Slashing Accounts Receivable, Part II

I knew my December 2005 column, which suggested asking each patient for a credit card number and billing balances to the card account as they come in, was an idea whose time had come. But I was quite unprepared for the huge volume of feedback—more, by far, than any column before it. (If you missed that column, you'll find it at the Web site, www.skinandallergynews.com

Questions and requests for copies of my letter of explanation and consent form continue to pour in, even now. Many of the questions are similar, so I've decided to answer the more common ones this month.

Don't your patients object to signing, in effect, a blank check?

Some did object initially—mostly older people. Nowadays a wide chasm seems to have formed in financial philosophies, right at about age 35. If you're older than that, for example, when you receive your checking account statement each month you probably say, “Thank goodness they still include copies of my canceled checks.” If you're younger, you probably say, “Why do they send all this paper with each statement?”

But when we explain that we're doing nothing different than most restaurants and online businesses, and it will work to patients' advantage by decreasing the bills they will receive and the checks they must write, most come around.

And they're not “signing a blank check”—all credit card contracts give cardholders the right to challenge any charge against their account, and we remind them of that.

Once you've collected the credit card information, where do you store it, and how do you keep it secure?

We keep it in the patient's chart, where it is guarded with the same level of security as the rest of that patient's privileged information.

Some offices prefer to store it all in one place—a Rolodex-type container, or an Excel (or Quickbooks, or similar) computer file, for example—protected by locked cabinets, passwords, and any other precautions that might be necessary.

Couldn't this be considered “balance billing” and therefore illegal?

This is not “balance billing,” which is asking patients to pay the difference between your normal fee and the insurer's normal payment. If you have a contract with the insurer, that's illegal—or more precisely, it's a breach of your contract. What you charge to the patient's credit card is the portion of the insurer-determined payment not paid by the insurer. For example, you bill $200, the payer approves $100 and pays 80% of that. The remaining $20 is the patient's responsibility, and that is what you charge to the credit card, rather than sending the patient a statement for that amount.

We instituted this policy after you suggested it in your American Academy of Dermatology course. So far one patient has called to ask if it is legal, and one insurance company has inquired about it. How do you respond to such queries?

Of course it's legal. (See above.) Ask those patients if they question the legality every time they check into a hotel or rent a car. We have had no inquiries from insurers, but my response would be it's none of their business.

You have every right to collect the patient-owed portion of your fees, and insurance companies have no say in how you do it.

How do you handle patients who refuse to hand over a number, particularly those who claim they have no credit cards?

We used to let refusers slide, but as of Jan. 1, we've made the policy mandatory. Patients who refuse without a good reason are asked, like any patient who refuses to cooperate with any standard office policy, to go elsewhere. Life's too short. And “I don't have any credit cards” does not count as a good reason. Everybody has credit cards in this day and age, except deadbeats with such awful credit that you don't want them anyway. My office manager does have authority to make exceptions on a case-by-case basis, however.

One surgeon I know asks “no credit card” patients to pay a lawyer-style “retainer” of $500 which is held in escrow and used to pay receivable amounts as they come due. When presented with that alternative, most suddenly remember that they do have a credit card after all.

Do you envision using this policy to enforce any no-show charges a practice might have?

I had not, but now I am. Excellent suggestion!

I knew my December 2005 column, which suggested asking each patient for a credit card number and billing balances to the card account as they come in, was an idea whose time had come. But I was quite unprepared for the huge volume of feedback—more, by far, than any column before it. (If you missed that column, you'll find it at the Web site, www.skinandallergynews.com

Questions and requests for copies of my letter of explanation and consent form continue to pour in, even now. Many of the questions are similar, so I've decided to answer the more common ones this month.

Don't your patients object to signing, in effect, a blank check?

Some did object initially—mostly older people. Nowadays a wide chasm seems to have formed in financial philosophies, right at about age 35. If you're older than that, for example, when you receive your checking account statement each month you probably say, “Thank goodness they still include copies of my canceled checks.” If you're younger, you probably say, “Why do they send all this paper with each statement?”

But when we explain that we're doing nothing different than most restaurants and online businesses, and it will work to patients' advantage by decreasing the bills they will receive and the checks they must write, most come around.

And they're not “signing a blank check”—all credit card contracts give cardholders the right to challenge any charge against their account, and we remind them of that.

Once you've collected the credit card information, where do you store it, and how do you keep it secure?

We keep it in the patient's chart, where it is guarded with the same level of security as the rest of that patient's privileged information.

Some offices prefer to store it all in one place—a Rolodex-type container, or an Excel (or Quickbooks, or similar) computer file, for example—protected by locked cabinets, passwords, and any other precautions that might be necessary.

Couldn't this be considered “balance billing” and therefore illegal?

This is not “balance billing,” which is asking patients to pay the difference between your normal fee and the insurer's normal payment. If you have a contract with the insurer, that's illegal—or more precisely, it's a breach of your contract. What you charge to the patient's credit card is the portion of the insurer-determined payment not paid by the insurer. For example, you bill $200, the payer approves $100 and pays 80% of that. The remaining $20 is the patient's responsibility, and that is what you charge to the credit card, rather than sending the patient a statement for that amount.

We instituted this policy after you suggested it in your American Academy of Dermatology course. So far one patient has called to ask if it is legal, and one insurance company has inquired about it. How do you respond to such queries?

Of course it's legal. (See above.) Ask those patients if they question the legality every time they check into a hotel or rent a car. We have had no inquiries from insurers, but my response would be it's none of their business.

You have every right to collect the patient-owed portion of your fees, and insurance companies have no say in how you do it.

How do you handle patients who refuse to hand over a number, particularly those who claim they have no credit cards?

We used to let refusers slide, but as of Jan. 1, we've made the policy mandatory. Patients who refuse without a good reason are asked, like any patient who refuses to cooperate with any standard office policy, to go elsewhere. Life's too short. And “I don't have any credit cards” does not count as a good reason. Everybody has credit cards in this day and age, except deadbeats with such awful credit that you don't want them anyway. My office manager does have authority to make exceptions on a case-by-case basis, however.

One surgeon I know asks “no credit card” patients to pay a lawyer-style “retainer” of $500 which is held in escrow and used to pay receivable amounts as they come due. When presented with that alternative, most suddenly remember that they do have a credit card after all.

Do you envision using this policy to enforce any no-show charges a practice might have?

I had not, but now I am. Excellent suggestion!

I knew my December 2005 column, which suggested asking each patient for a credit card number and billing balances to the card account as they come in, was an idea whose time had come. But I was quite unprepared for the huge volume of feedback—more, by far, than any column before it. (If you missed that column, you'll find it at the Web site, www.skinandallergynews.com

Questions and requests for copies of my letter of explanation and consent form continue to pour in, even now. Many of the questions are similar, so I've decided to answer the more common ones this month.

Don't your patients object to signing, in effect, a blank check?

Some did object initially—mostly older people. Nowadays a wide chasm seems to have formed in financial philosophies, right at about age 35. If you're older than that, for example, when you receive your checking account statement each month you probably say, “Thank goodness they still include copies of my canceled checks.” If you're younger, you probably say, “Why do they send all this paper with each statement?”

But when we explain that we're doing nothing different than most restaurants and online businesses, and it will work to patients' advantage by decreasing the bills they will receive and the checks they must write, most come around.

And they're not “signing a blank check”—all credit card contracts give cardholders the right to challenge any charge against their account, and we remind them of that.

Once you've collected the credit card information, where do you store it, and how do you keep it secure?

We keep it in the patient's chart, where it is guarded with the same level of security as the rest of that patient's privileged information.

Some offices prefer to store it all in one place—a Rolodex-type container, or an Excel (or Quickbooks, or similar) computer file, for example—protected by locked cabinets, passwords, and any other precautions that might be necessary.

Couldn't this be considered “balance billing” and therefore illegal?

This is not “balance billing,” which is asking patients to pay the difference between your normal fee and the insurer's normal payment. If you have a contract with the insurer, that's illegal—or more precisely, it's a breach of your contract. What you charge to the patient's credit card is the portion of the insurer-determined payment not paid by the insurer. For example, you bill $200, the payer approves $100 and pays 80% of that. The remaining $20 is the patient's responsibility, and that is what you charge to the credit card, rather than sending the patient a statement for that amount.

We instituted this policy after you suggested it in your American Academy of Dermatology course. So far one patient has called to ask if it is legal, and one insurance company has inquired about it. How do you respond to such queries?

Of course it's legal. (See above.) Ask those patients if they question the legality every time they check into a hotel or rent a car. We have had no inquiries from insurers, but my response would be it's none of their business.

You have every right to collect the patient-owed portion of your fees, and insurance companies have no say in how you do it.

How do you handle patients who refuse to hand over a number, particularly those who claim they have no credit cards?

We used to let refusers slide, but as of Jan. 1, we've made the policy mandatory. Patients who refuse without a good reason are asked, like any patient who refuses to cooperate with any standard office policy, to go elsewhere. Life's too short. And “I don't have any credit cards” does not count as a good reason. Everybody has credit cards in this day and age, except deadbeats with such awful credit that you don't want them anyway. My office manager does have authority to make exceptions on a case-by-case basis, however.

One surgeon I know asks “no credit card” patients to pay a lawyer-style “retainer” of $500 which is held in escrow and used to pay receivable amounts as they come due. When presented with that alternative, most suddenly remember that they do have a credit card after all.

Do you envision using this policy to enforce any no-show charges a practice might have?

I had not, but now I am. Excellent suggestion!