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5 tips for increasing LTC resident pay and reducing collections

December 18, 2012
by Bob Richardson
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Long-term care facilities provide a much-needed service to many residents. While the business purpose is noble, getting completely paid is not always easy. Many facilities have focused heavily on insurance, Medicare and Medicaid payments in the past as this was the bulk of the fees that they were trying to recover. As the resident pay portion has increased over the last several years, many facilities are finding it difficult to collect the resident’s entire portion when the resident doesn't have the resources to pay all at once.  

To get better results, if possible, before services are rendered, it is a good practice to determine which residents are likely to pay you and which ones are not. Obviously, it's not an exact science, but facilities can use several mechanisms, such as credit reports, proof of employment, proof of Social Security reimbursement, etc., to get an estimation.

Many healthcare providers don't like to do credit assessments; however, if the resident is looking at a prolonged stay at the facility, it's not a bad idea to see how credit-worthy someone is.

If a resident's credit information shows a history of missed payments or financial trouble, the next step could be verifying ability to pay, showing a year-to-date pay stub or requiring a co-signer. Even if you plan on admitting the resident anyway, it is important to know the risks you’re facing. The conversation may be uncomfortable, but it can save future headaches for both parties.

Given that most facilities will provide services to the resident, if they are covered by Medicare or Medicaid regardless of credit status, it is not uncommon to find out that the resident cannot afford their portion after services have already been delivered.  This results in an accounts receivables balance that must be addressed.

Many facilities try to structure payment plans, but most find it time-consuming and tedious, with the lion’s share of the resident’s portion turned over to collections. Additionally, for multi-location companies, it is often difficult to establish a consistent policy for how the resident pay portion is handled. To proactively address these challenges, here are five key tips for increasing the collection of the resident pay portion, thus reducing the account receivables that end up in collections.

1. Negotiate a reasonable payment plan or payback strategy.

Talk openly with residents about finances to gauge their willingness to pay. Quite often, a resident will be open about needing help to afford their portion of the fees, which makes it the perfect time to discuss options, such as third-party financing or payment plans. Determine how likely a resident is to pay their portion and plan accordingly.

If a person says, “I don't know if I can afford the bill,” then have a conversation about using a payment plan that they can afford. Negotiate a little for a monthly payment plan amount that's reasonable to you and to them.

While all of this might be uncomfortable, it's more uncomfortable when you don't get paid or have a big debt and need to go through collections to get your money.

2. Stay in constant communication.

Send proactive notifications to residents before payments are due and immediately following any missed payments. Keeping the resident well aware of the payment process will help improve your chances of collecting on time.

An email or text message alerting residents of upcoming payments is a quick way to notify and can save your billing department time and effort.

When a payment is missed, immediately contact the resident or responsible party and let them know you will try to collect again in approximately one week, but provide an exact date. This gives the resident some time to make funds available to cover the monthly payment. If the resident misses the re-attempt, make a phone call the following week to the resident.

What you are trying to do is keep the defaulted payment at the forefront of the resident’s mind. Don't wait 30 or 60 days. As you get farther out, the collectability rate drops dramatically.

Also, keep a record of all conversations with the resident, whether electronic or over the phone. This will allow different staff members working on the missed payment to be on the same page with the resident. It also creates a great audit trail if you eventually need to turn the resident over to collections.

3. Allow for flexibility.

Payment plans are easy, if everyone pays you on time. The work starts when missed payments need to be collected. To help residents stay current with their payment plan, allow for occasional flexibility with repayment issues.

If a resident has another unexpected expense and misses a monthly payment, many systems will try to catch up the resident the next month, but realistically, the resident won’t have twice as much money when the next month rolls around. If this is not habitual behavior, skip the payment and move it to the end of the payback term. Show the person in good standing and work with them to get back on track for payments they said they could afford.

Take proactive steps to set residents up for success, such as using auto debit from their bank accounts and scheduling their payments around paydays and rent schedules. Focus on, “How do you help the person who wants to pay you when life happens?” while making sure you get paid.

4. Consider charging interest.

Though the idea makes some healthcare professionals uneasy, charging interest on payment plans is part of successfully managing the plan and mitigating repayment risk. If you do choose to charge interest, keep it modest, between 3 and 6 percent. Residents won't feel taken advantage of if the charge isn't unnecessarily high.

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