Chapter 5
Bringing Home the Bacon

Perhaps like me, you became a doctor with the ideal of helping people every day.  This is indeed what you can do with chiropractic.  However, you also need to put bread on the table and pay off those student loans.  You’ve worked hard to get where you are, and you provide valuable services for patients.

Money can be a touchy issue in healthcare.  Some people seem to believe that health care should be provided as a free gift to humanity.  Most patients don’t understand their own insurance policies. So this is an area where you and your staff need to communicate very clearly and frankly with patients.

It may be difficult at the beginning of a doctor-patient relationship to muddy the waters with talk of finances.  You might find it awkward to ask to be paid for your services.  But the more you can establish concrete expectations with a patient up front, you will save a tremendous number of headaches down the road.

Unless you intend to do an all-cash practice, you will also need to deal with third-party payers.  And there is one fact you will soon discover:  the primary aim of health insurance companies is NOT to pay your claims; it is to maximize their profits.  It takes diligence, attention to detail, and ethical practice to win at the insurance game.

Financial Policy

In the “old days,” patients paid up front, fee for service.  If they had health insurance, they could then submit their receipt to the insurance company for reimbursement.  Since the 1970s, it has become standard practice for doctors’ offices to file insurance for the patient.  This has led to the perception among patients that it is the doctor’s responsibility to deal with the insurance company.  Most of the time, this is fine; after all, the office staff knows the insurance game better than the patient.  The flipside of this is that when the insurance company denies payment for any reason, the patient may feel that the doctor or staff has done something wrong—and by extension, feel resolved of any responsibility.  This makes it critical to have a written financial policy, to clarify everyone’s role in the payment process.

All of this brings us to the first couple of major points in a financial policy.

1. An insurance policy is an agreement between the insurance company and the patient—NOT the doctor.
2. Final payment of ALL bills remains the patient’s responsibility.

Beyond this, there are many different components that can be added, so some offices prefer to have separate forms for specific patient groups, such as Medicare, Medicaid, workers compensation, and personal injury.

Credit Cards

A big financial question for a doctor’s office is whether or not to accept credit cards.  Many established doctors have told me that this is just an unnecessary expense; all of their patients are used to bringing the ol’ checkbook.  This may be valid in their case; however, you need to take a number of factors into consideration.

The downside of accepting credit cards is indeed the bundle of expenses that goes with it.  You need to buy or lease a credit card reader from the financial institution—easily $300 or more.  There may be a monthly service fee of $10-$25.  Then there’s a fee on every transaction—anywhere from 1.5%-4.5%.  If you don’t have a certain minimum of transaction fees each month, you may even be charged the difference—perhaps another $20.

With all of these fees, why on earth would you want to accept credit cards?  The answer depends on the financial culture of your area, and the style of your practice.  In large metropolitan areas, credit cards have become so pervasive that many people assume they can use them wherever they go.  A friend of mine who lives in the Chicago area was surprised when the cashier at a fast food restaurant told him they did not accept credit cards.

Likewise, think about the type of practice you want to have.  Will it be largely “cash”-based?  Perhaps the convenience of accepting credit cards would be an incentive for people to pay more consistently.  Do you intend to offer products and services that are generally not covered by insurance, such as nutritional supplements or unusual lab tests?  Patients might be more willing to take a hundred dollars worth of vitamins and glucosamine sulfate if they can throw it on the plastic. 

Of course, you have the option of putting expensive items on the patient’s account, and formulating a payment plan; but then, you become the credit agency, and you and your staff take on the work—and the risk—of keeping track of patient payments.  Also, cash flow is key:  getting ninety-seven dollars (after fees) deposited directly into your business checking account right now is much better than receiving twenty-five dollars a month for the next four months (we’ll return to this idea of cash flow under the section on Filing Insurance Claims).

Some doctors may have a philosophical problem with credit cards, since consumer debt is a skyrocketing concern in this country.  Remember, though, that many people now have electronic debit or check cards.  These cards “look” just like a credit card to the vendor, but they actually draw money out of the person’s bank account.  I myself often use a check card in place of writing checks, for simple convenience.  If you have any suspicion that a patient might be in financial trouble, talk to him or her, or offer literature on responsible credit management.

A particularly interesting subspecies is the dedicated healthcare credit card (DHCC), which is used only for health professional services.  One of the most popular is called CareCredit^SM (1-800-300-3046, ext. 519).  Currently, it is mostly used by dentists, but some chiropractors are starting to use it as well.  Patients can apply for an account right at the doctor’s office, and be approved within minutes to days, depending on their credit history.  They can then put services on the card, and if they pay their balance in full within a specified time frame (about 3-12 months), they incur no interest charges.

Of course, everything has a trade-off.  From the doctor’s standpoint, the transaction fees for CareCredit are significantly higher than most other credit cards—in the neighborhood of 5%.  On the patient’s end, if the balance is not paid off within the allotted time, interest rates begin at a rather high rate (21% APR or more).

Discounts

It is common for chiropractic offices to wish to give a break to those patients paying cash.  Perhaps they have no insurance, or have a managed care plan in which you do not participate.  Immediate payment eliminates the expense of filing insurance, and improves cash flow.  Paying a little less is also an incentive for patients not to cut their treatment short.  Is it all right to give them a little slack?

The answer is a qualified yes.  The biggest legal pitfall to avoid is the appearance of a dual fee schedule.  It would be inappropriate to offer a “cash discount”—the language is problematic, since the patient may pay by check or credit card.  You can offer a discount for payment at the time of service—either a straight percentage off your normal rates, or a separate, lower fee schedule.  This is not a dual fee schedule, because it applies to all sources of payment.  In theory, if a health insurance claims adjuster accompanied a patient to your office, and cut a check on the spot for services rendered, you would be obligated to offer the discount to that insurance company.  (Don’t worry; this never happens in real life!)

An important point to remember with this definition is that you cannot extend the discount beyond the date of service.  If the patient does not pay immediately, you must bill him or her at your normal rates to avoid the impropriety of dual fee schedules.

Professional courtesy discount—offering services to other doctors at little or no cost—is a common, and generally accepted, practice.  Some offices choose to offer services to their employees for free, or for a discount; this is something that should go into your internal office policy, rather than a patient financial policy.  Define the specifics:  Is it a 50% discount?  Free?  Do part-time employees get the same discount?  Do employees’ immediate families receive the same benefit?

A type of “discount” to avoid is the routine waiver of required coinsurance or copayments.  Many doctors do this occasionally for friends or acquaintances.  But this is like speeding; just because EVERYONE goes 50 miles per hour in that 35 zone, you have no excuse if you get caught.  This is especially true with Medicare.  In the past, it was not uncommon for chiropractors to offer a deal of “No out-of-pocket expense” (NOOPE), or “We accept Medicare’s check as full payment.”  Medicare explicitly defines such practices as fraud.  For example, if you bill $100 for services, and you routinely accept Medicare’s eighty percent as full payment, then your de facto fee is actually $80, and you are overbilling.