Managing self-pay patients: What if they stop paying their medical bills?

By Kristen Fuller, MD
Published January 12, 2024

Key Takeaways

A few years ago, my physician’s office sent me to collections for a $78.00 charge. It was for a chest radiograph that was not covered by insurance. I was never contacted by the office or my insurance company about the bill, so I didn’t know it was outstanding—I was furious, especially because I knew it was going to affect my credit score. 

A frustrating personal experience

As a physician, I was disgruntled because I know we have a duty to collect money from our patients in an ethical and fair process—we don’t just immediately send them to collections. And as a patient, I felt cheated by my physician’s office.

The experience helped me better understand why some patients are hesitant to seek medical care. I immediately paid the bill, learned my lesson, cut my losses, and found a new physician. 

As physicians, more often than we would like, we run into situations where our patients do not want to pay their bill. This is not about indigent patients who meet the indigent criteria, but rather patients who are unwilling to hold up their end of the bargain, whether they are self-paying or insured, when it comes to receiving and paying for care out of pocket.

Case in point: Studies show that collection rates from insured patients ranges from 50%–70% after receiving medical care, and for uninsured patients, it can be as low as 10%.[]

The self-pay patient

Self-pay patients fall into two general categories: those not enrolled in health plans and those with payment obligations outside their health plans. Self-pay patients who do not carry insurance are becoming more popular as insurance deductibles increase.

For these patients, it can be more affordable and more accessible to pay cash directly to their doctor, as many of them won’t meet their deductibles and cash prices are often lower than their insurance company’s negotiated rates. This is also an attractive option for gig workers who are not offered insurance through their employers. 

As a provider, you can set the price you want for your service and collect the fee immediately when the service is delivered. This way, you should be able to avoid collection headaches. In a perfect world, self-pay can be highly beneficial to both the patient and physician, but unfortunately, the business side of medicine doesn’t always make this possible. 

Put your payment policy in writing

When working with a self-pay patient who does not have insurance, it is important to have a formal written payment policy so the patient understands their payment obligation at the time of service. This should also include an itemized list of services and prices. As you begin to work up a patient’s treatment plan in the office, you should be effectively communicating the cost of each service, treatment, or prescription, if possible. 

"Payment problems often arise because patients don’t understand what is expected of them financially, so it's important to be clear and concise."

Kristen Fuller, MD

When a new patient makes an appointment, your staff should outline your payment policy, including the rate for an initial visit. You can also consider sending the payment policy to your patient via email or text, and have them sign it upon the initial visit. The more thorough the conversation about the payment policy, the higher the likelihood your self-pay patient will pay their bill. 

It's also important to spread the word about the payment policy in the office. Post copies of your policy on your office door and the practice’s website, and place copies for patients at the reception desk. 

Depending on your office’s standards and practices, your payment policy should include some or all of the following verbiage:

  • Patients who do not have insurance are responsible for the entire amount of their bill.

  • Patients with insurance are responsible for any amounts their insurance does not cover, up to the entire amount of the bill.

  • Payment is due the day the service is provided, unless other arrangements are made in advance.

  • Payment must be made in an acceptable form. (Indicate whether your office accepts payment via credit card, debit card, check, cash, or other form—and make sure to specify which credit cards you accept).

Coordinate a payment plan

You may encounter self-pay patients who may not be able to pay their entire bill at the time of service. You will have to decide whether or not to treat this patient, or if you want to establish a payment plan. 

A payment plan should be as detailed and legible as your payment policy. It should include a promissory note before services are rendered, specific due dates, and specific amounts due, including a meaningful down payment at the time of service. 

You may want to send payment reminders before the scheduled payment date. Of course, payment plans can be more tedious for your office staff and don’t have the benefit of collecting the total fee up front. However, you may make more money in the long run, as this may attract a larger patient population.

The insured self-pay patient

Many practices bill the insurers for the entire service, receive an explanation of benefits a month or so later, and then bill the patient for what the insurance does not cover, such as deductibles, copays, out-of-network fees, and etc. 

After receiving care, the insured patient may have little to no incentive to pay outstanding fees—until the bill goes to collections. To avoid this, have your billing clerk, patient advocate, or office manager check for proof of insurance and determine the patient’s copay, deductibles, and any other potential out-of-pocket expenses.

Always collect 100% of the copay at the time of service, and try your best to collect as much of the estimated deductible and coinsurance as possible. These can be tricky to estimate if a lot of services are being rendered (or they are mixed in with preventative services), so you can collect 25%–50% of the estimate, and advise your patient that they will be billed the remainder once their claim is adjusted and complete. 

Dismissing patients who don’t pay

If you do not receive payment from a patient, there are a few steps you should take before sending them to collections or dismissing them as a patient. 

If your patient fails to pay their bill or make a scheduled payment, your staff should contact them and find out why in a cordial manner. It is essential to have an open and honest conversation without threatening debtors or chastising your patient. You are simply there to seek information and to figure out how to receive payment. 

If the patient is unreachable after multiple attempts, or reluctant to talk, or unwilling to make a payment entirely, your office should send a letter to the patient via mail, email, and patient portal. If there is still no resolution after this step, you can then consider sending the bill to collections and dismissing the patient. 

You have the option to terminate your professional relationship with a patient who doesn't pay you (except in medical emergencies, in which services must be rendered). If you and your office staff have contacted your patient multiple times about their outstanding balance with no solution, you can dismiss a self-pay patient by sending a certified letter, requesting a return receipt, and explaining that you can no longer provide services due to insufficient payment.

You should give a reasonable amount of time—at least 4 weeks—for your patient to find a new medical provider, and you should offer their new physician a copy of the patient’s medical records.

Each week in our "Real Talk" series, mental health advocate Kristen Fuller, MD, shares straight talk about situations that affect the mental and emotional health of today's healthcare providers. Each column offers key insights to help you navigate these challenging experiences. We invite you to submit a topic you'd like to see covered.

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