How to successfully collect co-pays upfront

It has been well-documented that co-payments should be collected at time of service. In fact, a pattern of waived co-payments can be considered fraud.* In addition, federal requirements indicate that any refund processing should occur within a 60-day period. As the cost of healthcare shifts increasingly to the patient, upfront and accurate payment collections are more important than ever.

Attempting to obtain payment after the visit and processing refunds are incredibly labor-intensive and expensive.  Your front desk should take the following steps to successfully collect accurate payments upfront. If your operations are already sophisticated in this area, you can use these points as a checklist.

Verify insurance prior to patient visit
Whether insurance verification is done manually or electronically, it should occur at least 24-48 hours prior to a prescheduled visit.  Many payers provide some level of co-pay information in an electronic eligibility response, but it is variable by payer. In addition, co-pay collection can be variable depending on the service provided. This level of determination may not be readily available in an electronic response, requiring office staff to take additional steps after the initial verification to fully understand if co-pay collection is appropriate. This further determination may require the verifier to place a call to the insurance company or view a payer website to see specifically how they adjudicate particular codes.

Understand insurance
It can be difficult to estimate the patient liability prior to services being rendered for various reasons; co-pay amounts can look very different based on the number of insurance policies a particular patient carries. Communicating with patients to obtain accurate insurance information is vital to the registration process. Eligibility responses typically do not indicate whether a patient has additional insurance plans that may be unknown to your office staff. Do not leave it up to the patient to divulge if he or she carries additional insurance. Train your front desk staff to ask patients directly if new insurance policies are in effect. 

Loading each policy in the correct filing order is equally important. Often co-payments for patients who carry secondary or even tertiary insurance can be waived at time of service, as those insurance plan(s) typically pick up any co-payment liability left over by the primary insurance following adjudication. Denials often occur when the filing order is incorrect and the claim goes out to the wrong payer first. There are several coordination-of-benefit rules that office staff should use to determine the correct insurance plan order.

A few examples:

  • Birthday rule. This rule is widely used by insurance companies for children that are listed as dependents on both parents’ insurance plans. This rule states that the parent whose birthday comes first within the calendar year is designated as the primary plan holder. This rule can get more complicated if the dependent child is covered under both parents who are divorced or separated.  

  • Medicare as a secondary payer. Medicare is always the secondary payer if the patient has liability coverage and the visit is related to this coverage (worker’s compensation, for example), automobile claims or group health plans that cover end-stage renal disease. This also includes group health plans with 20+ employees that cover current employees or spouses over the age of 65 and large group health plans sponsored by employers with 100+ employees that cover currently employed Medicare eligible employees.

  • Spousal coverage. If a patient is covered under his/her own insurance policy through his/her employer and also covered under the spouses’ insurance plan, the policy that the patient holds would be primary and the spouse’s plan would be secondary.


Strong insurance verification practices will help your staff’s ability to recognize these multiple-payer situations.

Document reason for visit
When patients present to make an appointment, office staff should ask enough questions to understand why the patient is asking to be seen. The reason for the visit should be clearly documented within the appointment. The staff that is verifying insurance should review this documented reason and utilize it to determine the appropriate co-payment for the visit. For example, if a patient is coming in to have blood drawn, or perhaps a physical, those services may be excluded from co-pay collection as part of the patient’s benefits. The reason and dollar amount of co-payment should be also documented in your patient management system in an effort to expedite the check-in process.

Understand your specialty
Some services may impact the generation of patient co-pay amounts during the payer adjudication process. For example, preventative services such as physicals and well-child checkups may be covered services for which an insurance company may waive the patient co-pay or deductible liability.  Likewise, many insurance companies do not expect co-payments to be collected from patients during a post-operative or global period. A global period is a timeframe following surgery during which routine care is included in the reimbursement of the original surgery and cannot be separately reported. Global packages include pre-operative and post-operative visits. Global days vary based on the type of operative services performed. To be eligible, care must be directly related to the surgical care for a defined unit of time.

I once worked for a large multi-specialty physician group and was asked by management to analyze patient accounts in an effort to determine why there were large numbers of patient credits resulting in the need to cut refunds to patients. The findings showed co-pay collection errors were occurring across all groups within the organization. The most common mistakes occurred around collecting co-payments for preventative care and post-surgical care; however, the majority of specialties also had issues collecting co-payments correctly. For example, the endocrinology department typically collected co-payments because they were a “specialty” department and collected the specialty co-payment regardless of the type of service performed. This department provided many patients with diabetic education management. Many insurance companies did not require a co-payment for diabetes education management while some did. This department had to educate their staff regarding which insurance plans did not adjudicate co-payments for diabetes management. They were also collecting co-payments when a patient had an active secondary insurance listed within his/her insurance plans. Once their staff was educated, they were able to reduce their improper co-pay collections by 60 percent within a three-month period and continued monitoring showed steady improvement over time.

Know when to collect
Depending on your office setup, it may be advantageous to collect co-pays at the end of the patient’s visit. It is not uncommon for the scope of a provider’s service to change once the patient is behind the closed exam room door, even when the reason for the visit is obtained from the patient at the time of scheduling. Providers may be able to add charges to a visit based on how the patient answers questions posed during an exam. For example, physician practices may decide to treat a patient with preventative medicine care, problem-oriented chronic illness, or new illness on the same date-of-service that the patient did not disclose at the time of scheduling.

In this scenario, prior to the actual exam, the co-pay would most likely not be taken from the patient for the preventative care visit. However, because the provider treated the patient for a problem-oriented illness, the scope of the visit changed. Based on the insurance company’s contract, a co-payment will probably be generated for the additional problem-oriented code. If the charge is reviewed at the end of the visit, this office visit co-payment can be collected on-site, negating the need to future bill the patient.

Obtaining insurance verification, educating front-end office staff on insurance contracts and the types of services provided by the providers in your office is integral in ensuring that correct co-payments are collected in your office, which ultimately reduces the number of collection errors that impact the number of refunds your office processes.

*Dept. of Health & Human Services, Publication of OIG Special Fraud Alerts. Federal Register, 12/19/1994.

Kathryn Williamson is a revenue cycle consultant at Hayes Management Consulting.

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