Overdue Accounts

Guidelines for Practice Success | Managing Finances | Revenue

Despite sharing your philosophy about the value of maintaining good oral health, patients can still fall behind on their payments.

If your staff reports that collecting fees is requiring more time or becoming more difficult, make it a point to review your internal financial policies and protocols as well as the written information you give patients about those policies. It could be time to update or even rewrite those documents so patients fully understand their responsibility for paying for services prior to, or at the time of, treatment. While you’re doing that, also make sure your financial policy accurately details the procedures staff should follow when collecting fees from overdue accounts for treatment already provided, including complete documentation of any patient promises to pay the balance.

If you accept assignment of benefit from patients with some type of dental benefit coverage, make sure you collect the anticipated amount that the patient is responsible for at the time of service. Don’t wait to collect the private pay portion of the bill until after the third-party payment has been received. Try to make it a standard operating procedure that you receive payment of benefits from any third-party dental benefit administrators within 7-10 days of submitting the claim. All claims should be paid, with funds deposited, within 30 days. Submitting your claims electronically will greatly help in reducing the payment cycle.

Sometimes, there might be a balance due from patients after you receive the payment of benefit, even though patients have paid their estimated portion of the bill at the time of service. When that happens, immediately send the patient a statement indicating the balance due. If this happens frequently, consider amending your financial policy to have patients sign a pre-authorization form that allows you to charge their credit card for any balance due after receiving payment from a third-party.

Practices that store patients’ credit card information should comply with the Payment Card Industry Data Security Standard (PCI DSS). It requires maintenance of a secure environment, including data encryption, firewalls, anti-virus protection, as well as other requirements.

A dental practice that does not comply may be subject to financial penalties and be vulnerable to payment card data breaches.

Dental practices that accept credit and debit cards should review their credit card service provider agreements and review their network security requirements for their individual situations.

Generally speaking, the best way to manage accounts receivable is to issue and mail weekly statements to all patients with balances on their accounts; this would include those who have a balance due following payment of a dental benefit. Each statement should include a due date. Past due statements should include a tactful message letting the patient know that his or her account is in arrears.

Accounts that are more than 30 days past due require extra attention. In these cases, the best approach is to have your financial coordinator, business administrator or office manager contact the patient by phone to request payment. No one likes to make – or receive – this type of call. But this approach usually works well because patients are talking with someone they’ve met and connected with in real life. One of the ways to make this phone call more successful is to be pro-active. Inform the patient who is establishing a payment plan how you handle the balance in the event that the expected payment does not arrive as planned. Let the patient know that a phone call will be made five days after payment is due.

Ideally, these types of calls should be made by someone who has had communications training and is familiar with federal and state collections laws. That person also should have the skills to balance a friendly and concerned demeanor with a commitment to resolving the situation. This isn’t as easy as it sounds. There needs to be kindness and courteousness, blended with a firmness that accomplishes the collection.

Even when you choose the right team member for the task, that person still needs time and resources to perform these important duties effectively. Make sure your collections person is able to make these calls in a private setting so the conversation isn’t overheard by other patients or staff. Also make certain that team members has enough time to make calls, prepare and mail any follow-up letters, and document the effort. Consider providing this staff member with training, such as a CE course, video or webinar that is specific to successful collections.

Never let accounts with outstanding balances become dormant. If you haven’t been able to collect a payment after mailing a statement and making a friendly phone call, you’ll need to try other approaches. Some practices find it helpful to send a series of collection letters which, while friendly and professional in tone, escalate in intensity the longer the past due amount remains unpaid. Issue these letters on a predetermined schedule, such as every two to three weeks. Follow up on the initial statement and reminder phone call with a reminder notice. After that move to a negotiation process and then a final letter detailing what steps you will take in order to receive payment. Again, make sure every communication is professional and nonjudgmental. Each should simply be a dated, factual recounting of the collection process with notation as needed.

While you might be tempted to hire a collection agency or file a complaint in small claims court, consider the possible ramifications of either action. Never make these types of decisions in haste or in anger and never threaten action you might not be willing to take. Keep in mind that suing a patient or sending an account to a collection agency could become a public relations nightmare that could tarnish your practice’s image and hurt your reputation in the community (also consider, for example, the possibility of an aggrieved patient disparaging your practice on social media). Consider all of the costs, including legal fees and time away from the practice for court appearances; it could be in the end that it’s better to write-off the debt and then terminate your professional relationship with that patient. Each state has its own rules regarding patient dismissals so refer to your state’s dental practice act and consider consulting a knowledgeable attorney in your jurisdiction before taking that action.

More information on dismissing patients is available in the ADA's Guidelines for Practice Success (GPS) module on Managing Patients.

Be aware that collection efforts by the office might result in a patient seeking refuge from paying behind a license complaint to the state licensing agency. The start of an investigation tends to focus the dentist’s attention on the defense of his or her license and away from collecting monies due. All patient records should be impeccable and able to withstand scrutiny.

In many cases, it’s possible that this type of situation could have been avoided if the appropriate policies were in place and properly communicated. While developing and abiding by a financial policy can be time-consuming, it’s an investment worth making up front. Make sure that the practice abides by all appropriate state and federal collection laws, such as the Federal Trade Commission’s Fair Debt Collections Act, which prohibits the use of specified abusive, harassing, and unfair practices in the collection of debts.

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