Observation Deck

The Importance of Invoicing

Solely relying on statements doesn’t cut it.

• By Ty Bello
• May 19, 2011

Consider the number of medical statements your average patient receives from all of the various companies and medical professionals that are involved in his or her care. Is it any wonder that our statements, and probably many others, get lost in the shuffle?

Statements, as we all know, are part of our process and we must provide them to our customers. We have an obligation to the patient both legally and also as a part of a customary service to notify them regarding what they owe and why. But let’s be realistic, when you receive three to four statements or more a month from your physician, hospital, medical equipment provider, medical insurance, and supplement, they all seem to blend together and might even cause more confusion then clarification.

Beside the number of statements, there is a timing issue that is probably the most frustrating thing of all: The timing of statements has always puzzled me, and probably you, as well. They never seem to reflect exactly where I am at with my payments and deductibles through my insurance or other provider.

A Conditioned Response

To me, it is no wonder that we have problems getting our patients to pay their portions of their bills.

Having studied this process for the past several years and trying to work with various HME providers to find the best solution to this ongoing problem, I have been educated in the difference between a statement and an invoice. I know the two might seem the same at first glance, but in reality they are very different and make a substantially different impact when received.

The standard set for so many years in healthcare billing has rendered the monthly statement ineffective. Patients are used to receiving bills with “insurance pending — do not pay” splashed across the front, which fosters an attitude that “insurance will cover everything.” Patients are conditioned to not pay until they receive multiple notices. Monthly statements help support this unfortunate precedent by overwhelming the patient with too much information without clearly communicating exactly what the patient owes.

Invoices can usually offer a more simplified format for the patient to understand. Although most HME providers would like to implement a process of invoicing (sending a bill as soon as it becomes patient responsibility) to improve cash flow, they normally resort to monthly statements due to the challenges of traditional invoicing. Not only does invoicing require more labor by having to generate bills multiple times per week, but follow-up then becomes the big issue. Once an invoice is sent, the only feasible method of follow-up offered by HME billing systems is a monthly statement.

Also, overlapping with a monthly statement, in many cases just several days after an invoice is sent, is confusing to the patient and results in customer service calls and even more troublesome double payments and credit transactions. Invoicing can only work effectively when combined with consistent follow-up of timely past-due notices.

Statements have their own stigma that surrounds them, for example:

• No due date — by definition since a statement might include past due charges, you typically don’t want to give the patient another 30 days to pay so due dates are omitted.
• Too many columns and too much info, which confuses patients.
• Patients know they will receive the same information month after month, which this encourages them to wait until they are sure that insurance has paid, or that all items are on the bill.
• The credit column (insurance payments) often has a $0 amount suggesting to the patient that insurance hasn’t paid everything yet.
• Statements are sent monthly. This is too long of an interval, and the bill is placed in pile and forgotten until next monthly statement comes along.
• 30/60/90/120 day boxes, although intended to express a sense of urgency, many times confuse the patient on exactly what is owed — especially since these boxes many times reflect the age from the date of service vs. when the patient was billed. But this also shows the patient that we won’t get serious until this is 120 days old.

Meanwhile, invoices are:

• Simpler to understand.
• Easier to describe and answer over the phone.
• Reach patients on average 15 days sooner than monthly statements.
• Have a due date.
• Match EOB.

Behavioral Modification

We must change the patient’s mindset and behavior, and the invoice is one of the critical behavior modifiers that must be adopted. Think of it this way: patients will pay their cable TV, electric, gas, and other utilities but won’t pay for their medical equipment?

You have to change patient behavior and by using the invoice process as part of your financial strategy going forward, expect not only to increase that patient-pay accounts receivable but also change that behavior for future services. DMEs have to start utilizing the technology and efficiencies that are being made available to them.

But we also need to change our own behavior. Simply put, we as HME professionals need to admit that we can’t do it all. Working alongside several DMEs and evaluating the tools and technology that is available, I suggest working with a third party patient invoicing service, such as Strategic AR. Firms like this knows exactly how to collect that patient-pay portion, and remove the mundane work of chasing after that patient-pay AR out of the hands of your billing department, freeing up their time to work the larger insurance balances.

In the long run, not only will you see an increase in the patient-pay, but also in your overall revenue. And after all, isn’t that what is really important?

 

This article originally appeared in the June 2011 issue of HME Business.