Without a defined handoff point, balances sit in the aging indefinitely — counted as an asset, worked by nobody. The policy needs a trigger, a threshold below which you write off rather than escalate, documented exceptions, and a destination decided in advance.
Every practice has balances that are too old to work and too large to ignore. Without a rule they sit in the aging indefinitely, counted as an asset, worked by nobody.
What an undefined point costs
- Reporting lies. Uncollectable balances inflate A/R and make every derived metric optimistic.
- Effort is wasted. Staff continue light follow-up on balances nobody expects to collect.
- Inconsistency. Some patients get pursued and others do not, based on who happened to look — which is the pattern that creates a fairness problem as well as a financial one.
What the policy should state
The trigger. Usually days since the first statement plus a minimum number of contact attempts. Both, not either.
The threshold. Below some amount, write off rather than escalate. Recovery on small balances rarely covers the cost.
The exceptions. Hardship, disputed balances, and any account where the practice may have erred. Documented, and applied by rule.
The destination. Internal final notice, external agency, or write-off — decided in advance rather than per account.
The relationship consideration
Sending a patient to collections is a clinical relationship decision as much as a financial one. Some practices choose never to, and write off instead. That is a legitimate policy — it just has to be the policy, applied consistently, rather than an outcome that varies with who is looking at the account.
Disputed balances are a separate track
An account the patient is disputing, or one where the practice may have billed in error, should never move to escalation on a timer. It needs resolving first, and escalating it converts a fixable billing question into a relationship and reputation problem.
Flag disputes explicitly in the system so the escalation rule skips them. Relying on staff to remember which accounts are contested is how the wrong one gets sent.
Review the policy against what it recovers
Track what escalated accounts actually return, net of agency fees and staff time. Many practices discover the recovery on their smallest tier barely covers the cost, which is an argument for raising the write-off threshold rather than working harder.
That is a decision worth making annually with real numbers, not once when the policy was written.
What patients should hear before it happens
A final notice that names the date and the consequence collects a meaningful share of balances that earlier statements did not. Not because it threatens, but because it is the first communication that is specific.
Include the amount, the date the account moves, and a route to stop it — a payment plan, a hardship application, or a phone number that a person answers. Escalation that arrives without warning generates complaints and rarely collects more.
Common questions
- When should a patient balance go to collections?
- At a trigger you defined in advance — typically days since the first statement plus a minimum number of contact attempts. Both conditions, not either one.
- Should small balances go to collections?
- Usually not. Below a threshold, recovery rarely covers the cost of pursuing it, so writing off is the cheaper and cleaner decision.
- Does sending patients to collections hurt the practice?
- It can. Some practices choose never to and write off instead, which is a legitimate policy — as long as it is the policy, applied consistently, rather than varying by who looks at the account.
- What should the collections policy include?
- The trigger, the dollar threshold, the documented exceptions for hardship and disputed balances, and the destination — internal notice, agency, or write-off.
- Why does undefined collections policy distort reporting?
- Uncollectable balances stay in A/R and inflate it, which makes every metric derived from A/R optimistic while burying the claims that are actually workable.
Denials Piling Up?
We handle the revenue cycle end to end — coding by certified coders, claim submission, denial management and appeals, and A/R follow-up, with six reported numbers every month.