Financial Policy

Financial Policy in the Physician Office: Clarity for You and Your Patients

Billing, fees, and collections are an integral part of practice management, but they can strike fear and avoidance into the hearts of otherwise business-savvy physicians. Many doctors feel uncomfortable dealing with patient financial issues, because they believe it is incompatible with their priority as healers. 

Of course, doctors are motivated by a genuine desire to help their patients; however, those who own their practices are also business operators. Managing patient billing and collections is an essential part of running a health care practice.   In fact, it is a benefit to patients to have your policies spelled out clearly at the outset, so patients may become better consumers who make informed decisions about their health care expenditures.

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Creating a financial policy is a good exercise for you as a physician clinic owner, because it forces you to consider and establish the kinds of financial rules you want for your office.  Once you have formulated a policy, it is easier to enforce and avoids unpleasant surprises if it is communicated clearly to patients.

Elements of a Financial Policy – What Should Be Included?

Financial policies are not required by law, and no universal form exists.  There are probably as many individual forms as there are practices, because each office is unique.  Therefore, each practice should customize its policy to its own needs.  You may want to “brainstorm” with your staff to create a list of important items that should be included in your policy, based on your personal experience in managing your practice.

Some common elements are, however, addressed in most financial policies.  They include information about how your office handles: 

• Insurance coverage, including patient financial responsibility, assignment of benefits, referrals, policies regarding uninsured patients, and payment of deductibles, copayments, and coinsurance;
• Billing and payment, including method of payment, time of payment, collection of outstanding balances, and divorce situations;
• Missed appointments, lateness and cancellation;
• Medical records copying and transferring; and
• Medical forms, reports and other expert services.

There is no “right” way to handle many of these items; they are largely a matter of your choice as the practice owner.  Of course, if you do not accept insurance, your policy is going to look quite different than that of a practice that accepts insurance. What is important is that you establish and communicate consistent rules that work for your office. 

Below are some guidelines and ideas to be considered when creating your financial policy.  (The ICS is making a template available to members.  Access the template here.)

Information Regarding Insurance

A number of insurance issues should be considered for inclusion in your financial policy:

• Notification by a clear statement that your patient is entering into a contract with you, the doctor, to pay your fee for services rendered, whether or not fees are ultimately covered by insurance or third-party payers of any kind.
• Whether or not your office is willing to contact the patient’s health plan to inquire as to benefits.  If you do, consider adding a statement that health plans do not guarantee payment even for services they initially “verify” as covered, and that sometimes services initially “verified” as covered are later deemed to be not covered and are payable by the patient (unless prohibited by the provider agreement).
• Whether or not you bill and/or accept assignment of benefits from insurers and health plans.  Some providers agree to bill only plans in which they participate as network providers, but not those for which they are not in the network.
• Notification that most health plans require the patient to pay a deductible, co-payments or coinsurance.  You should include a statement as to when you require these payments — copayments are often due upon arrival at appointment.  You may also want to include a statement that you do not routinely waive deductibles, co-payments or coinsurance.  Providers must adhere to this rule, whether or not it is incorporated in their written financial policies.
• Notification to your patients if you have a financial hardship policy under which patients may apply for discounts in limited circumstances (ICS members, see article “Financial Hardship Waiver of Fees: Make Sure Your Good Deed Goes Unpunished” article, as well as template forms for Financial Hardship Policy and Application, on the ICS website at www.ilchiro.org).
• For patients whose plans require a referral from a primary care physician before they may use your services, a statement regarding whose responsibility it is to obtain the referral.  Many practices make it the patient’s responsibility to obtain and produce a referral before the appointment.  Similarly, if you are asked to complete a referral for a patient to obtain services outside of your office, you may want to require a minimum amount of time (for example, 3 business days) to prepare the appropriate forms, except in emergencies.

A statement that some insurance plans require pre-authorization for some services.  Patients should be made aware that sometimes services are not authorized, and a Patient Notification of Non-Covered Service form is available.  Physicians note:  when it is anticipated that a procedure is not covered, some provider agreements require you to have the patient sign a written acknowledgment of non-coverage prior to providing the service as a condition to hold the patient financially responsible.  The ICS has provided a sample form here.

Billing and Payment

• Some financial policies provide that full payment is due at the time of service for uninsured patients, patients who are insured by a plan in which the office participates but services are not covered, or for patients who are insured by a plan in which the physician does not participate.
• You may want your policy to have the patient choose one of the following payment options: a) Patient has no insurance and agrees to pay in full at the time of service, unless other arrangements are made; b) Patient has insurance but wishes to file all claims on his or her own and agrees to pay in full at time of service, unless other arrangements are made; or c) Patient has insurance and requests provider to bill insurance. 
• If you accept and bill insurance, your policy could include a statement that the patient must sign an Authorization of Direct Payment, Power of Attorney Designation, Designation of Authorized Representative and/or Assignment Agreement (ICS members click here for a template and to see an explanation of the difference between this Authorization form vs. a simple Assignment of Benefits form). The Authorization of Direct Payment form may be incorporated into the Financial Policy itself or may be a separate form.
• Type of payment you accept:  cash, check, credit cards (specify type), and fees charged for returned checks.
• The time within which balance is to be paid after billing and when accounts will be turned over for collection.
• In the case of divorce, a statement that adult patients and accompanying parents of minor children are responsible for payment, regardless of the terms of the divorce.  It is the responsibility of family members to resolve legal disputes among themselves, and their divorce terms do not take priority over the contract between the doctor and the adult patient or the accompanying adult of a minor patient.  However, some offices include in their policies an acknowledgment that temporary financial problems may affect timely payment, and that patients are encouraged to contact the office to make payment arrangements in those situations. 
• The interest rate charged for bills outstanding after a specific number of days.  Illinois law limits interest to 9% per year, even where parties have agreed in advance.

Missed Appointments, Late Appointments and Cancellations

How your office handles missed appointments, late appointments and cancellations are essentially up to you.  The only restriction under the Medical Practice Act is that you may not engage in “gross and willful and continued overcharging for professional services.” 

• For missed appointments, your policy could reserve the right to charge a reasonable amount for a missed appointment, and you may evaluate whether to charge on a case-by-case basis.  Another option is to set a fixed amount that reflects your actual approximate loss.  A third option is to allow one or two missed appointments, after which charges are imposed.  Additionally, this amount and policy should also be posted clearly in your office.
• For patients who arrive late to appointments, some practices allow a 15-30-minute grace period, after which they may attempt but do not guarantee the patient will be seen. It should also be clear whether or not you will charge the patient for a missed appointment if he or she is later than your allotted time.
• Most financial policies require a minimum 24-hour notice prior to cancellation, except in cases of emergency, to avoid charges to the patient, or at least the practice’s right to charge the patient.

Medical Records Copying and Transferring

Physician copying, transferring and charging for patient records are highly regulated.  Unlike missed appointments, these are items about which the law does not give you much latitude.  Nonetheless, it is still helpful to spell out these provisions in your financial policy, so your patients are fully informed:

• In general, HIPAA and Illinois law require every health care practitioner to provide copies of patient records within a maximum (only if needed) of 30 days of a proper request, upon payment of fees as set by law.
• HIPAA limits the amount a practitioner may charge a patient or patient representative for copy fees.  Practitioners may charge only their actual costs, average costs, or a flat fee not to exceed $6.50.   If the requestor is a third party presenting a signed patient authorization, you may be able to charge per page plus an additional handling fee.
•  It is probably easiest to include in your policy the simple statement that your office will impose copying charges as permitted by law, rather than providing detailed copying charges for each type of request. 
• At this time (the Illinois Comptroller updates these each year), per-page charges are as follows: $1.30 for pages 1 through 25; $.87 for pages 26 through 50; and $.43 for copy pages in excess of 50.

(ICS members may refer to the ICS website at www.ilchiro.org for a detailed article entitled “Reasonable Fee For D.C. Testimony” on how to calculate copying charges in various types of cases.)

Medical Forms, Reports, Testimony, and Miscellaneous Fees

Some offices are frequently asked to complete miscellaneous forms, produce narrative reports, or provide expert testimony at depositions and trials. 

• Your policy should state whether you charge for additional services.  Many offices provide school forms at no charge but charge for expert services such as reports, depositions, and testimony.
• Your policy should reflect the basis for adding the charges (for example, hourly charges for the preparation of expert reports). 
• In Illinois, a court case has held that chiropractic physicians are entitled to reasonable hourly fees for their expert testimony.  If you include this item in your financial policy, you should state the hourly fee. (For a detailed analysis of the court case, members may see “Reasonable Fee for D.C. Testimony – With A Twist”

Knowledge is Power

Whatever provisions you include, it is a good idea to have the patient read and sign a copy of your financial policy, acknowledging that he or she has read it, understands it and agrees to abide by it.  It is also a good practice to have your office staff verbally emphasize the important provisions to the patient and to send the patient home with a copy on the first visit.  

Even if your patients don’t have a positive reaction to every detail of your policy, it is to their benefit to be informed.  Implementing a policy and applying it consistently will help avoid misunderstandings with your patients, ultimately resulting in greater patient satisfaction, smoother office administration and better collections for your practice.

Note: The ICS is making a template available to members.  Access the template here.