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Medical school teaches physicians how to treat patients when they show up, but does not address how to treat patients when they do not.  No-shows are money losers and a frequent problem for physician offices.  Not only do missed appointments disrupt patient flow, but no-shows also equate to lost revenue.  Further, when a patient misses an appointment, the overhead related to that no-show remains on the books because the costs of office space, equipment, staff and supplies accumulate regardless of whether or not a patient is seen and treated.  Fortunately, there are ways to limit the loss caused by missed appointments.

According to studies conducted by the Medical Group Management Association, a membership association for improved medical practice management, the average no-show rate for physician offices ranges from 5% to 8%, and even greater depending on office size and share of new patients.  Patients who miss appointments can be more than a nuisance; they can be a risk management problem.  By developing a reasonable missed appointment policy that is consistent, clear, and fair, patients will be aware of the consequences of not showing up.  The policy can be implemented as a part of the practice policies, which new patients are given to review and acknowledge by signature.  Signage in the waiting room can also serve as a reminder to patients of the importance of appointment keeping.  Important points to address in the policy include: how patients will be notified of their upcoming appointment, how to cancel an appointment, if the office charges patients for missed appointments, and how many missed appointments constitute grounds for dismissal. 

The American Medical Association’s Code of Ethics allows physicians to charge patients for missed appointments and/or appointments cancelled less than 24 hours in advance, so long as patients are properly advised and the policy is applied to all patient groups.  Ethics Opinion 8.01 states: “A physician may charge a patient for a missed appointment or for one cancelled 24 hours in advance if the patient is fully advised that the physician will make such a charge.”  Reasonable charges often range from $10 to $25, which indicates charges are usually used as a deterrent rather than an attempt to generate revenue.  Of course, this charge must comply with state and federal law.

Historically, physicians have been able to charge Medicare beneficiaries for missed appointments so long as the physician office’s missed appointment policy applies to all patients and the charges for Medicare and non-Medicare patients are the same.  This policy was clarified in Transmittal 1279, which added section 30.3.13, “Charges for Missed Appointments,” to the Medicare Claims Processing Manual.   In the Transmittal, CMS emphasizes that the charge is for a missed business opportunity, not a charge for a service itself (to which the assignment and limiting charge provisions apply).  Because Medicare does not make any payments for missed appointment charges imposed by physicians, claims for missed appointments sent to Medicare will be denied with the reason code 204—This service/equipment/drug is not covered under the patient’s current benefit plan.  Accordingly, the physician must bill the Medicare beneficiary directly.

Unfortunately for physicians, this clarification from CMS seems to raise more questions than it answers.  In order to charge all patients equally, the physician must first determine that he can charge all patients.  Many third party payors do not permit missed appointment charges.  These prohibitions can be found in the provider’s contract, listed separately in a manual, addressed in billing policies, or any number of other places.  To be certain, it is advisable that physician offices contact each third-party payor for verification that this practice is allowed.  Further, CMS has clarified that Medicaid providers are not permitted to bill recipients for missed appointments.  Federal regulations prohibit the imposition of cost-sharing on traditional Medicaid populations and suggest that billing a Medicaid recipient directly would violate the physician’s provider agreement.  This clarification has been reiterated by Kentucky’s Department for Medicaid Services.

Of course, physicians should be sensitive in determining whether or not missed appointment charges are appropriate for their patients.  Missed appointment charges can make patients feel alienated and in some instances, the cost of collection exceeds the charge itself.  If no shows are a problem, consider patterns in practice administration that may contribute to no shows.  For example, the more time the patient spends in the waiting room, the more likely the patient will seek care from another physician and not bother to cancel his appointment.  Additionally, research shows no-show rates are lowest when patients receive appointment reminders from office staff, rather than automated services.  As the lead author of a study tracking no-shows published in the June 2010 American Journal of Medicine, Amay Parikh, M.D., concluded, “Connecting to a live person, they may feel more of a responsibility to show up."[1] Minor administrative adjustments to improve patient access may reduce no-shows without having to resort to missed appointment charges.

If it is determined, however, that imposing a missed appointment policy is appropriate for a particular physician office, then consider how the policy will work.  Will there be warnings for the first missed appointment or will penalties be assessed immediately? How will patients be notified of a missed appointment? What is a reasonable amount to charge for a missed appointment?  How will the charge be collected?  Under what circumstances will the charge be waived, if at all?  When is dismissal of a chronic offender appropriate? At first glance, the considerations seem limitless when developing a policy that will reduce both missed appointments and lost revenue while not driving patients away.  On the other hand, the concept is far from novel.  If airlines, masseuses, and hairdressers do it, then why can’t doctors?

Lisa English Hinkle, Member of the Lexington office, also contributed to this article and can be reached at lhinkle@mcbrayerfirm.com or (859) 231-8780, ext. 1256.

Services may be performed by others.

This article does not constitute legal advice.

[1] "The Effectiveness of Outpatient Appointment Reminder Systems in Reducing No-Show Rates," abstract, American Journal of Medicine, June (www.amjmed.com/article/S0002-9343(10)00108-7).

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