Medical debt collection is becoming more important for physician practices as large deductibles and managed care plans shift more costs to the patient. Practices should review their policies on payment and collection to ensure they are up to date with the current demands for cash flow. At the same time, experts say physician practices need to ensure their procedure for appealing denied reimbursement claims is top notch. As healthcare dollars get squeezed, managed care companies will look for ways to deny more claims.

The Healthcare Financial Management Association (HFMA) and the Association of Credit and Collection Professionals worked with an industry task force of healthcare providers, account resolution groups, and others to craft a set of best practices for medical debt collection, says Richard L. Gundling, FHFMA, CMA, vice president of the Healthcare Financial Management Association (HFMA) in Westchester, Illinois.

One of the primary problems they found was a lack of clear communication to patients about payment and debt collection policies, Gundling says. "The debt collection folks don't know what the physician practice is telling people, and the physician practice doesn't know what the debt collectors are telling people," he explains. "The patient is caught in the middle because they're going with whatever they were told, when they might be held accountable for a different set of expectations."

This finding led to recommendations that practices improve their patient communication about payment and debt collection, educating the patient at the first opportunity, Gundling says.

Both patients and providers are struggling with the steep rise in patient-owed medical bills, driven by the growing prevalence of high-deductible plans. Uncompensated care, including bad debt and charity care, increased 12% to $46 billion in 2012, according to a January 2014 survey of 5,000 hospitals by the American Hospital Association.

At the same time, two out of five working-age adults, or 75 million people, are carrying medical debt or had problems paying medical bills, up from 58 million in 2005, according to the Common- wealth Fund. Additionally, 30% of U.S. adults say they or a family member have put off medical treatment in the past year because of the cost, according to Gallup.

Most physician practices do not handle their own debt collection, of course, but practices should ensure that the vendor who does is compliant with industry best practices, Gundling says.

"Ask if they embrace these best practices and follow the workflow that is outlined," he says. "The physician practice should read these guidelines and understand them too, so they can understand how the billing and collection process works after the bill leaves their offices."

Gundling says physicians should expect patients to ask more questions about billing procedures because they are paying more out of pocket, sometimes substantially more, than in recent years. "The more physicians understand how patient financial obligations work, the better," he says. "The physician is their face-to-face contact, and so patients are going to turn to them for answers. None of us really understand our coverage until we get to the doctor's office and ask them to explain it."

In addition to the debt collection process, appeals for managed care reimbursement will be most successful if you have clean, well-documented bills, says Bradley M. Seldin, JD, an attorney with the Florida Health Law Center in Davie who assists physicians with debt collection. Physicians should remember that payers will be looking for any reason to deny a claim, so they should make it as difficult as possible for payers to do so.

Emergency care is particularly difficult to obtain reimbursement for, Seldin says. A high proportion of emergency care is not fully reimbursed by payers, he says.

He also cautions physicians to take a skeptical approach when verifying insurance coverage for a patient.

"Often when you get authorization for treatment, the insurer says this is not a guarantee of payment. But you think that is just a caution and you're confident enough of the authorization to go ahead and provide services," Seldin explains. "Then you get a notice saying your claim was denied because the patient was not eligible at the time of service. The physician might think, 'Hey, I was told the authorization was not a guarantee of payment and I gambled, so I lose.' Not necessarily."

Seldin encourages physicians not to roll over and accept that lost revenue. Question the facts behind the decision, he says. Did the patient not pay a premium due three days before the service, meaning the grace period applies? Or did he or she not make the payment six months ago?

"If it was months ago, the HMO should have known the member is not eligible. At that point, they should be responsible if they told you the treatment was authorized," Seldin says. "Either they lied or they were miserably negligent in conveying accurate information." Those cases can be won on appeal, he says.

Providers can combat bad debt by fostering patient financial engagement earlier, especially before treatment, says Ann Garnier, chief operating officer of CarePayment, a national provider of patient financing based in Portland, Oregon. When providers offer 0% APR payment programs to patients early in the revenue cycle, collections more than double, net of fees, compared to in-house payment plans, which are often offered 30 or 60 days after the date of service, she says.

Garnier advises practices to discuss financing options, including any financing program, at the time of registration. "Patients should know that you have the same or better financing options as the department store and car dealers," she says. "Healthcare is so much important than those things, and if we are making it easier for patients to pay, then we need to tell them about those options up front."