Dealing with Unpaid Patient Balances: What to do when the Payments Stop
Unpaid patient balances can be one of the most frustrating challenges for mental health practices. In private practice, therapists focus on delivering compassionate care, but financial health is equally crucial for long-term sustainability. When patient payments stop, it can lead to stress, financial strain, and a distraction from providing quality care. Whether the lapse is due to insurance confusion, financial hardship, or simple oversight, it’s vital to have a plan in place to manage unpaid balances before they affect your practice’s bottom line.
This article will walk you through strategies for handling unpaid patient balances while maintaining positive patient relationships. We'll also discuss how to prevent future issues, legal and ethical considerations, and how Practice Solutions can help you assess the health of your patient balances through a comprehensive Practice Health Check.
1. Identify the Cause of Unpaid Patient Balances
The first step in dealing with unpaid patient balances is identifying the root cause. Understanding why payments have stopped can help you determine the best course of action for resolution. Here are a few common reasons:
Insurance Denials or Delays: Patients may stop paying if their insurance does not cover services as expected. This can occur due to denied claims, unmet deductibles, or confusion about the coordination of benefits.
High Deductibles or Copays: Patients with high-deductible health plans may need help to meet their financial obligations, especially if they aren't fully aware of their responsibilities upfront.
Financial Hardship: Some patients may face economic difficulties and cannot keep up with payments. This could be due to job loss, medical emergencies, or other unforeseen circumstances.
Lack of Clear Communication: If a patient is unclear about their financial responsibilities, they’ll likely fall behind on payments. This can happen when payment policies aren’t clearly explained during intake or when there’s confusion about copayments, coinsurance, or outstanding balances.
Administrative Oversight: Sometimes, practices must pay more attention to follow-up on unpaid balances, mainly when the billing process is managed in-house without dedicated billing support.
Once you’ve identified the reason for the missed payments, you can begin to address the issue in a way that’s both respectful to the patient and beneficial to your practice.
2. Communicate with Patients Effectively
Open, respectful communication is key when dealing with unpaid balances. Approaching patients with empathy while maintaining professionalism can prevent the situation from escalating. Here's how to engage with patients about their unpaid balances:
Send Friendly Payment Reminders: Sometimes, patients simply forget to pay. A friendly email, phone, or text reminder can prompt them to settle their balance. Automating this process can help ensure patients are reminded regularly without your staff's manual effort.
Personalize the Approach: For patients who have a history of timely payments but have suddenly stopped, a personal phone call from your billing department may be more appropriate than an impersonal email. Use the call to check in on the patient and see if there’s an underlying issue causing the missed payments.
Be Transparent and Kind: When discussing unpaid balances, clearly explain the amount due, the services provided, and the steps the patient can take to resolve the balance. Being transparent about fees and offering solutions can build trust.
Offer Flexible Payment Plans: If financial hardship is the issue, offering a payment plan can help patients manage their balances without feeling overwhelmed. A clear payment plan shows flexibility and understanding, helping to maintain the patient-provider relationship.
3. Implement a Clear Collections Policy
Having a well-defined collections policy is essential to managing unpaid balances efficiently. Without a clear policy, patients and staff may be unsure of how to proceed when payments stop. A successful collections policy should include:
Upfront Payment Expectations: Before services begin, patients should understand their financial responsibility. During intake, provide them with a copy of your payment policy and discuss any copays, deductibles, and coinsurance upfront.
Regular Invoicing: Ensure that invoices are sent out promptly and regularly. Many practices send monthly statements for any outstanding balances. Clear, concise invoices that detail the services provided, the amount due, and payment instructions are vital in receiving timely payments.
Late Fees and Penalties: Consider implementing late fees for unpaid balances after a certain period, such as 30 or 60 days. Make sure to communicate this policy to patients clearly upfront so they understand the consequences of delayed payments.
Escalation to Collections: As a last resort, unpaid balances can be sent to a collections agency. However, this can damage the patient relationship, so it should only be used after other failed attempts to resolve the issue. Ensure your policy outlines when and how this step will be taken.
4. Know When to Escalate
If you’ve tried multiple approaches and payments are still not coming in from your patient, it may be time to escalate the issue. While most patients will respond to initial reminders or payment plan offers, some balances will remain unpaid despite your best efforts. Here are a few escalation strategies:
Final Demand Letter: Before turning to a collections agency, send a final demand letter to the patient. This letter should include a detailed summary of the outstanding balance, a payment deadline, and a clear explanation of the next steps (such as sending the account to collections) if the payment is not received.
Involve a Collections Agency: If the final demand letter does not result in payment, you may need to enlist the help of a collections agency. While this can strain the patient relationship, recovering unpaid balances is sometimes necessary.
Consider Legal Action: Legal action might be considered in rare cases, particularly for large unpaid balances. However, this should be a last resort due to the time, cost, and potential damage to the patient-provider relationship.
5. Ethical and Legal Considerations
When dealing with unpaid balances, it’s important to stay within the bounds of ethical and legal standards. Violating patient privacy or discriminating against patients due to their financial situation can have serious repercussions. Here are a few points to keep in mind:
HIPAA Compliance: Ensure that all communications about unpaid balances remain HIPAA-compliant. Never disclose patient information inappropriately or use unsecured communication channels.
Non-Discrimination: Treat all patients with respect, regardless of their financial situation. Do not deny necessary care due to unpaid balances without fully understanding the patient’s circumstances.
Fair Billing Practices: Be transparent in your billing practices and avoid overcharging or billing errors, as these can erode trust and lead to disputes over balances.
6. Prevention Is Better Than Cure: Steps to Avoid Future Unpaid Balances
Preventing unpaid balances is always preferable to chasing them down. Here are steps you can take to reduce the likelihood of future payment issues:
Verify Insurance and Benefits Beforehand: Verify each patient’s insurance coverage and benefits before the first session. This helps avoid confusion or surprise bills, which often lead to non-payment. Practice Solutions manages eligibility and benefit checks for our billing clients.
Offer Multiple Payment Options: Flexible payment methods—such as online payments, automatic billing, and credit card payments—can make it easier for patients to pay on time. Our Patient Support services allow us to facilitate credit card payments for you.
Set Up Automated Payment Reminders: Use billing software to automatically send payment reminders to patients with outstanding balances. This will reduce the likelihood of missed payments due to forgetfulness. This is another element that can be handled by our billing team through our Patient Support service.
Provide a Detailed Financial Estimate: Providing patients with a cost estimate before services begin, particularly for services with high out-of-pocket costs, can help set expectations and reduce payment delays.
Take Control of Your Patient Balances: Get a Practice Health Check with Practice Solutions
Managing unpaid patient balances can be challenging, but your practice can maintain financial stability without compromising patient care with the right tools and processes. If you’re concerned about the health of your practice’s patient collections, Practice Solutions is here to help. Our Practice Health Check service is designed to assess your practice's financial and operational health, including patient balances. We’ll help you identify problem areas, streamline your collections process, and implement best practices to improve cash flow.
Contact us today to schedule your Practice Health Check and take control of your patient balances before they affect your bottom line.
