Patient Billing And Collections: Process, Best Practices, And Patient-Friendly Strategies -

Patient responsibility is one of the major sources of healthcare revenue. Deductibles, co-pays, coinsurance, and self-pay amount mean that a larger portion of every claim is coming from the patient as opposed to the insurance company. Effective management of such balances ensures revenue protection and keeps patients satisfied with their care.

Effective patient billing and collections process allows organizations to manage the outstanding balances of the patient while keeping a good patient experience intact. This article discusses the process of patient collection, point of service collection, billing the patient effectively and best practices for you to implement.

What Are Patient Collections in Medical Billing?

Patient collections in medical billing entail identifying, contacting and collecting the part of the medical bill that is due from the patient. Whenever the question of what “patient collections” are raised, the definition of patient collections becomes very straightforward – it is all that is done in order to collect balances from patients.

It is important to distinguish between the two parts of the payment:

Insurance responsibility – the amount that will be paid by the insurer within the terms of the insurance contract.
Patient responsibility – the amount left after insurance coverage.

The most typical patient balances include the following:

Copayment – fixed payment for the visit
Deductible – the amount to be paid before insurance coverage starts
Coinsurance – a percentage of the allowed charge paid by the patient
Non-covered charges – procedures not covered by the plan
Self-pay balances – payments from uninsured patients

Patient collections are not a stand-alone activity. It is only one phase of the revenue cycle and depends on registration, verification of eligibility, proper coding and claim submissions that precede the collection process.

What Does Patient Collections Do?

Patient collections keeps a practice’s revenue cycle moving after the payer has processed a claim. In a medical billing operation, the patient collections function typically:

Identifies outstanding patient balances
Generates and sends patient statements
Communicates payment responsibilities clearly
Follows up on unpaid balances
Processes patient payments
Sets up payment arrangements where appropriate
Maintains accurate account records

Good patient collections rely on clear communication and appropriate follow-up, not on pressure. The goal is for patients to understand what they owe and why, and to have a simple way to pay it.

What Is the Patient Collections Process?

A patient collections process is a set of related actions, starting with the initial patient contact and ending with successful accounts resolution. Below you will find the typical sequence of the patient collection procedure.

1. Verify Patient Information and Insurance Information

Collections should always begin at registration. Make sure that all patient demographics, insurance information, and patient eligibility are verified in advance. Most mistakes happen at this stage and cause claims rejection and inaccurate patient balances in the future.

2. Estimate Patient Responsibility

Based on the patient benefits information, estimate what patient responsibility is expected to be for the planned service. Estimation provides patients with a realistic expectation, and it gives your employees an opportunity to discuss the payment.

3. Collect at Point of Service

Collect estimated amounts of payment (copayments and, if possible, deductibles) during patient registration.

4. File and Process the Insurance Claim

File a clean claim with accurate codes. After the payer has processed your claim, the explanation of benefits shows what was covered and how much needs to be paid for the service.

5. Create Patients’ Statements

Once the insurance company has paid, make a statement that lists the services performed, amounts of insurance payments and adjustments, and the outstanding balance.

6. Collect Outstanding Balances

It isn’t always possible to collect balances right away after the statement has been made. But structured follow-ups with reminders will help you avoid growing balances that aren’t collected without straining your relations with the patient.

7. Provide Easy-to-Use Payment Options

Provide patients with convenient options to pay, including online payments, checks in the mail, card payments by telephone, or even payment plans when your practice policy allows it.

8. Resolve Patient Inquiries

Patients often need explanations regarding charges, insurance adjustments, and outstanding balances. Providing timely and polite responses will help you avoid problems with unpaid accounts and complaints.

The Medical Billing and Collections Process within Healthcare Organizations

An effective medical billing and collection process views the collection process as an integral part of the complete billing process. Any problem at any point of time will lead to an incorrect or even a disputed patient balance. The important elements are:

Accurate patient registration: accurate demographic and insurance information right from the start
Insurance validation: ensuring insurance coverage and benefits prior to the provision of services
Coding and filing: proper CPT and ICD-10 coding and prompt filing of claims
Payment posting: accurate payment posting of insurance and patients payments
Patient billing statements: statements reflecting the exact outstanding balance
Balance follow-ups: regular follow-ups for patients with unpaid balances
Denial and account resolutions: resolving all issues related to claims affecting patient balances
Documentation and reporting: proper documentation and reporting showing the status of the accounts

With the integration of registration, coding, claims, and patient billing, patients receive accurate bills and there is reduced effort spent on rectification of errors.

What Is a Point-of-Service Collection?

The point-of-service collection involves the collection of the total amount from the patient for their liability while receiving the care, either at the check-in or check-out time.

The practice is most effective if done right after verifying the eligibility and benefits of the patient. Making a request for the payment based on inaccurate information will cause unnecessary problems including refunds. Offering various easy-to-use methods like card readers, prepayment through the Internet or payment link sent before the visit will help to make the process comfortable for the patient.

It is important to understand that not every patient balance is supposed to be collected at the time of service. The final amount may depend on how the claim will be processed by the payer.

What Is Patient-Friendly Billing?

Patient-friendly billing is a form of billing that focuses on clarity, ease, and respect when it comes to handling a patient’s billing process. It normally involves:

Easy to understand statements
Transparent balances
Multiple options for payments
Easy payment instructions
Easily accessible billing assistance
Effective communication
Respectful follow-up
No use of complicated medical billing jargon

Why Patient-Friendly Billing Matters ?

This is simple logic; good communication improves understanding, improved understanding means smooth payment process, and easy payments mean good patient relationship. The patients who understand their bill will definitely be able to take actions accordingly, and will not have to call to ask you questions.

Patient-friendly billing does not ensure collection, but it ensures that all the avoidable barriers are removed and that the patient knows how much you value his understanding.

Balancing Patient Care and Hospital Finance

The hospitals need stable finances in order to deliver care. The balance between patient care and hospital finance implies that patient billing is only a part of the finance, and it has to contribute to operational processes without harming the patient.

For hospital administrators and practice managers, the balancing acts according to these principles:

The billing process has to be accurate and understandable.
The collections have to be uniform and respectful.
The communication has to be good on every stage: prior to care, during, and after.

Clear communication and accurate billing can help reduce unnecessary billing confusion, which benefits both patients and finance teams.

How to Ensure Maximum Collections from Patient Services Billing ?

Process optimization, rather than any sort of aggressive behaviour, is the key to improving collections from patient services billing. Here’s how.

Verify Patient Coverage Before the Appointment

This allows you to estimate what a patient will have to pay and avoid any surprises.

Inform Your Patient of the Payment Responsibility in Advance

Letting the patient know what he/she may owe prevents the unpleasant surprise of getting a bill at home.

Collect Co-payments and Other Known Amounts at Point of Service

This reduces the length of the billing cycle and the number of amounts to collect subsequently.

Provide Accurate Statements Promptly

Send your patient statements timely after the insurance adjudication. It should contain all relevant information about why the patient owes the money.

Make Payments Inconvenient

Provide multiple payment options with clear instructions. Lowering the amount of effort required increases the probability of payment.

Consistent Follow-Up of Outstanding Balances

Maintain consistent follow-up schedule with polite reminders. Consistency outweighs intensity in this case.

Keep Track of Your Patient A/R

Review patient A/R timely. Analyzing aging accounts allows you to identify delays, problems, and necessary actions.

How Does a Hospital Bill a Patient?

The process followed by the hospital to bill a patient can be described as:

Healthcare service → Coding and claim submission → Insurance processing → Payment or adjustment made by the payer → Balance due by the patient → Patient statement → Payment and follow-up

There are some variations in the final bill compared to the estimate for the patient because of the following reasons:

Insurance adjudication: The coverage and allowable determination by the payer
Deductible amount which the patient needs to satisfy before the benefits are payable
Coinsurance: Proportional share of the allowable amount by the patient
Non-covered items: Those items not included in the coverage
Contractual adjustment: Required discount per contractual arrangement

This makes it easy for patients to understand their statements.

When Is Outsourcing Patient Billing & Collections a Good Fit for a Healthcare Practice?

Not all practices will benefit from outsourcing their services, but the following may apply to some of them:

Overworked billing department
Hard-to-manage patient accounts receivable
Delayed statements
Inconsistent payment posting
Time spent on balance follow-up
Desire for more streamlined patient billing processes
Better management visibility into patient accounts

If you feel that any of these apply to your healthcare practice, having a dedicated billing partner will allow your staff to focus on providing patients with quality care rather than dealing with paperwork.

Support for Patient Billing and Collection at Spark Billing Network

Spark Billing Network is a company that helps healthcare providers organize patient billing and collection processes. Services for patient billing at SBN include:

Patient statements
Patient payments posting
Statement mailing
Patient billing assistance
Collections follow-up
Billing account management
Revenue cycle assistance

Patient collections are better organized and performed if they are integrated into other billing processes, which is why we assist practices with full medical billing and coding services.

Learn more about our services.

Frequently Asked Questions about Patient Billing and Collections

What are patient collections?

Patient collections is the method for locating, billing, and collecting the amount due from patients for their portion of the bill after the insurance coverage has paid its amount.

What is the process of patient collections?

The process of patient collections starts with the verification of insurance and calculation of patient responsibility. This is followed by point of service collections, claim submissions, patient statements, follow up of outstanding balance, easy modes of payment and resolution of billing disputes.

What is a point-of-service collection?

Point-of-service collection involves collecting the financial obligation of the patient in the form of a copay at the time of admission or discharge of the patient from the hospital. It depends upon the eligibility process and becomes successful if it is facilitated with convenient payment options. The focus of point-of-service collections is to collect known amount only as the amount will be determined after processing of insurance.

How can healthcare providers enhance patient collections?

Healthcare providers can enhance patient collections through verifying the eligibility, communicating the costs prior to the service provision, collecting appropriate amount, preparing concise and clear statements, providing appropriate payment options, and follow-up effectively. Consistent monitoring of the accounts receivable of the patients can be effective in improving collections.

What is patient-friendly billing?

Patient-friendly billing is a method which makes it easy for the patients to understand their bills and pay it conveniently.

Patient Billing and Collections: Process, Best Practices, and Patient-Friendly Strategies