Patients, payers contribute to bad debt 'purgatory'

Friday, June 22, 2012

YARMOUTH, Maine – In today's business and reimbursement environment, HME providers don't want to leave money on the table. That's why, for the majority of providers (80%), reducing bad debt like uncollected patient co-pays is a priority, according to the latest HME NewsPoll.

But it's not easy, providers say.

"We have a part-time person that calls and mails statements and letters, but we aren't having much success with reducing it," said one provider, whose bad debt is more than 6%.

That provider’s bad debt load is not uncommon: 46% of poll respondents say their bad debt is more than 6%. Twenty-five percent say their bad debt falls between 4% and 6%, and 29% say their bad debt is less than 3%.

The reasons for bad debt run the gamut from the weak economy to patients and payers not paying, say providers, who were especially critical of payers.

"We are the bank for Medicare, Medicaid and insurances," said Doug Crana, president of Consolidated Medical. "They pay inconsistently and never in full. This causes a very erratic cash flow."

Managed care contracts also drew ire.

"They deny claims and they go into bad debt purgatory," said one provider. "Four years later, they are settling for 20 cents on the dollar."

Providers are beginning to take a harder line with patients, making it clear to them in advance that they’re responsible for co-pays.

"We are considering options such as getting credit card numbers upfront," said Martin Cobb, CFO of Mitchell Home Medical. “We have situations where the patient is set up with equipment and then does not pay the monthly co-pay.”

Unfortunately, it's tough to change the mindset of patients who can't or won't pay up, providers say.

"It's the way of the world," said Sally Alflen, president/owner of We care Medical. "Home care isn't like it used to be."


HME providers are always the last one's at the table when it comes to collecting what is rightfully theirs. Pharmacies, physcians and clinics collect co-pays up front before dispensing products or rendering services. Retaining a credit card as collateral if one does not pay is just plain responsible. In a majority of cases it boils down to;  I can pay, I just dont want to.

In the end our bad debt is part of profit after expenses are all paid. How much are you willing to give away, more than 3 percent? Really!