Insurance vs. cash-based practice: how to decide

One of your most difficult startup decisions is whether to begin as a “cash-based” practice, or to accept insurance payments. Do you try to get on insurance panels? How do you deal with co-pays? Do you have one type of payment or several?

For purposes of this discussion, let’s define the term “cash-based practice” to mean a practice in which you accept cash, credit cards, debit cards, or checks. If a patient has insurance, they still pay you, and you give them a super-bill or something to give their insurance company to get reimbursed. You are an “out of network” provider, meaning the patient doesn’t get paid at the higher network rate.

An “insurance” practice, on the other hand, takes co-pays from patients and bills the insurance company. Patients appreciate this, but it means you must file a claim and wait for payment. As you begin your practice, this might mean several months of waiting for your first claim to be paid. Many chiropractors think a “cash practice” is ideal, because you get paid immediately, but there are other factors to consider in your decision.

“¢ Local business factors. Some communities have many people on insurance plans. These people expect that healthcare providers will accept payment from their insurance company, and that they will not have to file their own insurance claims. If you are locating to an area with large employers who have insurance plans, you may need to get into their preferred provider network in order to accommodate the many patients who will come to you with insurance cards in hand.

“¢ Size of area. If you are practicing in a small town, there is a good chance that you will be able to get people to pay you cash. Donation practices (sometimes called “black box” practices, from the black donation box on the wall) are easier to maintain in a small town, because everyone knows everyone else and you will find that people are willing to pay you what they can afford. In larger cities, people will more likely be employed by large companies with insurance.

“¢ Type of Practice. The type of practice and the techniques you are using are determining factors in how you get paid. Some wellness practices, for example, use a payment plan, while other techniques don’t require you to come in on a regular basis, so you can request cash from patients. The type of patients you see may also determine the type of billing you will do. If you see many personal injury (PI) or workers’ compensation cases, you won’t be accepting money from patients, but you will wait many months to be paid by an insurance company.

“¢ Your comfort level. Probably the primary factor in determining your ability to have a cash practice is your comfort level with requiring people to pay cash. Setting up a cash practice also requires you to set up a system in which you must first tell people that you require payment at every visit, and you must reinforce this expectation each time they come into your office. Having a sign near the front desk isn’t enough.

If you decide you want to start out as a cash practice, you will need to establish a carefully orchestrated collections process. Here are some steps to take in order to make this happen:

1. When the patient comes in for the first visit, include a financial responsibility statement as part of the initial paperwork. Have your staff discuss this responsibility statement with the patient to set up the initial expectation.

2. At the end of the first visit, have your front desk person ask the patient, “Will you be paying by cash, check, or credit/debit card?” Notice that the assumption is that the patient will pay.

3. Learn how to answer the excuses that people will use to get out of paying. Find appropriate, tactful, but firm answers to these excuses, and keep requesting payment.

4. If people don’t pay, or if their payments are bad, actively pursue them. Don’t let people slide; the longer you wait to pursue the person, the less likely you will be to get paid.

If you decide you want to start out as an insurance practice, begin by taking these steps:

1. Get your Medicare provider number as quickly as possible, since most insurance companies include this identifier in their process.

2. Find out the insurance companies for the largest companies in your area, and work actively to get on their provider panel.

3. If you can’t get on a provider panel for an insurance company, get a copy of their claim form and learn how to fill it out so you can help the patient file a claim. You can require the patient to pay you, or, more likely, show the patient how to assign the payment to you.

4. If you must deal with several insurance companies, consider hiring a claims service, so you can get paid faster.

In short, whether you choose a cash or insurance-based practice, you will need to work actively to set up the system by which you get paid.