Patient Receivable Management After the Golden Era

When Mike Bargmann makes his presentation on patient receivable management, the second PowerPoint slide he shows calls this “The End of the Golden Era.”

His sister-in-law, Lisa Bargmann who has more than 20 years of industry experience came up with a slightly cruder, but no less artful phrase to describe the age of seemingly unlimited insurance company spending. She calls the bygone time the “The Golden Commode Era.”

The joke, as Bargmann, of Invacare HCS, explains it, is that at one time insurance would pay 100% of the rental for a portable toilet for 20 years with no, or at least few questions asked.

Those days, emphatically, are over. Co-pay costs and patients paying for their own care have skyrocketed as employers continue to push more health care costs on their employers.

According to the Centers for Medicare and Medicaid Services, employees’ total out-of-pocket-costs are projected at $3,597 per person this year. That projection is 10.1% higher than in 2007.

And with the baby boom generation reaching retirement age, health care spending is likely to continue exploding.

So what does that all mean for the O&P provider? A lot, according to Bargmann.

Know the numbers

According to the Centers for Medicare and Medicaid Services, employees’ total out-of-pocket-costs are projected at $3,597 per person this year.

Patient receivables now represent 10% to 30% of a typical provider’s accounts receivable, and should only continue to grow.

Patient-pay balances are typically low-dollar receivables that do not receive the attention they deserve because of how difficult it is to manage those accounts. And as the 10% to 30% figure shows, those nickels and dimes add up, particularly in a tough economy.

“Now you really have to collect every dollar out there…,” Bargmann said. “Or there is no profit.”

Why is that a big deal? Because typically, Bargmann said, providers have a lot of time available for collecting on patient receivables.

The patient receivable side of the ledger is so mismanaged it is frequently neglected altogether.

“There are a lot of very, very good companies with skilled and talented insurance billers,” Bargmann said. “When it comes to the patient portion, the smaller portion of the dollar bucket, people don’t have time to work it. What happens is that it gets pushed to the end…and the older it gets, the less a percentage recovered.”

In more than 90% of the companies Bargmann works with, 50% of the patients receivable is aged 90 days or older.

The struggle

There are many reasons why providers do not excel at this area of billing. For one, it is not always pleasant. Who looks forward to calling someone and asking them for money they do not want to cough up?

As Bargmann writes in a company paper called “Patient Receivables – The Neglected A/R”, “many companies employ a tactic of splitting an employee’s time between insurance and patient billing, a strategy that often fails due to the substantially different skill and negotiation levels required for both areas.”

If you ask an insurance biller to call patients “a lot want to hide under the table,” Bargmann said. “It takes a certain type of personality to spend all day long speaking with someone. That’s an art by itself.”

Even if companies have the time and resources to devote to chasing patient receivables, it is not always easy. Bills get sent to addresses that are long since vacant. People change their phone number. Computer programs lack the necessary tools to appropriately log communications as to ensure the proper follow up action is taken.

The good news, however, is that it doesn’t have to be such an impossible task. Bargmann has plenty of advice on the best ways to maximize profit through better patient-receivable management.

Improve process

Improve the front-end process. In other words, start preparing for the collection process long before the first invoice leaves the office. When patients are in the office, verify their addresses. Ask for an alternative billing address. Of the 260,000 envelopes that leave Bargmann’s office every month, he estimates nearly 10% bounce back. The key is to flag those addresses so they are not repeated in the next billing cycle, something Bargmann sees frequently.

“If you mail the same envelope out and it’s going to come right back what do you accomplish? Absolutely nothing except wasting everyone’s time.”

Get not just a home phone number, but the cell and work numbers too. When the invoice does go out, make sure it is stamped with a specific due date. Do not write generics like “due in 30 days.”

Ideally, try to get the money upfront, or at the very least a portion, like a first month down payment on a rental.

“You have to set the precedent that they do owe something,” Bargmann said.


In the midst of the patient’s reasons for not paying, there may be a nugget that allows you to work out a payment plan.

Work accounts in a logical order. And no, that does not mean alphabetically, as Bargmann frequently sees. Instead, work from high dollar to low dollar; prioritize. If resources are too limited to work all accounts, work only the largest.

Get on the phone. If Bargmann could emphasize one piece of advice it’s this: phone calls, not mailings, bring in the money.

“You have to make calls,” Bargmann said. “Have to.”

He suggests making the first call 15 days from the due date of the invoice. The caller should state that the bill is due in full and that it is their “obligation” to pay.

Ask open-ended questions, like “how will you be making your payment today?”

Be a good listener. In the midst of the patient’s reasons for not paying, there may be a nugget that allows you to work out a payment plan.

Practice strategies to rebut the most common excuses for not paying. For instance, if the patient says they have declared bankruptcy, find out if the date of sale was before or after the bankruptcy. If before, get their lawyers phone number and get in line with other creditors. If after, remind them that the bill is not covered under bankruptcy.

Other common excuses include misunderstandings like “my insurance said it would pay for this,” dissatisfaction, such as “I want to return the equipment,” and the one Bargmann finds most frequently, “I’m on a fixed income.”

If calls aren’t returned, alternate the time of the calls. Call home phones in the evenings after work hours. Try weekends. Always leave messages asking the patient to return the call.

If the number is wrong or disconnected, implement skip tracing free resources. There are numerous free websites, places like and that can help find phone numbers and addresses.

There are also paid sites, such as Bargmann suggests a “waterfall” approach, using more than one at the same time.

When to stop

Know when to cut your losses. Remember the magic 90-day mark and how few payments are received when the account has lapsed longer.

“Ninety days is the bogie,” Bargmann said. “If you’ve sent three statements, spoke multiple times, make up your mind what you’re going to do with it.”

It may be wise to go into bad debt collection, or write off the bad debt balance. Although the provider is owed the money, it is not always in the company’s best interest to continue showing the receivable as an asset.

As long as it’s on the books as an asset, it accrues attention and costs the provider time and money to manage that could be better spent working more viable accounts.

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