In this episode, Sage explains what deductibles season is, how it affects income for private practices, and what practices can do to avoid income delays during this time. Listen now or check out the transcript below!
Introduction
Hi folks, thank you for joining us today! My name is Sage and you’re listening to Billing Breakthroughs, a podcast devoted to helping you find billing success. In this episode we are going to talk about the dreaded deductible season and what your practice can do to ensure that income does not get delayed during this time. You might be wondering what I mean when I say “deductible season”. That’s a great question and a perfect place to start for this episode. Deductible season refers to the first three or so months of the year when many clients have not yet met their insurance deductibles, meaning that they will need to pay your contracted rate in full for one or more sessions until their deductible is paid off for the year. This time of the year is no fun for anyone involved – clients are hit with higher bills than usual, providers experience a dip in insurance reimbursements, and income delays often occur. Today we are going to talk about some strategies practices can use to minimize the impact deductible season has on cash flow.
Deductibles Explained
A deductible is an amount of money that a client must pay each year before their insurance payer will start sharing costs with the client. This amount is set by the client’s insurance plan, and it usually resets at the beginning of each calendar year. Deductibles are often spoken of in terms of “met” or “unmet” – insurance will not pay for the cost of medical service while the deductible is still unmet (not yet paid), but once it has been met (paid in full) insurance will kick in and start covering all expenses aside from copays and coinsurance. If you send an insurance claim out for a session with a client whose deductible is unmet, the insurance company will send you back a $0 remittance and you will need to bill the client the entirety of your contracted rate for that session. For example, say your contracted rate for a session is $100 and you see a client who has not yet met their deductible. After you submit the claim for that session to the insurance payer, you will receive back a $0 remittance from the payer and you will need to bill your client the full $100.
Deductible season happens at the beginning of each new year because most insurance plan deductibles reset on January 1st. This means that in January, February, March, and even further into springtime, many clients have not yet met their deductibles and will be responsible for the full contracted rate of their sessions until they have met their deductibles. Deductible season is more prevalent than ever these days because high-deductible insurance plans are on the rise and deductibles upwards of $1,000 are becoming more and more common. This can be really tough on practices for a couple of reasons. First, without insurance remittances coming in for client sessions, your practice’s income can take a hit at the beginning of the year if you do not prepare for deductible season. Second, clients will be receiving higher bills than usual and not all of them will feel prepared to pay this higher amount for their therapy sessions, which can end up affecting your practice’s income if these clients are going overdue on their balances. Today we are going to talk about ways to combat these challenges so that your practice can stay in good financial health through deductible season.
Confirm Client Deductibles
If you have the operating capacity within your practice to check and confirm client deductible amounts before each clients’ first appointment at the beginning of each calendar year, this will be the best way to prepare for deductible season. There are different softwares out there that can help you check insurance eligibility and confirm deductibles, or you can do it directly through the insurance payer’s provider portal. By confirming a client’s deductible, you are putting your practice at an advantage because you will be able to inform clients of their deductible and encourage them to pay their owed amount at the time of service.
Once you know what your clients’ deductibles will be, you’ll have an idea of how much they will need to pay out of pocket before their insurance will start covering some or all of their medical costs. Of course, it’s important to remember that client deductibles apply to all medical services they are receiving, not just their therapy appointments with you. It is possible that they will meet their deductible through a combination of appointments with you and other providers, so calculating how many times they will need to pay in full for your services is not an exact science – you will need to check their remaining deductible before each appointment in order to know exactly how much they have left to pay. If you overcharge a client and it turns out that they have in fact met their deductible through another provider, then you may need to reimburse your client once you have received the remittance from the insurance company.
Get Clear on Your Contracted Rates with Insurance Payers
It’s a good idea to confirm your contracted rates with insurance companies so that you know how much to collect from your clients who have not yet met their deductibles. Your contracted rates will differ based on which services you are billing and to which insurance payers that you are billing. I recommend taking some time to write out your contracted rates for each insurance payer and all services that you bill. This way, when you see a client who you know has not met their deductible you can reference the service you will be billing for them and the client’s insurance payer to determine how much they will owe for their appointment.
Take Payment Upfront Whenever Possible
The biggest reason why practices take a financial hit during deductible season is because they are waiting to receive the $0 remittance from the insurance company and then billing the clients for the outstanding responsibility. Assuming it takes an insurance company 30 days to send remittance advice for the claim and another 30 days for the client to pay their balance once they receive their bill, that creates roughly a 2 month cash flow delay for the entire rate of the session. If you have taken the time to determine a client’s deductible and your contracted rate with their insurance company, you should have a pretty good idea of how much the client is going to end up owing for their first few sessions at the beginning of the year. With this information in mind, you may consider asking your clients to pay your contracted rate for the session at the time of service to avoid cash flow delays associated with waiting until you have received the $0 insurance remittance. Remember that even if the client pays up front for a service, you will still need to submit the claim for the service to the insurance company so that the amount is applied to the client’s deductible.
Consider Keeping Credit Cards on File
Another option for avoiding cash flow delays is to keep client credit cards on file so that you can charge the client immediately once you have received the remittance from the insurance company. This may be more preferable for your practice than the option of charging clients upfront because it does not require you to research and confirm deductible amounts for each client. In this option, you can wait until the insurance remits so that you know for sure exactly how much the client’s responsibility is for the session. Once you know what insurance has or hasn’t covered for the session, you can charge the client’s credit card on file and avoid furthering cash flow delays.
Reiterate Your Payment Policies
It is best practice to draw up a financial agreement document for your practice that outlines your payment policies and have each client sign this agreement before and during their initial therapy session with your practice. To avoid overdue balances from clients with high deductibles, you might consider having all clients review and re-sign this financial agreement. This will give you a chance to professionally and clearly remind clients of your payment policies and what is expected from them should they accrue a balance with your practice. If you have had a chance to confirm your clients’ deductibles ahead of time, you may want to take this opportunity to inform your client of this deductible and the fact that they will likely owe a higher amount than usual at the beginning of the year before their deductible has been met. If you have not taken the time to confirm your clients’ deductibles, I recommend suggesting to your clients that they do their own research to confirm their deductible with their insurance plan so that they can financially prepare for potentially higher medical bills at the beginning of the year.
Conclusion
I think we can all agree that deductibles aren’t very fun for providers or clients. Providers are having to wait longer to receive funds, clients are having to pay more out of pocket, and the ambiguity of it all can get pretty frustrating. By doing your research and communicating with your clients about their financial responsibility, you can help simplify the situation and avoid income dip for your practice.
The TheraNest Billing Specialist team is here to support your insurance billing cycle through every step, from invoice creation to payment received. They are available every business day to answer your questions and help you work through any issues that may arise as you embark on your insurance billing journey.
I have an exciting offer for you – we have an insurance billing e-book that will walk you through the insurance billing process and help to demystify the whole system for you. You can download the e-book by clicking here.
If you are not yet a TheraNest subscriber but would like to change that, you can start by signing up for a free 21 day trial by clicking here. If you are already part of the TheraNest family and want to get started with TheraNest’s Integrated Billing Solutions, simply send us a message saying “Get Started with Billing Solutions” via the “Get Help” button in your account.
Thank you so much for listening to this episode of Billing Breakthroughs. I wish you all the best in your practice management! My name is Sage and you have been listening to Billing Breakthroughs, a podcast devoted to helping you find billing success. Bye for now!
Add a Comment