Our friend James Riviezzo of Practice On Your Terms has a very simple time of service payment decision tree we’d like to share with you. We get a lot of questions about how much to collect and when to collect it. We’ve found the advice James shares about time of service payments is a solid rule of thumb for most practices.
The idea behind his decision tree is to capture at least enough to cover the cost of the visit. If you know the average cost to your practice of a patient visit, you can easily calculate what you need to collect to break even and stay in the black. Here’s an example right from the Practice On Your Terms training.
The Medicare allowable for the 99204 Office/Outpatient Visit is going to be about $164. Now the actual insurance will vary based on the payer but this gives us a start.
So expected Visit Revenue $164 - (minus the) Co-Pay - $25 = (then) Remainder = $139.
Now the $139 is going to go straight to patient responsibility. No patient is going to be thrilled about paying $139 on their office visit. Especially if they have been only paying their co-pay.
James says, ’So instead of asking for the entire amount, I like to collect against HALF of the insurance responsibility - an additional $69.’ Let’s assume you did the calculations and found that your cost for an average office visit is $84 (James’ research shows that this close to the average cost of an office visit to a practice). The formula looks like this.
$69 + $25 = $94 Total Collected for that visit
Given these numbers, the beautiful part is that you’ve just covered your cost and collected an additional $10. Do this on every visit and you will keep your practice profitable! To download the full sized graphic click here.
For a free webinar explaining more about the patient collection tree as James calls it, and more techniques to secure payment and keep your practice in the black, check out our webinar by clicking the link below.