciliation. Sit down with the patient, explain your concerns, and discuss what must be done if your doctor-patient relationship is to continue. Often, such patients are not aware (or willing to admit) that they are violating your office policies. Honest communication will often save such relationships. But be sure to make it clear that failure to address the problems you have outlined will result in dismissal from your practice. Document this conversation in detail in the patient’s chart, and follow up with a written communication reconfirming what you discussed.

If, despite your best (documented) efforts, the problems continue and dismissal becomes necessary, following a few generally accepted guidelines will help keep the process smooth and consequence free.

First, try to avoid dismissing a patient in the middle of a course of treatment. If that is unavoidable, you might want to contact your malpractice carrier and review the case with them prior to doing so.

Inform the patient, preferably by certified mail, of your decision. Spell out your reasons, with a reminder that these problems were discussed, and that a warning was issued and not heeded. If the patient belongs to a third-party health plan, be certain that you are acting within the stipulations of your contract with that plan, and inform the payer in writing of your action.

Once again, you must clearly document in the patient’s chart exactly how he or she violated your office policies. This will minimize grounds for charges of discrimination of any sort. Be especially diligent about this step if the patient has any known physical or mental disability.

Give the patient a reasonable amount of time (30 days is common) to find another physician, and mention that you will address any emergent problems within the scope of your specialty within that 30-day period. To minimize any potential allegations of abandonment, include a list of competent physicians in your area (without any guarantees) who might be willing to assume the patient’s care. Alternatively, you can list the phone number or website of a local medical society that they can contact to find a replacement. Offer to transfer medical records to the new physician upon receipt of written permission.

File a copy or scan of the letter, the certified delivery receipt, and the returned signature card in the patient’s chart. While the law states that a first-class letter, properly addressed and stamped, is presumed to have been delivered, you don’t want any question as to whether the patient received written notice of dismissal.

Forcibly ending a physician-patient relationship is a significant event that should not be undertaken lightly. Again, dismissal should be a rare occurrence, a last resort.

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 [email protected].

After a recent column about the dilemma of dealing with patients who refuse to be vaccinated against COVID-19, several readers raised the question of how to properly dismiss patients from a practice, for that or any other reason. Specifically, most asked: “How do I dismiss a patient without violating any laws?”

Contrary to what seems to be the popular opinion, there are no statutory laws that I am aware of that directly apply to patient dismissal, beyond the obvious ones prohibiting discrimination that I’ve discussed many times. The more realistic concern is leaving yourself vulnerable to civil litigation – usually charges of abandonment.

Criteria will vary by region, jurisdiction, and practice. Since there are no hard and fast rules, your reasons for dismissal should be determined in advance, written out, and included in your practice manual. Once you have laid down your rules, follow them. Exceptions should be rare and made only under extraordinary circumstances.

Most patients are dismissed because of interpersonal conflicts between physician or staff members. Usually, that involves noncompliance with a reasonable treatment plan (including vaccinations), but there are other valid reasons. These include threats of violence, inappropriate sexual advances, providing false or misleading medical history, demands for inappropriate treatments or medications, and repeated failure to keep appointments or pay bills. And most ethics experts agree that you can dismiss someone who insists on treatment outside your area of expertise, or at a location other than your private office.

Even when circumstances warrant, dismissal should be a last resort. As with most interpersonal conflicts, your best option is usually reconciliation. Sit down with the patient, explain your concerns, and discuss what must be done if your doctor-patient relationship is to continue. Often, such patients are not aware (or willing to admit) that they are violating your office policies. Honest communication will often save such relationships. But be sure to make it clear that failure to address the problems you have outlined will result in dismissal from your practice. Document this conversation in detail in the patient’s chart, and follow up with a written communication reconfirming what you discussed.

If, despite your best (documented) efforts, the problems continue and dismissal becomes necessary, following a few generally accepted guidelines will help keep the process smooth and consequence free.

First, try to avoid dismissing a patient in the middle of a course of treatment. If that is unavoidable, you might want to contact your malpractice carrier and review the case with them prior to doing so.

Inform the patient, preferably by certified mail, of your decision. Spell out your reasons, with a reminder that these problems were discussed, and that a warning was issued and not heeded. If the patient belongs to a third-party health plan, be certain that you are acting within the stipulations of your contract with that plan, and inform the payer in writing of your action.

Once again, you must clearly document in the patient’s chart exactly how he or she violated your office policies. This will minimize grounds for charges of discrimination of any sort. Be especially diligent about this step if the patient has any known physical or mental disability.

Give the patient a reasonable amount of time (30 days is common) to find another physician, and mention that you will address any emergent problems within the scope of your specialty within that 30-day period. To minimize any potential allegations of abandonment, include a list of competent physicians in your area (without any guarantees) who might be willing to assume the patient’s care. Alternatively, you can list the phone number or website of a local medical society that they can contact to find a replacement. Offer to transfer medical records to the new physician upon receipt of written permission.

File a copy or scan of the letter, the certified delivery receipt, and the returned signature card in the patient’s chart. While the law states that a first-class letter, properly addressed and stamped, is presumed to have been delivered, you don’t want any question as to whether the patient received written notice of dismissal.

Forcibly ending a physician-patient relationship is a significant event that should not be undertaken lightly. Again, dismissal should be a rare occurrence, a last resort.

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 [email protected].

With the bewildering array of new bureaucracies that private practices are now forced to contend with, it is easy to forget about the older ones – especially the Occupational Health and Safety Administration (OSHA).

Now might be a good time to get out your OSHA logs, walk through your office, and confirm that you remain in compliance with all the applicable regulations. Even if you hold regular safety meetings (which all too often is not the case), the occasional comprehensive review is always a good idea, and could save you a bundle in fines.

For starters, do you have an official OSHA poster, enumerating employee rights and explaining how to file complaints? Every office must have one posted in plain site, and it is the first thing an OSHA inspector will look for. You can download one from OSHA’s Web site or order it at no charge by calling 800-321-OSHA.

Next, how old is your written exposure control plan for blood-borne pathogens? It should document your use of such protective equipment as gloves, face and eye protection, needle guards, and gowns, and your implementation of universal precautions – and it is supposed to be updated annually, to reflect changes in technology.

You need not adopt every new safety device as it comes on the market, but you should document which ones you are using – and which you pass up – and why. For example, you and your employees may decide not to purchase a new safety needle because you don’t think it will improve safety, or that it will be more trouble than it’s worth; but you should document how you arrived at your decision and why you feel that your current protocol is as good or better.

Review your list of hazardous substances, which all employees have a right to know about. Keep in mind that OSHA’s list includes alcohol, hydrogen peroxide, acetone, and other substances that you might not consider particularly dangerous, but are nevertheless classified as “hazardous.” (My favorite in that category is liquid nitrogen; it’s hard to envision anything less hazardous, since it evaporates instantly if spilled, and cannot injure skin, or anything else, without purposeful, sustained exposure – and is great, incidentally, for extinguishing small fires.) For each substance, your employees must have access to the manufacturer-supplied Material Safety Data Sheet, which outlines the proper procedures for working with a specific material, and for handling and containing it in a spill or other emergency.

Check out your building’s exits. Everyone must be able to evacuate your office quickly in case of fire or other emergencies. At a minimum, you (or the owner of the building) are expected to establish exit routes to accommodate all employees and to post easily visible evacuation diagrams.

Examine all electrical devices and their power sources. All electrically powered equipment – medical, clerical, or anything else in the office – must operate safely. Pay particular attention to the way wall outlets are set up. Make sure each outlet has sufficient power to run the equipment plugged into it and that circuit breakers are present and functioning. And beware the common situation of too many gadgets running off a single circuit.

You must provide all at-risk employees with hepatitis B vaccine at no cost to them. You also must provide and pay for appropriate medical treatment and follow-up after any exposure to a dangerous pathogen.

Other components of the rule include proper containment of regulated medical waste, identification of regulated-waste containers, sharps disposal boxes, and periodic employee training regarding all of these things.

Federal OSHA regulations do not require medical and dental offices to keep an injury and illness log, as other businesses must; but your state may have a requirement that supersedes the federal law. Check with your state, or with your local OSHA office, regarding any such requirements.

It is a mistake to take OSHA regulations lightly; failure to comply with them can result in stiff penalties running into many thousands of dollars.

How can you be certain you are complying with all the rules? The easiest and cheapest way is to call your local OSHA office and request an inspection. Why would you do that? Because OSHA issues no citations during voluntary inspections, as long as you agree to remedy any violations they find.
 

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 [email protected].

With the bewildering array of new bureaucracies that private practices are now forced to contend with, it is easy to forget about the older ones – especially the Occupational Health and Safety Administration (OSHA).

Now might be a good time to get out your OSHA logs, walk through your office, and confirm that you remain in compliance with all the applicable regulations. Even if you hold regular safety meetings (which all too often is not the case), the occasional comprehensive review is always a good idea, and could save you a bundle in fines.

For starters, do you have an official OSHA poster, enumerating employee rights and explaining how to file complaints? Every office must have one posted in plain site, and it is the first thing an OSHA inspector will look for. You can download one from OSHA’s Web site or order it at no charge by calling 800-321-OSHA.

Next, how old is your written exposure control plan for blood-borne pathogens? It should document your use of such protective equipment as gloves, face and eye protection, needle guards, and gowns, and your implementation of universal precautions – and it is supposed to be updated annually, to reflect changes in technology.

You need not adopt every new safety device as it comes on the market, but you should document which ones you are using – and which you pass up – and why. For example, you and your employees may decide not to purchase a new safety needle because you don’t think it will improve safety, or that it will be more trouble than it’s worth; but you should document how you arrived at your decision and why you feel that your current protocol is as good or better.

Review your list of hazardous substances, which all employees have a right to know about. Keep in mind that OSHA’s list includes alcohol, hydrogen peroxide, acetone, and other substances that you might not consider particularly dangerous, but are nevertheless classified as “hazardous.” (My favorite in that category is liquid nitrogen; it’s hard to envision anything less hazardous, since it evaporates instantly if spilled, and cannot injure skin, or anything else, without purposeful, sustained exposure – and is great, incidentally, for extinguishing small fires.) For each substance, your employees must have access to the manufacturer-supplied Material Safety Data Sheet, which outlines the proper procedures for working with a specific material, and for handling and containing it in a spill or other emergency.

Check out your building’s exits. Everyone must be able to evacuate your office quickly in case of fire or other emergencies. At a minimum, you (or the owner of the building) are expected to establish exit routes to accommodate all employees and to post easily visible evacuation diagrams.

Examine all electrical devices and their power sources. All electrically powered equipment – medical, clerical, or anything else in the office – must operate safely. Pay particular attention to the way wall outlets are set up. Make sure each outlet has sufficient power to run the equipment plugged into it and that circuit breakers are present and functioning. And beware the common situation of too many gadgets running off a single circuit.

You must provide all at-risk employees with hepatitis B vaccine at no cost to them. You also must provide and pay for appropriate medical treatment and follow-up after any exposure to a dangerous pathogen.

Other components of the rule include proper containment of regulated medical waste, identification of regulated-waste containers, sharps disposal boxes, and periodic employee training regarding all of these things.

Federal OSHA regulations do not require medical and dental offices to keep an injury and illness log, as other businesses must; but your state may have a requirement that supersedes the federal law. Check with your state, or with your local OSHA office, regarding any such requirements.

It is a mistake to take OSHA regulations lightly; failure to comply with them can result in stiff penalties running into many thousands of dollars.

How can you be certain you are complying with all the rules? The easiest and cheapest way is to call your local OSHA office and request an inspection. Why would you do that? Because OSHA issues no citations during voluntary inspections, as long as you agree to remedy any violations they find.
 

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 [email protected].

With the bewildering array of new bureaucracies that private practices are now forced to contend with, it is easy to forget about the older ones – especially the Occupational Health and Safety Administration (OSHA).

Now might be a good time to get out your OSHA logs, walk through your office, and confirm that you remain in compliance with all the applicable regulations. Even if you hold regular safety meetings (which all too often is not the case), the occasional comprehensive review is always a good idea, and could save you a bundle in fines.

For starters, do you have an official OSHA poster, enumerating employee rights and explaining how to file complaints? Every office must have one posted in plain site, and it is the first thing an OSHA inspector will look for. You can download one from OSHA’s Web site or order it at no charge by calling 800-321-OSHA.

Next, how old is your written exposure control plan for blood-borne pathogens? It should document your use of such protective equipment as gloves, face and eye protection, needle guards, and gowns, and your implementation of universal precautions – and it is supposed to be updated annually, to reflect changes in technology.

You need not adopt every new safety device as it comes on the market, but you should document which ones you are using – and which you pass up – and why. For example, you and your employees may decide not to purchase a new safety needle because you don’t think it will improve safety, or that it will be more trouble than it’s worth; but you should document how you arrived at your decision and why you feel that your current protocol is as good or better.

Review your list of hazardous substances, which all employees have a right to know about. Keep in mind that OSHA’s list includes alcohol, hydrogen peroxide, acetone, and other substances that you might not consider particularly dangerous, but are nevertheless classified as “hazardous.” (My favorite in that category is liquid nitrogen; it’s hard to envision anything less hazardous, since it evaporates instantly if spilled, and cannot injure skin, or anything else, without purposeful, sustained exposure – and is great, incidentally, for extinguishing small fires.) For each substance, your employees must have access to the manufacturer-supplied Material Safety Data Sheet, which outlines the proper procedures for working with a specific material, and for handling and containing it in a spill or other emergency.

Check out your building’s exits. Everyone must be able to evacuate your office quickly in case of fire or other emergencies. At a minimum, you (or the owner of the building) are expected to establish exit routes to accommodate all employees and to post easily visible evacuation diagrams.

Examine all electrical devices and their power sources. All electrically powered equipment – medical, clerical, or anything else in the office – must operate safely. Pay particular attention to the way wall outlets are set up. Make sure each outlet has sufficient power to run the equipment plugged into it and that circuit breakers are present and functioning. And beware the common situation of too many gadgets running off a single circuit.

You must provide all at-risk employees with hepatitis B vaccine at no cost to them. You also must provide and pay for appropriate medical treatment and follow-up after any exposure to a dangerous pathogen.

Other components of the rule include proper containment of regulated medical waste, identification of regulated-waste containers, sharps disposal boxes, and periodic employee training regarding all of these things.

Federal OSHA regulations do not require medical and dental offices to keep an injury and illness log, as other businesses must; but your state may have a requirement that supersedes the federal law. Check with your state, or with your local OSHA office, regarding any such requirements.

It is a mistake to take OSHA regulations lightly; failure to comply with them can result in stiff penalties running into many thousands of dollars.

How can you be certain you are complying with all the rules? The easiest and cheapest way is to call your local OSHA office and request an inspection. Why would you do that? Because OSHA issues no citations during voluntary inspections, as long as you agree to remedy any violations they find.
 

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 [email protected].

No matter how complete your insurance portfolio, there is one policy – one you probably have never heard of – that you should definitely consider adding to it.

Ildo Frazao/Getty Images

A while ago, I spoke with a dermatologist in California who experienced every employer’s nightmare: he fired an incompetent employee, who promptly sued him for wrongful termination and accused him of sexual harassment to boot. The charges were completely false, and the employee’s transgressions were well documented; but he was not insured against a suit of that type, and defending it would have been prohibitively expensive. He was forced to settle it for a significant sum of money.

Disasters like that are becoming more common. Plaintiffs’ attorneys know that most small businesses, including medical practices, are not insured against internal liability actions – and that settlements are cheaper than litigation.

Fortunately, there is a relatively inexpensive alternative: Employment practices liability insurance (EPLI) provides protection against many kinds of employee lawsuits not covered by conventional liability insurance. These include wrongful termination, sexual harassment, discrimination, breach of employment contract, negligent hiring or evaluation, failure to promote, wrongful discipline, mismanagement of benefits, and the ever-popular “emotional distress.”

EPLI coverage would have permitted the California dermatologist to mount a proper defense against his employee’s groundless charges. In fact, there is a better than even chance that the lawsuit would have been dropped, or never filed to begin with.

Some liability carriers are beginning to cover some employee-related issues in “umbrella” policies, so before looking into EPLI, check your current coverage. Then, as with all insurance, you should shop around for the best price and carefully read the policies on your short list. All EPLI policies cover litigation against your practice and its owners by employees, but some cover only full-timers. Try to obtain the broadest coverage possible so that claims from part-time, temporary, and seasonal employees, and, if possible, even applicants for employment and former employees, also are covered.

You should also look for the most comprehensive policy in terms of coverage. Almost every EPLI policy covers the allegations mentioned above, but some offer a more comprehensive list of covered acts, such as invasion of privacy and defamation of character.

Also be aware of precisely what each policy does not cover. Most exclude punitive damages and court-imposed fines, as well as criminal acts, fraud, and other clearly illegal conduct. For example, you would not be covered if you fired an employee because he or she refused to falsify insurance claims.

Depending on where you practice, it may be necessary to ask an employment attorney to evaluate your individual EPLI needs. An underwriter cannot anticipate every eventuality for you, particularly if he or she does not live in your area and is not familiar with employment conditions in your community.

As with any liability policy, try to get a clause added that permits you to choose your own defense attorney. Better still, pick a specific attorney or firm that you trust and have that counsel named in an endorsement to the policy. Otherwise, the insurance carrier will select an attorney from its own panel who may not consider your interests a higher priority than those of the insurer itself.

If you must accept the insurer’s choice of counsel, you should find out whether that attorney is experienced in employment law, which is a very specialized area. And just as with your malpractice policy, you will want to maintain as much control as possible over the settlement of claims. Ideally, no claim should be settled without your express permission.

As with any insurance policy you buy, be sure to choose an established carrier with ample experience in the field and solid financial strength. A low premium is no bargain if the carrier is new to EPLI or goes broke.

Above all, as with any insurance policy, make sure that you can live with the claims definition and exclusions in the policy you choose, and seek advice if you are unsure what your specific needs are before signing on the dotted line.
 

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 [email protected].

No matter how complete your insurance portfolio, there is one policy – one you probably have never heard of – that you should definitely consider adding to it.

Ildo Frazao/Getty Images

A while ago, I spoke with a dermatologist in California who experienced every employer’s nightmare: he fired an incompetent employee, who promptly sued him for wrongful termination and accused him of sexual harassment to boot. The charges were completely false, and the employee’s transgressions were well documented; but he was not insured against a suit of that type, and defending it would have been prohibitively expensive. He was forced to settle it for a significant sum of money.

Disasters like that are becoming more common. Plaintiffs’ attorneys know that most small businesses, including medical practices, are not insured against internal liability actions – and that settlements are cheaper than litigation.

Fortunately, there is a relatively inexpensive alternative: Employment practices liability insurance (EPLI) provides protection against many kinds of employee lawsuits not covered by conventional liability insurance. These include wrongful termination, sexual harassment, discrimination, breach of employment contract, negligent hiring or evaluation, failure to promote, wrongful discipline, mismanagement of benefits, and the ever-popular “emotional distress.”

EPLI coverage would have permitted the California dermatologist to mount a proper defense against his employee’s groundless charges. In fact, there is a better than even chance that the lawsuit would have been dropped, or never filed to begin with.

Some liability carriers are beginning to cover some employee-related issues in “umbrella” policies, so before looking into EPLI, check your current coverage. Then, as with all insurance, you should shop around for the best price and carefully read the policies on your short list. All EPLI policies cover litigation against your practice and its owners by employees, but some cover only full-timers. Try to obtain the broadest coverage possible so that claims from part-time, temporary, and seasonal employees, and, if possible, even applicants for employment and former employees, also are covered.

You should also look for the most comprehensive policy in terms of coverage. Almost every EPLI policy covers the allegations mentioned above, but some offer a more comprehensive list of covered acts, such as invasion of privacy and defamation of character.

Also be aware of precisely what each policy does not cover. Most exclude punitive damages and court-imposed fines, as well as criminal acts, fraud, and other clearly illegal conduct. For example, you would not be covered if you fired an employee because he or she refused to falsify insurance claims.

Depending on where you practice, it may be necessary to ask an employment attorney to evaluate your individual EPLI needs. An underwriter cannot anticipate every eventuality for you, particularly if he or she does not live in your area and is not familiar with employment conditions in your community.

As with any liability policy, try to get a clause added that permits you to choose your own defense attorney. Better still, pick a specific attorney or firm that you trust and have that counsel named in an endorsement to the policy. Otherwise, the insurance carrier will select an attorney from its own panel who may not consider your interests a higher priority than those of the insurer itself.

If you must accept the insurer’s choice of counsel, you should find out whether that attorney is experienced in employment law, which is a very specialized area. And just as with your malpractice policy, you will want to maintain as much control as possible over the settlement of claims. Ideally, no claim should be settled without your express permission.

As with any insurance policy you buy, be sure to choose an established carrier with ample experience in the field and solid financial strength. A low premium is no bargain if the carrier is new to EPLI or goes broke.

Above all, as with any insurance policy, make sure that you can live with the claims definition and exclusions in the policy you choose, and seek advice if you are unsure what your specific needs are before signing on the dotted line.
 

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 [email protected].

No matter how complete your insurance portfolio, there is one policy – one you probably have never heard of – that you should definitely consider adding to it.

Ildo Frazao/Getty Images

A while ago, I spoke with a dermatologist in California who experienced every employer’s nightmare: he fired an incompetent employee, who promptly sued him for wrongful termination and accused him of sexual harassment to boot. The charges were completely false, and the employee’s transgressions were well documented; but he was not insured against a suit of that type, and defending it would have been prohibitively expensive. He was forced to settle it for a significant sum of money.

Disasters like that are becoming more common. Plaintiffs’ attorneys know that most small businesses, including medical practices, are not insured against internal liability actions – and that settlements are cheaper than litigation.

Fortunately, there is a relatively inexpensive alternative: Employment practices liability insurance (EPLI) provides protection against many kinds of employee lawsuits not covered by conventional liability insurance. These include wrongful termination, sexual harassment, discrimination, breach of employment contract, negligent hiring or evaluation, failure to promote, wrongful discipline, mismanagement of benefits, and the ever-popular “emotional distress.”

EPLI coverage would have permitted the California dermatologist to mount a proper defense against his employee’s groundless charges. In fact, there is a better than even chance that the lawsuit would have been dropped, or never filed to begin with.

Some liability carriers are beginning to cover some employee-related issues in “umbrella” policies, so before looking into EPLI, check your current coverage. Then, as with all insurance, you should shop around for the best price and carefully read the policies on your short list. All EPLI policies cover litigation against your practice and its owners by employees, but some cover only full-timers. Try to obtain the broadest coverage possible so that claims from part-time, temporary, and seasonal employees, and, if possible, even applicants for employment and former employees, also are covered.

You should also look for the most comprehensive policy in terms of coverage. Almost every EPLI policy covers the allegations mentioned above, but some offer a more comprehensive list of covered acts, such as invasion of privacy and defamation of character.

Also be aware of precisely what each policy does not cover. Most exclude punitive damages and court-imposed fines, as well as criminal acts, fraud, and other clearly illegal conduct. For example, you would not be covered if you fired an employee because he or she refused to falsify insurance claims.

Depending on where you practice, it may be necessary to ask an employment attorney to evaluate your individual EPLI needs. An underwriter cannot anticipate every eventuality for you, particularly if he or she does not live in your area and is not familiar with employment conditions in your community.

As with any liability policy, try to get a clause added that permits you to choose your own defense attorney. Better still, pick a specific attorney or firm that you trust and have that counsel named in an endorsement to the policy. Otherwise, the insurance carrier will select an attorney from its own panel who may not consider your interests a higher priority than those of the insurer itself.

If you must accept the insurer’s choice of counsel, you should find out whether that attorney is experienced in employment law, which is a very specialized area. And just as with your malpractice policy, you will want to maintain as much control as possible over the settlement of claims. Ideally, no claim should be settled without your express permission.

As with any insurance policy you buy, be sure to choose an established carrier with ample experience in the field and solid financial strength. A low premium is no bargain if the carrier is new to EPLI or goes broke.

Above all, as with any insurance policy, make sure that you can live with the claims definition and exclusions in the policy you choose, and seek advice if you are unsure what your specific needs are before signing on the dotted line.
 

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 [email protected].

For most physicians, the resolution of patients’ complaints ranks second only to firing an employee on the Least Favorite Tasks List. With so many potential problems, and so many ways patients can react to them, it seems impossible to construct any sort of template for consistent, mutually satisfactory resolutions.

But it can be done, and it’s not as complex as it appears, once you realize that the vast majority of complaints have the same basic root: The patient’s expectations have not been met. Sometimes it’s your fault, sometimes the patient’s, and often a bit of both. Either way, the result is the same: You have an unhappy patient, and you must deal with it.

In most cases, this is not a job you should delegate. Unless the complaint is trivial or purely administrative, you should address it yourself. It’s what you would want if you were the complainant, and it’s often too important to trust to a subordinate.

I have distilled this unpleasant duty down to a simple three-part strategy:

• Discover which expectations went unmet, and why.

• Agree on a solution.

• Learn from the experience, to prevent similar future complaints.

At this point, you may be asking, “Why should I care? Is the personal expenditure of my time and effort necessary to resolve complaints really worth it?” Absolutely, because the old cliché is true: A satisfied patient will refer 5 new patients, but a dissatisfied one will chase away 20 or more. Besides, if the complaint is significant, and you won’t resolve it, the patient is likely to find someone who will; and chances are you won’t like the choice, or the venue – or the eventual resolution.

Of course, the easiest way to deal with complaints is to prevent as many as possible in the first place. Try to nip unrealistic expectations in the bud. Take the time to explain all treatments and procedures, and their most likely outcomes, in a clear and honest manner. And since even the most astute patients will not absorb everything you tell them, make liberal use of written handouts and other visual aids.

And, of course, document everything you have explained. Documentation is like garlic: There is no such thing as too much of it.

But despite your best efforts, there will always be complaints, and handling them is a skill set worth honing. The most important skill in that set is the one most people – especially physicians – do poorly: listening to the complaint. Before you can resolve a problem you have to know what it is, and this is precisely the wrong time to make assumptions or jump to conclusions.

So listen to the entire complaint without interrupting, defending, or justifying. Angry patients don’t care why the problem occurred, and they are not interested in your side of the story. This is not about you, so listen and understand.

As you listen, the unmet expectations will become clear. When the patient is finished, I like to summarize the complaint in that context: “So if I understand you correctly, you expected “X” to happen, but “Y” happened instead.” If I’m wrong, I modify my summary until the patient agrees that I understand the problem.

Once you know the problem, you can talk about a solution. The patient usually has one in mind – additional treatment, a referral elsewhere, a fee adjustment, or sometimes simply an apology. Consider it.

If the patient’s solution is reasonable, by all means, agree to it; if it is unreasonable, try to offer a reasonable alternative. The temptation here is to think more about protecting yourself than making the patient happy, but that often leads to bigger problems. Don’t be defensive. Again, this is not about you.

I am often asked if refunding a fee is a reasonable option. Some patients (and lawyers) will interpret a refund as a tacit admission of guilt, so I generally try to avoid them. However, canceling a small fee for an angry patient can be an expedient solution, and in my opinion looks exactly like what it is: an honest effort to rectify the situation. But in general, additional materials or services, at reduced or waived fees, are a better alternative than refunding money.

Once you have arrived at a mutually satisfactory solution, again, document everything; but consider reserving a “private” chart area for such documentation (unless it is a bona fide clinical issue), so that it won’t go out to referrers and other third parties with copies of your clinical notes. Also, consider having the patient sign off on the documentation, acknowledging that the complaint has been resolved.

Finally, always try to learn something from the experience. Ask yourself how you might prevent a repetition of the complaint, what you did that you can avoid doing next time, and how you might prevent unrealistic expectations in a similar future situation.

Above all, never take complaints personally – even when they are personal. It’s always worth reminding yourself that no matter how hard you try, you can never please everyone.

Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a long-time monthly columnist for Dermatology News. Write to him at [email protected].

For most physicians, the resolution of patients’ complaints ranks second only to firing an employee on the Least Favorite Tasks List. With so many potential problems, and so many ways patients can react to them, it seems impossible to construct any sort of template for consistent, mutually satisfactory resolutions.

But it can be done, and it’s not as complex as it appears, once you realize that the vast majority of complaints have the same basic root: The patient’s expectations have not been met. Sometimes it’s your fault, sometimes the patient’s, and often a bit of both. Either way, the result is the same: You have an unhappy patient, and you must deal with it.

In most cases, this is not a job you should delegate. Unless the complaint is trivial or purely administrative, you should address it yourself. It’s what you would want if you were the complainant, and it’s often too important to trust to a subordinate.

I have distilled this unpleasant duty down to a simple three-part strategy:

• Discover which expectations went unmet, and why.

• Agree on a solution.

• Learn from the experience, to prevent similar future complaints.

At this point, you may be asking, “Why should I care? Is the personal expenditure of my time and effort necessary to resolve complaints really worth it?” Absolutely, because the old cliché is true: A satisfied patient will refer 5 new patients, but a dissatisfied one will chase away 20 or more. Besides, if the complaint is significant, and you won’t resolve it, the patient is likely to find someone who will; and chances are you won’t like the choice, or the venue – or the eventual resolution.

Of course, the easiest way to deal with complaints is to prevent as many as possible in the first place. Try to nip unrealistic expectations in the bud. Take the time to explain all treatments and procedures, and their most likely outcomes, in a clear and honest manner. And since even the most astute patients will not absorb everything you tell them, make liberal use of written handouts and other visual aids.

And, of course, document everything you have explained. Documentation is like garlic: There is no such thing as too much of it.

But despite your best efforts, there will always be complaints, and handling them is a skill set worth honing. The most important skill in that set is the one most people – especially physicians – do poorly: listening to the complaint. Before you can resolve a problem you have to know what it is, and this is precisely the wrong time to make assumptions or jump to conclusions.

So listen to the entire complaint without interrupting, defending, or justifying. Angry patients don’t care why the problem occurred, and they are not interested in your side of the story. This is not about you, so listen and understand.

As you listen, the unmet expectations will become clear. When the patient is finished, I like to summarize the complaint in that context: “So if I understand you correctly, you expected “X” to happen, but “Y” happened instead.” If I’m wrong, I modify my summary until the patient agrees that I understand the problem.

Once you know the problem, you can talk about a solution. The patient usually has one in mind – additional treatment, a referral elsewhere, a fee adjustment, or sometimes simply an apology. Consider it.

If the patient’s solution is reasonable, by all means, agree to it; if it is unreasonable, try to offer a reasonable alternative. The temptation here is to think more about protecting yourself than making the patient happy, but that often leads to bigger problems. Don’t be defensive. Again, this is not about you.

I am often asked if refunding a fee is a reasonable option. Some patients (and lawyers) will interpret a refund as a tacit admission of guilt, so I generally try to avoid them. However, canceling a small fee for an angry patient can be an expedient solution, and in my opinion looks exactly like what it is: an honest effort to rectify the situation. But in general, additional materials or services, at reduced or waived fees, are a better alternative than refunding money.

Once you have arrived at a mutually satisfactory solution, again, document everything; but consider reserving a “private” chart area for such documentation (unless it is a bona fide clinical issue), so that it won’t go out to referrers and other third parties with copies of your clinical notes. Also, consider having the patient sign off on the documentation, acknowledging that the complaint has been resolved.

Finally, always try to learn something from the experience. Ask yourself how you might prevent a repetition of the complaint, what you did that you can avoid doing next time, and how you might prevent unrealistic expectations in a similar future situation.

Above all, never take complaints personally – even when they are personal. It’s always worth reminding yourself that no matter how hard you try, you can never please everyone.

Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a long-time monthly columnist for Dermatology News. Write to him at [email protected].

For most physicians, the resolution of patients’ complaints ranks second only to firing an employee on the Least Favorite Tasks List. With so many potential problems, and so many ways patients can react to them, it seems impossible to construct any sort of template for consistent, mutually satisfactory resolutions.

But it can be done, and it’s not as complex as it appears, once you realize that the vast majority of complaints have the same basic root: The patient’s expectations have not been met. Sometimes it’s your fault, sometimes the patient’s, and often a bit of both. Either way, the result is the same: You have an unhappy patient, and you must deal with it.

In most cases, this is not a job you should delegate. Unless the complaint is trivial or purely administrative, you should address it yourself. It’s what you would want if you were the complainant, and it’s often too important to trust to a subordinate.

I have distilled this unpleasant duty down to a simple three-part strategy:

• Discover which expectations went unmet, and why.

• Agree on a solution.

• Learn from the experience, to prevent similar future complaints.

At this point, you may be asking, “Why should I care? Is the personal expenditure of my time and effort necessary to resolve complaints really worth it?” Absolutely, because the old cliché is true: A satisfied patient will refer 5 new patients, but a dissatisfied one will chase away 20 or more. Besides, if the complaint is significant, and you won’t resolve it, the patient is likely to find someone who will; and chances are you won’t like the choice, or the venue – or the eventual resolution.

Of course, the easiest way to deal with complaints is to prevent as many as possible in the first place. Try to nip unrealistic expectations in the bud. Take the time to explain all treatments and procedures, and their most likely outcomes, in a clear and honest manner. And since even the most astute patients will not absorb everything you tell them, make liberal use of written handouts and other visual aids.

And, of course, document everything you have explained. Documentation is like garlic: There is no such thing as too much of it.

But despite your best efforts, there will always be complaints, and handling them is a skill set worth honing. The most important skill in that set is the one most people – especially physicians – do poorly: listening to the complaint. Before you can resolve a problem you have to know what it is, and this is precisely the wrong time to make assumptions or jump to conclusions.

So listen to the entire complaint without interrupting, defending, or justifying. Angry patients don’t care why the problem occurred, and they are not interested in your side of the story. This is not about you, so listen and understand.

As you listen, the unmet expectations will become clear. When the patient is finished, I like to summarize the complaint in that context: “So if I understand you correctly, you expected “X” to happen, but “Y” happened instead.” If I’m wrong, I modify my summary until the patient agrees that I understand the problem.

Once you know the problem, you can talk about a solution. The patient usually has one in mind – additional treatment, a referral elsewhere, a fee adjustment, or sometimes simply an apology. Consider it.

If the patient’s solution is reasonable, by all means, agree to it; if it is unreasonable, try to offer a reasonable alternative. The temptation here is to think more about protecting yourself than making the patient happy, but that often leads to bigger problems. Don’t be defensive. Again, this is not about you.

I am often asked if refunding a fee is a reasonable option. Some patients (and lawyers) will interpret a refund as a tacit admission of guilt, so I generally try to avoid them. However, canceling a small fee for an angry patient can be an expedient solution, and in my opinion looks exactly like what it is: an honest effort to rectify the situation. But in general, additional materials or services, at reduced or waived fees, are a better alternative than refunding money.

Once you have arrived at a mutually satisfactory solution, again, document everything; but consider reserving a “private” chart area for such documentation (unless it is a bona fide clinical issue), so that it won’t go out to referrers and other third parties with copies of your clinical notes. Also, consider having the patient sign off on the documentation, acknowledging that the complaint has been resolved.

Finally, always try to learn something from the experience. Ask yourself how you might prevent a repetition of the complaint, what you did that you can avoid doing next time, and how you might prevent unrealistic expectations in a similar future situation.

Above all, never take complaints personally – even when they are personal. It’s always worth reminding yourself that no matter how hard you try, you can never please everyone.

Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a long-time monthly columnist for Dermatology News. Write to him at [email protected].

In a previous column I discussed the challenges inherent to incorporating the Patient Protection and Affordable Care Act’s health insurance exchanges into private practices.¹ While it is important to pay close attention to newer third-party vehicles, do not ignore established payers or assume their compensation schedules are up-to-date.

Because traditional insurers and managed care organizations typically do not take it upon themselves to update their payment schedules for private practices on a regular basis, you should take a close look at your third-party plans; you may be surprised to find that you have unknowingly remained associated with an outdated plan with an inappropriate fee schedule or with few patients generating negligible remuneration for your practice when you could have replaced it with a young, aggressive, well-paying organization long ago.

As is usually the case, you will never know unless you look. The process is the sort of disagreeable task that smaller practices often postpone or ignore completely, but the effort is well worth it. First, ask your employees to assemble some data. Start with lists of the last 50 patients affiliated with each third-party contract; your electronic records should allow you to assemble these data easily. For each patient, note the diagnoses; the procedure codes billed; the amounts billed and paid for each code; and any problems encountered, especially payment delays and records requests. Also ask for any correspondence you have on file with claims departments and medical directors over the last year.

Next, send out a questionnaire to the provider relations department for each third-party payer. Tell them you are updating your managed care data. Include a list of your 25 most commonly used Current Procedural Terminology (CPT) codes and ask for their maximum allowable reimbursement on each code. Then ask some basic questions. There are 5 questions we routinely ask in my practice:

Have a staffer follow-up with a telephone call 10 days later on each letter to make sure it was received and will be answered promptly.

Once these questions have been answered, schedule a meeting with your office manager and your insurance specialist. Put the telephones on service, ask someone else to cover emergencies, and otherwise make sure you will not be disturbed during this time. Armed with the answers received from each payer and the data you have collected, analyze each plan in detail during this meeting. How many of the payer’s patients are currently active in your practice? Is that number increasing or decreasing? How well does each one compensate you compared to other payers, Medicare, and your regular fees, and how promptly are you paid? What problems have you had with referral and claim forms? Are you permitted to bill patients for uncovered charges?

More specific issues also should be addressed. For instance, what services, precisely, are not covered? Which procedures are paid particularly well and which are paid poorly (or not at all) despite being ostensibly “covered”? Are there any unusual or unorthodox rules for certain surgical or diagnostic procedures? Do you get an inordinate number of requests for further information from the payer? Are you asked for the same information repeatedly? Are there problems with CPT modifiers 25 and 78, or other modifiers?

Then take a hard look at the numbers. What fraction of your accounts receivable is attributed to each plan at any particular moment? Is that number increasing? If so, is it because the number of patients in that plan is increasing, or is it because the plan is losing momentum in paying its bills? The latter is a red flag; either growth is outstripping efficiency or financial problems are looming.

It also is important to look at mechanics of each plan. How easy is it for patients to get a referral to your office? Do primary care practitioners dole out referrals as if they were diamonds? Be sure to review the referral requirements in each of your contracts. On those all-too-common occasions when patients show up for an appointment without a valid referral, how easy does the plan make it to get them one quickly?

Finally, talk to your insurance representatives, the staffers who deal with these plans on a daily basis. Their subjective impressions are just as important as any hard data. They will immediately separate the good plans from the bad, but it also is important to ask them some specific questions. Is your staff constantly cutting through red tape to get patients seen? Are claim forms confusing or hard to file? How hard is it to get a hold of provider relations representatives, and once contacted, are they helpful and courteous? Are provider relations representatives constantly calling your office with unnecessary or inappropriate questions?

After you collect all of this information, you will have your own up-to-the-minute managed care database, which you can consult immediately to determine which plans you will keep and which you should disengage. Repeat this exercise regularly—we now do it yearly in my practice—because the private insurance environment is evolving ever more rapidly due to the advent of the Patient Protection and Affordable Care Act and other factors.

Another important use for your managed care database is to renegotiate your fee schedule. Any payer with fees that are below your average remuneration should receive a letter informing them that the payments are below the level that is recognized as usual and customary in your area. Inform them that your office will be pleased to give them the opportunity to remain associated with your practice if their reimbursements are immediately increased. Although insurers are not always receptive to requests for increased compensation, they are usually willing to open a dialogue; if not, you will need to reconsider your practice’s continued association with that plan.

This exercise requires a lot of work, but your time and effort will be well spent. In addition to ensuring that your services are properly compensated, you will be putting your third-party payers on notice that you are paying attention and that your office will not tolerate unfair remuneration or inordinate delays in payment.  

In a previous column I discussed the challenges inherent to incorporating the Patient Protection and Affordable Care Act’s health insurance exchanges into private practices.¹ While it is important to pay close attention to newer third-party vehicles, do not ignore established payers or assume their compensation schedules are up-to-date.

Because traditional insurers and managed care organizations typically do not take it upon themselves to update their payment schedules for private practices on a regular basis, you should take a close look at your third-party plans; you may be surprised to find that you have unknowingly remained associated with an outdated plan with an inappropriate fee schedule or with few patients generating negligible remuneration for your practice when you could have replaced it with a young, aggressive, well-paying organization long ago.

As is usually the case, you will never know unless you look. The process is the sort of disagreeable task that smaller practices often postpone or ignore completely, but the effort is well worth it. First, ask your employees to assemble some data. Start with lists of the last 50 patients affiliated with each third-party contract; your electronic records should allow you to assemble these data easily. For each patient, note the diagnoses; the procedure codes billed; the amounts billed and paid for each code; and any problems encountered, especially payment delays and records requests. Also ask for any correspondence you have on file with claims departments and medical directors over the last year.

Next, send out a questionnaire to the provider relations department for each third-party payer. Tell them you are updating your managed care data. Include a list of your 25 most commonly used Current Procedural Terminology (CPT) codes and ask for their maximum allowable reimbursement on each code. Then ask some basic questions. There are 5 questions we routinely ask in my practice:

Have a staffer follow-up with a telephone call 10 days later on each letter to make sure it was received and will be answered promptly.

Once these questions have been answered, schedule a meeting with your office manager and your insurance specialist. Put the telephones on service, ask someone else to cover emergencies, and otherwise make sure you will not be disturbed during this time. Armed with the answers received from each payer and the data you have collected, analyze each plan in detail during this meeting. How many of the payer’s patients are currently active in your practice? Is that number increasing or decreasing? How well does each one compensate you compared to other payers, Medicare, and your regular fees, and how promptly are you paid? What problems have you had with referral and claim forms? Are you permitted to bill patients for uncovered charges?

More specific issues also should be addressed. For instance, what services, precisely, are not covered? Which procedures are paid particularly well and which are paid poorly (or not at all) despite being ostensibly “covered”? Are there any unusual or unorthodox rules for certain surgical or diagnostic procedures? Do you get an inordinate number of requests for further information from the payer? Are you asked for the same information repeatedly? Are there problems with CPT modifiers 25 and 78, or other modifiers?

Then take a hard look at the numbers. What fraction of your accounts receivable is attributed to each plan at any particular moment? Is that number increasing? If so, is it because the number of patients in that plan is increasing, or is it because the plan is losing momentum in paying its bills? The latter is a red flag; either growth is outstripping efficiency or financial problems are looming.

It also is important to look at mechanics of each plan. How easy is it for patients to get a referral to your office? Do primary care practitioners dole out referrals as if they were diamonds? Be sure to review the referral requirements in each of your contracts. On those all-too-common occasions when patients show up for an appointment without a valid referral, how easy does the plan make it to get them one quickly?

Finally, talk to your insurance representatives, the staffers who deal with these plans on a daily basis. Their subjective impressions are just as important as any hard data. They will immediately separate the good plans from the bad, but it also is important to ask them some specific questions. Is your staff constantly cutting through red tape to get patients seen? Are claim forms confusing or hard to file? How hard is it to get a hold of provider relations representatives, and once contacted, are they helpful and courteous? Are provider relations representatives constantly calling your office with unnecessary or inappropriate questions?

After you collect all of this information, you will have your own up-to-the-minute managed care database, which you can consult immediately to determine which plans you will keep and which you should disengage. Repeat this exercise regularly—we now do it yearly in my practice—because the private insurance environment is evolving ever more rapidly due to the advent of the Patient Protection and Affordable Care Act and other factors.

Another important use for your managed care database is to renegotiate your fee schedule. Any payer with fees that are below your average remuneration should receive a letter informing them that the payments are below the level that is recognized as usual and customary in your area. Inform them that your office will be pleased to give them the opportunity to remain associated with your practice if their reimbursements are immediately increased. Although insurers are not always receptive to requests for increased compensation, they are usually willing to open a dialogue; if not, you will need to reconsider your practice’s continued association with that plan.

This exercise requires a lot of work, but your time and effort will be well spent. In addition to ensuring that your services are properly compensated, you will be putting your third-party payers on notice that you are paying attention and that your office will not tolerate unfair remuneration or inordinate delays in payment.  

In a previous column I discussed the challenges inherent to incorporating the Patient Protection and Affordable Care Act’s health insurance exchanges into private practices.¹ While it is important to pay close attention to newer third-party vehicles, do not ignore established payers or assume their compensation schedules are up-to-date.

Because traditional insurers and managed care organizations typically do not take it upon themselves to update their payment schedules for private practices on a regular basis, you should take a close look at your third-party plans; you may be surprised to find that you have unknowingly remained associated with an outdated plan with an inappropriate fee schedule or with few patients generating negligible remuneration for your practice when you could have replaced it with a young, aggressive, well-paying organization long ago.

As is usually the case, you will never know unless you look. The process is the sort of disagreeable task that smaller practices often postpone or ignore completely, but the effort is well worth it. First, ask your employees to assemble some data. Start with lists of the last 50 patients affiliated with each third-party contract; your electronic records should allow you to assemble these data easily. For each patient, note the diagnoses; the procedure codes billed; the amounts billed and paid for each code; and any problems encountered, especially payment delays and records requests. Also ask for any correspondence you have on file with claims departments and medical directors over the last year.

Next, send out a questionnaire to the provider relations department for each third-party payer. Tell them you are updating your managed care data. Include a list of your 25 most commonly used Current Procedural Terminology (CPT) codes and ask for their maximum allowable reimbursement on each code. Then ask some basic questions. There are 5 questions we routinely ask in my practice:

Have a staffer follow-up with a telephone call 10 days later on each letter to make sure it was received and will be answered promptly.

Once these questions have been answered, schedule a meeting with your office manager and your insurance specialist. Put the telephones on service, ask someone else to cover emergencies, and otherwise make sure you will not be disturbed during this time. Armed with the answers received from each payer and the data you have collected, analyze each plan in detail during this meeting. How many of the payer’s patients are currently active in your practice? Is that number increasing or decreasing? How well does each one compensate you compared to other payers, Medicare, and your regular fees, and how promptly are you paid? What problems have you had with referral and claim forms? Are you permitted to bill patients for uncovered charges?

More specific issues also should be addressed. For instance, what services, precisely, are not covered? Which procedures are paid particularly well and which are paid poorly (or not at all) despite being ostensibly “covered”? Are there any unusual or unorthodox rules for certain surgical or diagnostic procedures? Do you get an inordinate number of requests for further information from the payer? Are you asked for the same information repeatedly? Are there problems with CPT modifiers 25 and 78, or other modifiers?

Then take a hard look at the numbers. What fraction of your accounts receivable is attributed to each plan at any particular moment? Is that number increasing? If so, is it because the number of patients in that plan is increasing, or is it because the plan is losing momentum in paying its bills? The latter is a red flag; either growth is outstripping efficiency or financial problems are looming.

It also is important to look at mechanics of each plan. How easy is it for patients to get a referral to your office? Do primary care practitioners dole out referrals as if they were diamonds? Be sure to review the referral requirements in each of your contracts. On those all-too-common occasions when patients show up for an appointment without a valid referral, how easy does the plan make it to get them one quickly?

Finally, talk to your insurance representatives, the staffers who deal with these plans on a daily basis. Their subjective impressions are just as important as any hard data. They will immediately separate the good plans from the bad, but it also is important to ask them some specific questions. Is your staff constantly cutting through red tape to get patients seen? Are claim forms confusing or hard to file? How hard is it to get a hold of provider relations representatives, and once contacted, are they helpful and courteous? Are provider relations representatives constantly calling your office with unnecessary or inappropriate questions?

After you collect all of this information, you will have your own up-to-the-minute managed care database, which you can consult immediately to determine which plans you will keep and which you should disengage. Repeat this exercise regularly—we now do it yearly in my practice—because the private insurance environment is evolving ever more rapidly due to the advent of the Patient Protection and Affordable Care Act and other factors.

Another important use for your managed care database is to renegotiate your fee schedule. Any payer with fees that are below your average remuneration should receive a letter informing them that the payments are below the level that is recognized as usual and customary in your area. Inform them that your office will be pleased to give them the opportunity to remain associated with your practice if their reimbursements are immediately increased. Although insurers are not always receptive to requests for increased compensation, they are usually willing to open a dialogue; if not, you will need to reconsider your practice’s continued association with that plan.

This exercise requires a lot of work, but your time and effort will be well spent. In addition to ensuring that your services are properly compensated, you will be putting your third-party payers on notice that you are paying attention and that your office will not tolerate unfair remuneration or inordinate delays in payment.  

Health care reform has triggered considerable discussion both in print and online about the administrative problems it has created for private practitioners, including decreased cash flow, increased paperwork and business expenses, and an increasing number of high-deductible insurance exchanges with the infamous 90-day “grace periods.” Extending discounts to patients who pay at the time of service or out of pocket may mitigate damage caused by all 3 of these issues; however, caution is necessary, as discounts often can run afoul of federal and state laws, including anti-kickback statutes,¹ the anti-inducement provision of the Health Insurance Portability and Accountability Act,² the Medicare exclusion provision,³ and state insurance antidiscrimination provisions.⁴

Avoid Kickback Penalties From Patient Discounts

From a legal standpoint, any discount is technically a kickback of sorts because you are returning part of your fee to the patient, and many laws designed to thwart true kickbacks can apply to patient discounts. Take the relatively straightforward case of time-of-service discounts for cosmetic procedures and other services not normally covered by insurance. You would think that these transactions are strictly between you and your patients, but if these discounts appear to be marketing incentives to attract patients, you may face a penalty.⁵

Patient discounts also may impact third-party payers. Many provider agreements contain “most favored nation” clauses, which require you to automatically give that payer the lowest price you offer to anyone else, regardless of what would be paid otherwise. In other words, the payer could demand the same discount you offer any individual patient. A time-of-service discount is, of course, exactly that: it is offered only when payment is made immediately. Third parties never pay at the time of service and would not be entitled to it, but they may try to invoke their agreement.

If you want to extend discounts for covered services, you must be sure that the discounted fee you charge the patient also is reflected on the claim submitted to the insurer. Billing the insurer more than you charged the patient invites a charge of fraud.⁶ It is important to avoid discounting so regularly that the discounted fee becomes your usual and customary rate in the eyes of the insurer.

Waiving Costs and Kickbacks

Waiving coinsurance and deductibles can be trouble too, particularly with Medicare and Medicaid. You might intend it as a good deed, but the Centers for Medicare & Medicaid Services (CMS) will see it as an inducement or kickback, especially if you do it routinely, and similar to private carriers, they will consider the discounted fee your new customary fee. The CMS has no problem with an occasional waiver, especially “after determining in good faith that the individual is in financial need,” according to the Office of Inspector General,⁷ but thorough documentation is necessary in such cases.

Waiving co-pays for privately insured patients can be equally problematic. Nearly all insurers impose a contractual duty on providers to make a reasonable effort to collect applicable co-pays and/or deductibles. They view the routine waiver of patient payments as a breach of contract, and litigation may occur against providers who flout this requirement.⁸ As with the CMS, accommodating patients with individually documented financial limitations is acceptable, but if there is a pattern of routine waivers and a paucity of documentation, you will have difficulty defending it.

Antidiscrimination Laws

In addition to kickback laws, some states also have antidiscrimination laws that forbid lower charges to any subset of insurance payers or to direct payers.⁴ Some states make specific exceptions for legitimate discounts, such as individual cases of financial hardship, or if you pass along your lower billing and collection expenditures to patients who pay immediately, but other states do not.

Determining Discount Amounts

The discount amount depends on the physician’s situation and deserves careful consideration. If the amount or percentage that you choose to offer as a discount is completely out of proportion with the administrative costs of submitting paperwork as well as the hassles associated with waiting for third-party payments, you could be accused of running a discount policy that is in effect a de facto increase to insurance carriers, which also could result in charges of fraud.²

In cases of legitimate financial hardship, the most effective and least problematic strategy may be to offer a sliding scale. Many large clinics and community agencies as well as all hospitals have written policies for this system, often based on federal poverty guidelines. To avoid any potential issues, contact your local social service agencies and welfare clinics, learn the community standard in your area, and formulate a written policy with guidelines for determining a patient’s indigence.

Final Thoughts

Consistency of administration, objectivity in policies, and documentation of individual eligibility will ensure that the discounts you offer patients are in line with legal and payer regulations. Before you establish a discount policy, be sure to check your state’s applicable laws, and as always, run everything by your attorney.

Health care reform has triggered considerable discussion both in print and online about the administrative problems it has created for private practitioners, including decreased cash flow, increased paperwork and business expenses, and an increasing number of high-deductible insurance exchanges with the infamous 90-day “grace periods.” Extending discounts to patients who pay at the time of service or out of pocket may mitigate damage caused by all 3 of these issues; however, caution is necessary, as discounts often can run afoul of federal and state laws, including anti-kickback statutes,¹ the anti-inducement provision of the Health Insurance Portability and Accountability Act,² the Medicare exclusion provision,³ and state insurance antidiscrimination provisions.⁴

Avoid Kickback Penalties From Patient Discounts

From a legal standpoint, any discount is technically a kickback of sorts because you are returning part of your fee to the patient, and many laws designed to thwart true kickbacks can apply to patient discounts. Take the relatively straightforward case of time-of-service discounts for cosmetic procedures and other services not normally covered by insurance. You would think that these transactions are strictly between you and your patients, but if these discounts appear to be marketing incentives to attract patients, you may face a penalty.⁵

Patient discounts also may impact third-party payers. Many provider agreements contain “most favored nation” clauses, which require you to automatically give that payer the lowest price you offer to anyone else, regardless of what would be paid otherwise. In other words, the payer could demand the same discount you offer any individual patient. A time-of-service discount is, of course, exactly that: it is offered only when payment is made immediately. Third parties never pay at the time of service and would not be entitled to it, but they may try to invoke their agreement.

If you want to extend discounts for covered services, you must be sure that the discounted fee you charge the patient also is reflected on the claim submitted to the insurer. Billing the insurer more than you charged the patient invites a charge of fraud.⁶ It is important to avoid discounting so regularly that the discounted fee becomes your usual and customary rate in the eyes of the insurer.

Waiving Costs and Kickbacks

Waiving coinsurance and deductibles can be trouble too, particularly with Medicare and Medicaid. You might intend it as a good deed, but the Centers for Medicare & Medicaid Services (CMS) will see it as an inducement or kickback, especially if you do it routinely, and similar to private carriers, they will consider the discounted fee your new customary fee. The CMS has no problem with an occasional waiver, especially “after determining in good faith that the individual is in financial need,” according to the Office of Inspector General,⁷ but thorough documentation is necessary in such cases.

Waiving co-pays for privately insured patients can be equally problematic. Nearly all insurers impose a contractual duty on providers to make a reasonable effort to collect applicable co-pays and/or deductibles. They view the routine waiver of patient payments as a breach of contract, and litigation may occur against providers who flout this requirement.⁸ As with the CMS, accommodating patients with individually documented financial limitations is acceptable, but if there is a pattern of routine waivers and a paucity of documentation, you will have difficulty defending it.

Antidiscrimination Laws

In addition to kickback laws, some states also have antidiscrimination laws that forbid lower charges to any subset of insurance payers or to direct payers.⁴ Some states make specific exceptions for legitimate discounts, such as individual cases of financial hardship, or if you pass along your lower billing and collection expenditures to patients who pay immediately, but other states do not.

Determining Discount Amounts

The discount amount depends on the physician’s situation and deserves careful consideration. If the amount or percentage that you choose to offer as a discount is completely out of proportion with the administrative costs of submitting paperwork as well as the hassles associated with waiting for third-party payments, you could be accused of running a discount policy that is in effect a de facto increase to insurance carriers, which also could result in charges of fraud.²

In cases of legitimate financial hardship, the most effective and least problematic strategy may be to offer a sliding scale. Many large clinics and community agencies as well as all hospitals have written policies for this system, often based on federal poverty guidelines. To avoid any potential issues, contact your local social service agencies and welfare clinics, learn the community standard in your area, and formulate a written policy with guidelines for determining a patient’s indigence.

Final Thoughts

Consistency of administration, objectivity in policies, and documentation of individual eligibility will ensure that the discounts you offer patients are in line with legal and payer regulations. Before you establish a discount policy, be sure to check your state’s applicable laws, and as always, run everything by your attorney.

Health care reform has triggered considerable discussion both in print and online about the administrative problems it has created for private practitioners, including decreased cash flow, increased paperwork and business expenses, and an increasing number of high-deductible insurance exchanges with the infamous 90-day “grace periods.” Extending discounts to patients who pay at the time of service or out of pocket may mitigate damage caused by all 3 of these issues; however, caution is necessary, as discounts often can run afoul of federal and state laws, including anti-kickback statutes,¹ the anti-inducement provision of the Health Insurance Portability and Accountability Act,² the Medicare exclusion provision,³ and state insurance antidiscrimination provisions.⁴

Avoid Kickback Penalties From Patient Discounts

From a legal standpoint, any discount is technically a kickback of sorts because you are returning part of your fee to the patient, and many laws designed to thwart true kickbacks can apply to patient discounts. Take the relatively straightforward case of time-of-service discounts for cosmetic procedures and other services not normally covered by insurance. You would think that these transactions are strictly between you and your patients, but if these discounts appear to be marketing incentives to attract patients, you may face a penalty.⁵

Patient discounts also may impact third-party payers. Many provider agreements contain “most favored nation” clauses, which require you to automatically give that payer the lowest price you offer to anyone else, regardless of what would be paid otherwise. In other words, the payer could demand the same discount you offer any individual patient. A time-of-service discount is, of course, exactly that: it is offered only when payment is made immediately. Third parties never pay at the time of service and would not be entitled to it, but they may try to invoke their agreement.

If you want to extend discounts for covered services, you must be sure that the discounted fee you charge the patient also is reflected on the claim submitted to the insurer. Billing the insurer more than you charged the patient invites a charge of fraud.⁶ It is important to avoid discounting so regularly that the discounted fee becomes your usual and customary rate in the eyes of the insurer.

Waiving Costs and Kickbacks

Waiving coinsurance and deductibles can be trouble too, particularly with Medicare and Medicaid. You might intend it as a good deed, but the Centers for Medicare & Medicaid Services (CMS) will see it as an inducement or kickback, especially if you do it routinely, and similar to private carriers, they will consider the discounted fee your new customary fee. The CMS has no problem with an occasional waiver, especially “after determining in good faith that the individual is in financial need,” according to the Office of Inspector General,⁷ but thorough documentation is necessary in such cases.

Waiving co-pays for privately insured patients can be equally problematic. Nearly all insurers impose a contractual duty on providers to make a reasonable effort to collect applicable co-pays and/or deductibles. They view the routine waiver of patient payments as a breach of contract, and litigation may occur against providers who flout this requirement.⁸ As with the CMS, accommodating patients with individually documented financial limitations is acceptable, but if there is a pattern of routine waivers and a paucity of documentation, you will have difficulty defending it.

Antidiscrimination Laws

In addition to kickback laws, some states also have antidiscrimination laws that forbid lower charges to any subset of insurance payers or to direct payers.⁴ Some states make specific exceptions for legitimate discounts, such as individual cases of financial hardship, or if you pass along your lower billing and collection expenditures to patients who pay immediately, but other states do not.

Determining Discount Amounts

The discount amount depends on the physician’s situation and deserves careful consideration. If the amount or percentage that you choose to offer as a discount is completely out of proportion with the administrative costs of submitting paperwork as well as the hassles associated with waiting for third-party payments, you could be accused of running a discount policy that is in effect a de facto increase to insurance carriers, which also could result in charges of fraud.²

In cases of legitimate financial hardship, the most effective and least problematic strategy may be to offer a sliding scale. Many large clinics and community agencies as well as all hospitals have written policies for this system, often based on federal poverty guidelines. To avoid any potential issues, contact your local social service agencies and welfare clinics, learn the community standard in your area, and formulate a written policy with guidelines for determining a patient’s indigence.

Final Thoughts

Consistency of administration, objectivity in policies, and documentation of individual eligibility will ensure that the discounts you offer patients are in line with legal and payer regulations. Before you establish a discount policy, be sure to check your state’s applicable laws, and as always, run everything by your attorney.

For many years I have advised physicians that aggressive management of accounts receivable is the key to financial health for any private practice. In the current health care reform climate, it has become more important than ever. A crucial step toward proper management of accounts receivable in the age of the Patient Protection and Affordable Care Act is minimization, if not outright elimination, of patient billing, which is a hallowed yet obsolete tradition in private practice. Billing, in effect, is extending free credit to patients, and independent physicians can no longer afford it.

Some physicians of a traditional bent cling to the idea that accepting credit cards or even asking for payment at the time of service smacks of “storekeeping.” They feel more comfortable billing patients for outstanding balances but complain that their bills often are ignored; with each passing day following treatment in your office, the likelihood decreases that a patient will pay the bill.

Patient billing also is expensive. When you total the costs of materials, postage, and staff labor, each bill can cost anywhere from $2 to $10 or more. Every minute the office staff spends producing and mailing bills is time not spent on more productive work. Billing services are an alternative, but they also are expensive, and those bills get ignored too. Requiring immediate payment may seem distasteful to some physicians, but for physicians who wish to keep their office private and independent, it is rapidly becoming the only viable option.

Health Savings Accounts

Private practices will need to become increasingly flexible in how they accept payments as the population continues to age. This flexibility becomes increasingly important as more and more patients rely on health savings accounts (HSAs). Enrollment in these specialized, tax-deductible, tax-free accounts has increased 10-fold over the last decade.¹ Private practice physicians will want to accommodate for HSAs as much as possible.

A few credit companies are already promoting cards to finance HSAs and other private-pay portions of health care expenses, such as The HELPcard (www.helpcard.com). Major credit card companies also have begun to appreciate this largely untapped segment of potential business for them. Soon you may begin receiving help from them in setting up creative payment plans for your patients. Some financial institutions have even begun creating medical credit and debit cards called health benefit cards that are designed specifically for use at physicians’ offices.²

Credit and Debit Cards

Credit and debit cards eliminate many of the problems associated with patient billing. They allow you to collect more fees at the time of service while you still have the patient’s attention and the service you provided is still appreciated.

Charging to a credit or debit card also reduces the chances of a balance owed falling through the cracks, getting lost in the mail, or getting embezzled, and it cannot bounce so it is better than a check. Card payments also can improve your practice’s cash flow, which is always a welcome benefit. Additionally, if a patient is delinquent in paying a credit card bill, it is the credit card company’s problem, not yours.

Credit cards also offer more payment flexibility for patients. In the case of a large balance, offer your patient the option of charging all of the services to a credit card, which he/she can then pay off in affordable monthly installments. Your practice will get reimbursed in full, even as the patient is paying it off slowly, and the patient is able to pay off the debt at a pace that makes sense for his/her finances.

Payment Policies

Beyond simply accepting credit cards, the next step is one that every hotel, rental car agency, and many other businesses have used for years: Retain a card number in each patient’s file, and bill balances as they come in.

Every new patient in my office receives a letter at his/her first visit explaining our policy: We will keep a credit card number on file and use it to bill any outstanding balances after third parties pay their portion. At the bottom of the letter is a brief statement of consent for the patient to sign, along with a place to write the credit card number and expiration date. This policy also comes in handy for patients who claim to have come to the office without cash, a checkbook, credit cards, or any other method of payment. In such situations, my office manager can say, “No problem, we have your credit card information on file!”

Do patients object to this policy? Some do, mostly older patients. But when we explain that we are doing nothing different than hotels do at check-in and that this policy also will work to their advantage by decreasing the number of bills they receive and checks they must write, most come around. Make it an option at first if you wish; then, when everyone is accustomed, you can make it a mandatory policy. My office manager has the authority to make exceptions on a case-by-case basis when necessary.

Do patients worry about confidentiality or unauthorized use? Most individuals do not worry when they use a credit card at a restaurant, hotel, or the Internet. Guard your patients’ financial information as carefully as their medical information. If you have electronic health records, the patient’s credit card number can go in the medical chart. Otherwise use a separate portable filing system that can be locked up each night.

Does this policy work? In only 1 year, my total accounts receivable dropped by nearly 50%; after another year they stabilized at 30% to 35% of prior levels and have remained there ever since, which was a source of consternation for our new accountant who we hired shortly thereafter. “Something must be wrong,” he said nervously after his first look at our books. “Accounts receivable totals are never that low in a medical office with your level of volume.” His eyes widened as I explained our system. “Why doesn’t every private practice do that?” he asked. Why, indeed.

Final Thoughts

The business of health care delivery is currently being rocked at its foundations, as I have been detailing in this column. Without considerable adaptation to these fundamental changes, a private practice can do little more than survive, and even that will take luck. A crucial component of adaptation involves doing more of what we do best, treating patients. Leave the business of extending credit to the banks and credit card companies.

For many years I have advised physicians that aggressive management of accounts receivable is the key to financial health for any private practice. In the current health care reform climate, it has become more important than ever. A crucial step toward proper management of accounts receivable in the age of the Patient Protection and Affordable Care Act is minimization, if not outright elimination, of patient billing, which is a hallowed yet obsolete tradition in private practice. Billing, in effect, is extending free credit to patients, and independent physicians can no longer afford it.

Some physicians of a traditional bent cling to the idea that accepting credit cards or even asking for payment at the time of service smacks of “storekeeping.” They feel more comfortable billing patients for outstanding balances but complain that their bills often are ignored; with each passing day following treatment in your office, the likelihood decreases that a patient will pay the bill.

Patient billing also is expensive. When you total the costs of materials, postage, and staff labor, each bill can cost anywhere from $2 to $10 or more. Every minute the office staff spends producing and mailing bills is time not spent on more productive work. Billing services are an alternative, but they also are expensive, and those bills get ignored too. Requiring immediate payment may seem distasteful to some physicians, but for physicians who wish to keep their office private and independent, it is rapidly becoming the only viable option.

Health Savings Accounts

Private practices will need to become increasingly flexible in how they accept payments as the population continues to age. This flexibility becomes increasingly important as more and more patients rely on health savings accounts (HSAs). Enrollment in these specialized, tax-deductible, tax-free accounts has increased 10-fold over the last decade.¹ Private practice physicians will want to accommodate for HSAs as much as possible.

A few credit companies are already promoting cards to finance HSAs and other private-pay portions of health care expenses, such as The HELPcard (www.helpcard.com). Major credit card companies also have begun to appreciate this largely untapped segment of potential business for them. Soon you may begin receiving help from them in setting up creative payment plans for your patients. Some financial institutions have even begun creating medical credit and debit cards called health benefit cards that are designed specifically for use at physicians’ offices.²

Credit and Debit Cards

Credit and debit cards eliminate many of the problems associated with patient billing. They allow you to collect more fees at the time of service while you still have the patient’s attention and the service you provided is still appreciated.

Charging to a credit or debit card also reduces the chances of a balance owed falling through the cracks, getting lost in the mail, or getting embezzled, and it cannot bounce so it is better than a check. Card payments also can improve your practice’s cash flow, which is always a welcome benefit. Additionally, if a patient is delinquent in paying a credit card bill, it is the credit card company’s problem, not yours.

Credit cards also offer more payment flexibility for patients. In the case of a large balance, offer your patient the option of charging all of the services to a credit card, which he/she can then pay off in affordable monthly installments. Your practice will get reimbursed in full, even as the patient is paying it off slowly, and the patient is able to pay off the debt at a pace that makes sense for his/her finances.

Payment Policies

Beyond simply accepting credit cards, the next step is one that every hotel, rental car agency, and many other businesses have used for years: Retain a card number in each patient’s file, and bill balances as they come in.

Every new patient in my office receives a letter at his/her first visit explaining our policy: We will keep a credit card number on file and use it to bill any outstanding balances after third parties pay their portion. At the bottom of the letter is a brief statement of consent for the patient to sign, along with a place to write the credit card number and expiration date. This policy also comes in handy for patients who claim to have come to the office without cash, a checkbook, credit cards, or any other method of payment. In such situations, my office manager can say, “No problem, we have your credit card information on file!”

Do patients object to this policy? Some do, mostly older patients. But when we explain that we are doing nothing different than hotels do at check-in and that this policy also will work to their advantage by decreasing the number of bills they receive and checks they must write, most come around. Make it an option at first if you wish; then, when everyone is accustomed, you can make it a mandatory policy. My office manager has the authority to make exceptions on a case-by-case basis when necessary.

Do patients worry about confidentiality or unauthorized use? Most individuals do not worry when they use a credit card at a restaurant, hotel, or the Internet. Guard your patients’ financial information as carefully as their medical information. If you have electronic health records, the patient’s credit card number can go in the medical chart. Otherwise use a separate portable filing system that can be locked up each night.

Does this policy work? In only 1 year, my total accounts receivable dropped by nearly 50%; after another year they stabilized at 30% to 35% of prior levels and have remained there ever since, which was a source of consternation for our new accountant who we hired shortly thereafter. “Something must be wrong,” he said nervously after his first look at our books. “Accounts receivable totals are never that low in a medical office with your level of volume.” His eyes widened as I explained our system. “Why doesn’t every private practice do that?” he asked. Why, indeed.

Final Thoughts

The business of health care delivery is currently being rocked at its foundations, as I have been detailing in this column. Without considerable adaptation to these fundamental changes, a private practice can do little more than survive, and even that will take luck. A crucial component of adaptation involves doing more of what we do best, treating patients. Leave the business of extending credit to the banks and credit card companies.

For many years I have advised physicians that aggressive management of accounts receivable is the key to financial health for any private practice. In the current health care reform climate, it has become more important than ever. A crucial step toward proper management of accounts receivable in the age of the Patient Protection and Affordable Care Act is minimization, if not outright elimination, of patient billing, which is a hallowed yet obsolete tradition in private practice. Billing, in effect, is extending free credit to patients, and independent physicians can no longer afford it.

Some physicians of a traditional bent cling to the idea that accepting credit cards or even asking for payment at the time of service smacks of “storekeeping.” They feel more comfortable billing patients for outstanding balances but complain that their bills often are ignored; with each passing day following treatment in your office, the likelihood decreases that a patient will pay the bill.

Patient billing also is expensive. When you total the costs of materials, postage, and staff labor, each bill can cost anywhere from $2 to $10 or more. Every minute the office staff spends producing and mailing bills is time not spent on more productive work. Billing services are an alternative, but they also are expensive, and those bills get ignored too. Requiring immediate payment may seem distasteful to some physicians, but for physicians who wish to keep their office private and independent, it is rapidly becoming the only viable option.

Health Savings Accounts

Private practices will need to become increasingly flexible in how they accept payments as the population continues to age. This flexibility becomes increasingly important as more and more patients rely on health savings accounts (HSAs). Enrollment in these specialized, tax-deductible, tax-free accounts has increased 10-fold over the last decade.¹ Private practice physicians will want to accommodate for HSAs as much as possible.

A few credit companies are already promoting cards to finance HSAs and other private-pay portions of health care expenses, such as The HELPcard (www.helpcard.com). Major credit card companies also have begun to appreciate this largely untapped segment of potential business for them. Soon you may begin receiving help from them in setting up creative payment plans for your patients. Some financial institutions have even begun creating medical credit and debit cards called health benefit cards that are designed specifically for use at physicians’ offices.²

Credit and Debit Cards

Credit and debit cards eliminate many of the problems associated with patient billing. They allow you to collect more fees at the time of service while you still have the patient’s attention and the service you provided is still appreciated.

Charging to a credit or debit card also reduces the chances of a balance owed falling through the cracks, getting lost in the mail, or getting embezzled, and it cannot bounce so it is better than a check. Card payments also can improve your practice’s cash flow, which is always a welcome benefit. Additionally, if a patient is delinquent in paying a credit card bill, it is the credit card company’s problem, not yours.

Credit cards also offer more payment flexibility for patients. In the case of a large balance, offer your patient the option of charging all of the services to a credit card, which he/she can then pay off in affordable monthly installments. Your practice will get reimbursed in full, even as the patient is paying it off slowly, and the patient is able to pay off the debt at a pace that makes sense for his/her finances.

Payment Policies

Beyond simply accepting credit cards, the next step is one that every hotel, rental car agency, and many other businesses have used for years: Retain a card number in each patient’s file, and bill balances as they come in.

Every new patient in my office receives a letter at his/her first visit explaining our policy: We will keep a credit card number on file and use it to bill any outstanding balances after third parties pay their portion. At the bottom of the letter is a brief statement of consent for the patient to sign, along with a place to write the credit card number and expiration date. This policy also comes in handy for patients who claim to have come to the office without cash, a checkbook, credit cards, or any other method of payment. In such situations, my office manager can say, “No problem, we have your credit card information on file!”

Do patients object to this policy? Some do, mostly older patients. But when we explain that we are doing nothing different than hotels do at check-in and that this policy also will work to their advantage by decreasing the number of bills they receive and checks they must write, most come around. Make it an option at first if you wish; then, when everyone is accustomed, you can make it a mandatory policy. My office manager has the authority to make exceptions on a case-by-case basis when necessary.

Do patients worry about confidentiality or unauthorized use? Most individuals do not worry when they use a credit card at a restaurant, hotel, or the Internet. Guard your patients’ financial information as carefully as their medical information. If you have electronic health records, the patient’s credit card number can go in the medical chart. Otherwise use a separate portable filing system that can be locked up each night.

Does this policy work? In only 1 year, my total accounts receivable dropped by nearly 50%; after another year they stabilized at 30% to 35% of prior levels and have remained there ever since, which was a source of consternation for our new accountant who we hired shortly thereafter. “Something must be wrong,” he said nervously after his first look at our books. “Accounts receivable totals are never that low in a medical office with your level of volume.” His eyes widened as I explained our system. “Why doesn’t every private practice do that?” he asked. Why, indeed.

Final Thoughts

The business of health care delivery is currently being rocked at its foundations, as I have been detailing in this column. Without considerable adaptation to these fundamental changes, a private practice can do little more than survive, and even that will take luck. A crucial component of adaptation involves doing more of what we do best, treating patients. Leave the business of extending credit to the banks and credit card companies.