Payment Plans

By Elizabeth W. Woodcock, MBA, FACMPE, CPC

Elizabeth Woodcock will be a featured speaker at the NCMGMA-NCHFMA Roadshow in New Bern, held October 14th at the New Bern River Front Convention Center. Learn more at


Elizabeth Woodcock

In these tough economic times, patients may need extra time to pay their bills. Patients with high-deductible health plans, or with no insurance at all, are challenged to fulfill their financial responsibility for services they receive from your practice. Even though federal health care reform may dramatically reduce the number of uninsured in coming years, more and more patients will have higher deductibles, coinsurance and copayments. You can no longer afford to be resigned to take losses on these patients.

Establishing protocols for payment plans certainly isn’t the newest approach to boosting your bottom line. It’s hardly flawless either, but with a bit of effort by your staff to carry it out – and your commitment to stick to its goals – a payment plan can be a lifeline to the patients who truly want to live up to their financial responsibilities.

Take these steps to ensure a successful payment plan strategy in your practice:

Ask, don’t tell. Avoid taking the lead in determining the payment plan’s timeframe. Instead, ask the patient: “How much more time do you need?” You’re more likely to get a shorter timeframe than what you would have offered. If the timeline proposed is longer than you are willing to accept, then at least you have opened the discussion with the patient buying into the fact that there is going to be a timeframe in which to pay.

Establish parameters. Develop protocols for the minimum monthly amount and the maximum timeframe you will offer. Set up a grid for your business office staff to reference – if the patient owes $300, for example, the grid would outline three $100 payments (1 – Initial Set-up; 2 – Beginning of Month 2; 3 – Beginning of Month 3). When the balance is not a round number, instruct your staff to collect the additional odd amount with the initial payment. For example, the payment plan for a $321.40 balance would be a $121.40 initial payment followed by two payments of $100 – simple rounded payments are easier for patients to remember. Although most practices collect each month, encourage patients to agree to a twice-monthly payment plan; this plan is more likely to succeed if it’s in sync with the patient’s paychecks. Plus, a twice-monthly plan makes the patient’s payments smaller and, thus, more palatable.

Offer discounts. Maybe you can avoid a payment plan altogether by offering discounts to self-pay patients who pay their balances quickly. Put a time limit on the discount by extending the offer for not more than, say, 10 days. Be cautious about extending prompt payment discounts to patients who are beneficiaries of insurance companies with which you participate. It may make sense in limited situations – financial hardship, for one – but remember that you are already offering these insured patients significant discounts in the form of the allowable.

Reduce the cost of administration. Don’t spend precious dollars for supplies, postage and staff processing time on mailing notifications for each payment due. Instead, put together a payment coupon book for patients, and provide them with self-addressed envelopes. Even better, provide a link to your online bill payment system.

Deploy “hold-and-charge” technology. Many businesses accept credit card numbers to pre-pay for products or services; so too can your practice. In fact, you’ve likely done this many times yourself if you’ve ever bought a retail item online that’s on back order. Medical practices now have access to technology to securely store information for credit or debit cards. Look for vendors who will set up secure, online administration for patients’ payment plans. This gives your practice the opportunity to collect payment information, while also managing the payment terms. Once set up, the vendor will debit the patient’s credit card automatically, transmitting a receipt securely to the guarantor – and distributing the funds directly to your practice.

Outsource the management. If you don’t have enough staff to manage payment plans in the business office, consider outsourcing the administration of payment plans to your collection agency. Ask the agency for a proposal along these lines: if you establish the terms of the plan (timeframes, minimum payment amounts, etc.), what would the agency charge to monitor the patient’s compliance with the plan? Be sure to negotiate a rate that is much lower than the “normal” collection account. Of course, the agency will still be taking a percentage of the payments, albeit lower than their normal fee, but think how much staff time you’ll save and how much additional success you’ll have with a professional keeping a watchful eye on the process. If worse comes to worse – the patient defaults – that account will now be teed up for quick collection.

Payment plans are an important component to your overall billing and collections strategy, particularly in tough economic times. Payment plans that work will help your bottom line. They even can help with patient relations – your patients will appreciate your flexibility, and you’ll retain their loyalty.

©Woodcock & Associates, Inc., 2013, reprinted with permission. Learn more about Elizabeth at


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