Is A Cash Only Practice a Good Fit?

Frustration with health insurers — specifically the reimbursement process and appealing claim denials — has led many chiropractors to consider transitioning their practices from insurance-based to cash only. Some of the benefits include the freedom to treat patients without insurance mandates and have more time to spend with patients during each practice visit. At the same time, there are also challenges to managing a cash only practice that prevent it from being the one-size-fits-all solution for all healthcare professionals. Considering moving toward a cash only practice? Let's take a closer look at cash-based practices to see if the transition is a good fit for you.

How They Work

Most cash-based practices are not strictly "cash based." They have a financial policy that requires payment at time of treatment and accept a range of payment methods including cash, check or credit/debit cards. Patients with insurance pay for care up front and then submit claims for reimbursement to their respective insurers. Even though cash-based practices choose to no longer accept private insurance, they still work with Medicare or may choose to not accept patients who want to use the Medicare program.

In today's insurance environment with higher deductibles and larger self-pay portions, even if you've made no transition, you may already be more cash-based than you realize. Because most practices, whether cash-based or not, have a policy where payment is due at the time of treatment — many patients can already be considered cash patients.

The Benefits

Transitioning to a cash only practice provides some advantages for chiropractors. CareCredit practice development managers hear from some chiropractic offices that they spend as much as 30% of their time and financial resources trying to collect payments from insurance companies. Cash only practices may experience lower overhead by eliminating or greatly reducing the need for claim processing, patient billing and collection costs and expenses related to insurance and managed care. Perhaps the biggest benefit is the increased time and attention you and your staff have to spend on patient care, with fewer or no insurance administration duties.

The Challenges

The most immediate challenge you may face in transitioning into a cash-only practice may be finding ways to retain as many patients as possible and attracting more new patients and growing referrals. Because patients who are in the habit of processing their insurance through the practice will no longer be able to do so, you may experience a degree of patient loss as some choose to go where they will not have to process their own insurance claim. For patients who choose to stay and obtain reimbursement, it's important that your team make the process as uncomplicated and simple as possible.

When it comes to attracting new patients, a cash-only policy may appear less service-focused than competitors that bill insurance. In addition, many patients with coverage tend to stay within the parameters of their insurance company's participating providers to maximize benefits. As a cash only practice, you will not be listed as a participating provider, and may need to invest more time and resources in marketing and administration to attract and retain new patients and build practice growth.

Before You Switch

Before making the switch to a cash only practice, many experts advise decision-makers to review their current processes and assure they properly bill and collect. Understanding and consistently practicing the rules governing insurance reimbursement can help reduce frustrating billing issues and maximize receipt of payment. Since billing problems and insurance company push back may arise when treatment falls outside of the scope of adjustment or therapy, it's important to stay within the scope of practice. Once billed, your team should be able to collect almost all of net services. Set this expectation for your team, reinforce this goal and provide the tools and support resources and training they need to succeed.

Tips to be Successful

If you decide to make the transition to a cash only practice, you want to set yourself up for success. Understand the transitional process can take up to one year to complete. Once you are ready, start by selecting four or five insurance carriers that are your smallest source of claims and work your way up from there.

Alert your patients to the change as soon as possible. At least four months before the change goes into effect for their insurance carrier, let them know you will no longer be accepting insurance. Be sure to communicate how the change will benefit them, including the fact that your team will be able to spend more time with patients and any cost savings that they might experience. Also, highlight any new referral programs or other opportunities for discounts and services.

If patients are able to continue receiving reimbursement from insurers when they visit your practice, inform them that you are still here to provide them with the highest quality chiropractic care and that they will need to submit any claims to their insurance company directly. Explain how you can help make the process easy for them by providing all of the information they need to receive their insurance reimbursement. Some practices will still submit the forms for patients who request it for an additional fee.

Practices that transition to cash only may experience a temporary dip in revenue while the adjustment takes place. The reality is that most patients will understand the change in your practice's financial policy; however, some will prefer to stay within their insurance network and will select another provider. That's why it is important to be prepared for any temporary loss of income and have cash reserves available to help your practice manage through the transition to cash only. Other considerations before you introduce the transition include evaluating the financial health of your practice. Are all of your debts paid? Does your practice run efficiently? Is your equipment in good working order? Are your staff costs controlled?

An essential element is to make sure your team is trained and confident in leading financial discussions. Your staff needs to be comfortable talking with patients about the change to cash only and discussing payment requirements at the time of service. Make patients aware of your financial policy and their payment options throughout the patient interaction, including when scheduling appointments and upon check in. The goal is to eliminate surprises and keep patients informed about their care, cost and payment requirements.

One way you can help ensure payment is received at the time of treatment is to work proactively with patients to design an affordable treatment plan. In addition to accepting cash, check, credit and debit cards, offering a patient financing program such as CareCredit can help make it easier for patients to access and manage the cost of care. CareCredit is a healthcare credit card that features special financing options* many patients find valuable. In fact, a recent survey confirmed 95% of cardholders rated CareCredit a good, very good or excellent value; and 90% of cardholders said they would recommend CareCredit to a friend.¹

There are pros and cons to both the traditional insurance-based reimbursement system and the cash-based practice. Only you can determine the best fit for you. Ultimately, you want a financially healthy and thriving practice with patients accessing the chiropractic care they need. Simplifying your financial policy by gaining a greater understanding of insurance reimbursement or going cash only will help free up valuable time to treat more patients and grow your practice. 

* Subject to credit approval. Minimum monthly payments required. See carecredit.com for details.

Reference:

1. Cardholder Engagement Study, Q4 2013, conducted for CareCredit by Chadwick Martin Bailey.

Rob Morris is vice president of marketing and new business development for CareCredit. Mr. Morris joined CareCredit in 1993 and has more than 35 years of experience including executive level marketing and sales positions with leading healthcare companies.