Despite the advances of the Patient Protection and Affordable Healthcare Act (ACA) related to patient debt (establishing maximum out-of-pocket expenses and other protections), most healthcare finance analysts believe bad debt will increase over the coming years.
LexisNexis, in this free whitepaper, has put together recommended best practices from a wide range of healthcare providers who have managed to stem the tide of bad debt increases.
Read an excerpt below — and then download the paper from our Free Whitepapers section.
At the outset of any bad debt initiative, it is a good idea to take a hard look at one’s organization and financial structure. Here are three best practices:
- Know what bad debt is. Healthcare providers use different models for coming up with a bad debt calculation. As one expert recently pointed out, if one does not know what model the organization employs, the changes may not be effective. Some organizations, for example, may write off accounts receivable more than 180 days old as bad debt; others may use a model that tracks populations separately, such as writing off self-pays after 30 days, co-insurance and deductibles after 90 days, Medicare beneficiaries after 120 days, and so on.
- Ensure accountability. Reducing bad debt is the responsibility of the entire organization. As will become evident in this whitepaper, managing bad debt starts at the beginning of the patient finance lifecycle and extends beyond revenue cycle staff into the clinical areas.
- Establish lines of communication. Bad debt can explode suddenly, many times as a result of circumstances beyond a healthcare provider’s control (e.g., changes in government regulation or contracts with payors). Not only is it important to stay on top of bad debt trends, but to communicate them in a timely fashion. Many healthcare financial professionals recommend regular meetings with the CFO or CEO beyond traditional reporting. In addition, setting up in-person reporting to clinical and healthcare revenue cycle departments can go a long way toward impressing upon all staff the importance of managing bad debt. Do not forget your partners, especially those working in accounts receivable. Another frequently overlooked stakeholder group is the payors. Hold monthly meetings to review payor issues.