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Credit Card On File Program Key To Patient Collections Success

After an Illinois-based practice implemented a credit card on file program, patient collections improved and patients started to expect upfront payments.

A credit card on file program boosted patient collections at a small specialty practice in Illinois

Source: Thinkstock

By Jacqueline LaPointe

- Implementing a credit card on file program boosted patient collections and reduced accounts receivable by 28 percent in six months at Orthopaedics & Rheumatology of the North Shore, a four-physician specialty practice in Illinois.

Consumers use credit cards to pay for a range of goods and services from food to major purchases, such as a down payment on a car. Why shouldn’t healthcare organizations expect the same from their patients, asked the specialty practice’s office manager, Amy Rogers, CMPE.

“Why shouldn’t it be an expectation that a patient pays their bills and not determine how much they can pay us each month,” she recently told “If all the practices would start doing this, then it could become an expectation like going to the grocery store to get your groceries.”

“The industry as a whole needs this,” the former healthcare software and medical billing consultant added. “We’ve been giving it away for so long and nobody has cared that the doctors have suffered because they make a lot of money, but it’s not true. We’re here providing a service just like the next person is.”

Despite credit card use in daily life, credit card on file programs are not common practice among healthcare organizations like it is now at Orthopaedics & Rheumatology of the North Shore. Only 20 percent of providers use a credit card on file for patient collections as of February 2017, according to a recent Navicure survey.

READ MORE: Key Ways to Boost Collection of Patient Financial Responsibility

While most providers do not have the program, about 20 percent agreed that a credit card on file was the best method for decreasing patient days in accounts receivable. Another 29 percent viewed the patient collection strategy as an effective way to reduce bad debt and write-offs.

For Orthopaedics & Rheumatology of the North Shore, the credit card on file initiative not only reduced accounts receivable but account aging for 91 to 120 days for patient balances also declined by 72 percent, Rogers added.

As a result, the credit card on file group brought in $23,000 in the two weeks before Rogers sat down with The additional patient collection revenue stemming from the new policy was especially helpful for the small practice.

“We’re a smaller group,” she said. “We are not owned by a hospital system, so getting our money in as quickly as possible is very important to us.”

Prior to implementing the credit card on file program, Rogers explained that the practice was losing out on much-needed patient collection revenue because of high-deductible health plans. More healthcare consumers are turning to the plans because of their lower premiums. About 90 percent of individuals on the public and private healthcare exchange program during the 2016 open enrollment period selected a high-deductible health plan, CMS reported.

READ MORE: 4 Key Ways to Boost Point-of-Service Patient Collections

“We are not a bank and we can’t afford to be a bank.”

While premiums were lower, out-of-pocket costs significantly increased. Consumers have paid 255 percent more in out-of-pocket costs since 2006 as a result, according to a 2015 Kaiser Family Foundation study.

“In 2016, these high-deductible plans got even higher for patients,” Rogers stated. “For patients who had a secondary insurance to Medicare, there was a $900 deductible on the secondary side, which I hadn’t seen before. We were crippled by the high-deductible plans and, consequently, patients were either not paying or paying us $100 a month for a $2,000 deductible.”

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Like Orthopaedics & Rheumatology of the North Shore found out, providers end up shouldering the financial burden of increased out-of-pocket costs under high-deductible plans. About three-quarters of healthcare providers reported an increase in patient financial responsibility in 2015, InstaMed reported in 2016.

But McKinsey & Company research uncovered that providers only expect to collect between 50 and 70 percent of a patient’s balance after a visit and another 70 percent of providers stated that it takes at least a month to receive payments from patients.

In response to being high-deductible crippled, Rogers decided to tackle patient collections challenges.

“We came to discover after talking to the doctors that we are not a bank and we can’t afford to be a bank,” she said. “We decided that we can’t continue this cash flow issue, especially when deductibles are on average around $3,000. We can’t afford that.”

“We would much rather have that patient make payments to their own credit card than to us,” she added.

To add a credit card on file program to her practice, Rogers worked with the practice’s medical billing system Aprima Medical Software to integrate a credit card merchant’s services into the system. She also implemented card readers on each computer for staff and patient convenience.

“They just swipe the card and the system, through the Easy Pay and Aprima integration, posts the payment for the staff,” she explained. “Not only do I just get a credit card payment added in a batch, it actually applies it to a patient’s account for us.”

Instead of receiving a fraction of the total owed like before, the credit card on file program also allowed Rogers and her staff to develop medical bill payment plans that satisfied patients and the practice’s revenue cycle.

“We will work with patients who want a payment plan, but we set it up in the software to charge the card monthly and we always want balances paid off within three or four months,” she elaborated. “So, we’ll tell patients that we are going to charge their card this month, but they can pick the day to charge the card each month. Once they give us the day they want, we just put the total amount that is owed, how many months, and then Easy Pay calculates it and takes it out.”

Once her staff charges a patient, the credit card on file program creates an electronic batch for the medical billing system and Rogers can allocate the funds from there. She also noted that the program accepts debit cards.

“We’ve only have had a few leave – ones that were likely not to pay, anyways.”

If patients do not have a credit or debit card, staff currently ask for a retainer of $200 cash or check for Medicare patients. The retainer jumps to $500 for commercially insured patients.

At first, Rogers and her associates feared that some patients would leave the practice because of the new patient collection policy.

“However, we’ve only have had a few leave – ones that were likely not to pay, anyways,” she said.

Physician buy-in and patient education were key to retaining patients during the payment policy change, she added.

“Number one thing that has supported this program is the doctors,” she explained. “When we started this process, our staff felt a little scared or timid about it. They weren’t sure how it was going to be accepted by the patients or if they were going to have an argument with every patient.”

“But it didn’t work out that way,” she continued. “Most of the patients accepted it, especially after we explained to them the changes in healthcare. But if they said they wanted to talk to the doctor, the doctor would either take them into an exam room that was open or they come up to the front desk and they would tell them that we were not owned by the hospital across the street and we have to pay our staff.”

Rogers noted that if the practice’s physicians did give in to complaining patients, the program would not have improved patient collections across all patient groups.

“If they gave in, then my staff would not have had support and they would have stopped doing it because they would think this patient is going to get upset, so let’s skip them,” she stated. “We made it across the board. I can count on one hand the number of patients that the doctors have come to me asked for an exception.”

Additionally, improving patient collection strategies relied on patient education on the new policy.

“First of all, we put a sign up indicating about the policy change and when patients called to schedule an appointment at the infancy stage of the program, we let them know of the new policy,” she continued. “If a patient got upset, my staff would hand me the phone to speak to them. Basically, I would explain to them that this is something we have to do since it is deductible season and frankly, we’re not a bank.”

“Now, since it is fully integrated, all new patients that call and make an appointment, we let them know of our policy,” she said.

The practice also developed financial limits for the credit card of file program to ensure that patients could still pay their medical bills and the practice was collecting for their services.

“When we put a credit card on file, you can put a limit per swipe,” she explained. “For patients with commercial health plans, we have a limit of $500. If they owe us $1,500, we’re going to swipe it, but that’ll be over three months. Now we are getting $500 a month versus $100.”

“For Medicare patients, the limit is $200 because this year’s deductible is $188 and that’s the limit we can charge altogether for the month per swipe,” she stated. “If a patient has any type of Medicaid plan, we don’t take a credit card because we can’t.”

While paying for healthcare services isn’t quite the same as buying food or even a car, adopting a more retail approach to combat rising out-of-pocket costs can save a practice’s revenue cycle. As Rogers pointed out, her practice was not a bank and customers needed to pay for services to keep the business running.

By implementing a credit card on file program and increasing provider and physician buy-in, the practice was able to manage a patient collections redesign and capture the revenue that was rightfully theirs but they would not have seen under previous patient collections strategies.


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