Commentary

Dealing With Deadbeats


 

My last few columns have covered various techniques for assuring that you are paid for what you do. However, despite your best efforts, there will always be a few deadbeats whom you will need to pursue. For the record, I’m speaking not about patients who fall on hard times and are unable to pay, but those who are able to pay and do not.

The worst kinds of deadbeats are the ones who rob you twice; they accept payments from insurance companies and then spend the money themselves. Such crooks must be pursued aggressively, with all the means at your disposal; but to reiterate the point I’ve tried to drive home recently, the best cure is prevention.

You already know that you should collect as many fees as possible at the time of service. For cosmetic procedures you should require a substantial deposit in advance, with the balance due at the time of service. When that is impossible, maximize the chances you will be paid by making sure all available payment mechanisms are in place.

In the last several columns (click here to access them), I described my credit-card-on-file system; patients who fail to pay their credit card bill are the credit card company’s problem, not yours. In cases in which you suspect fees might exceed credit card limits, you can arrange a realistic payment schedule in advance and have the patient fill out a credit application. You can find forms for this online at allbusiness.com, lawdog.com, and other sites.

In some cases, it may be worth the trouble to run a background check. There are easy and affordable ways to do this. Dunn & Bradstreet, for example, will furnish a report containing payment records and details of any lawsuits, liens, and other legal actions for as little as $30. The more financial information you have on file, the more leverage you have if a patient later balks at paying the balance.

Photo turner890/iStockphoto.com

The worst kinds of deadbeats are the ones who rob you twice; they accept payments from insurance companies and then spend the money themselves.

For cosmetic work, always take before and after photos and have all patients sign a written consent giving permission for the procedure, assuming full financial responsibility, and acknowledging that no guarantees have been given or implied. This defuses the common deadbeat tactics of professing ignorance of personal financial obligation and/or dissatisfaction with results.

Despite all your precautions, a deadbeat will inevitably slip through on occasion; but even then, you have options for extracting payment. Collection agencies are the traditional first line of attack for most medical practices. Ideally, your agency should specialize in handling medical accounts, so it will know exactly how much pressure to exert to avoid charges of harassment. Delinquent accounts should be submitted earlier rather than later to maximize the chances of success; my manager never allows an account to age more than 90 days, and if circumstances dictate, she refers them sooner than that.

When collection agencies fail, think about small claims court. You’ll need to learn the rules for filing in your state, but most charge a nominal fee and place a limit of $5,000 or so on claims. No attorneys are involved. If your paperwork is in order, the court will nearly always rule in your favor, but it will not provide the means for actual collection. In other words, you’ll still have to persuade the deadbeat to pay up. However, in many states, a court order will give you the authority to attach a lien to property or garnish wages, which often provides enough leverage to force payment.

What about those double deadbeats who steal the insurance checks? First, check your third-party contract; sometimes, the insurance company or HMO will be compelled to pay you directly and then will go after the patient itself to get back its money. (They won’t volunteer this service, however – you’ll have to ask for it.)

If that’s not an option, consider reporting the misdirected payment to the Internal Revenue Service as income to the patient, by submitting a 1099-Miscellaneous Income form. Be sure to notify the deadbeat that you will be doing this. Sometimes, the threat of such action will convince the crook to pay up; but if not, at least you’ll have the satisfaction of knowing he or she will have to pay taxes on the money.

Dr. Eastern practices dermatology and dermatologic surgery in Bellevue, N.J.

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