Patient Payment On File Programs Support Financial Liquidity and Stability

Posted by Practice Management Institute on Nov 20, 2018 10:46:32 AM
Practice Management Institute


By: Steven Kleinberg EVP, COO, CardChoice International

In today’s healthcare marketplace, many patients have high deductibles and are responsible for a larger portion of their medical expenses. The consequences for medical practices include increased costs to get paid and increased risks that the practice may never get fully paid.

Patient Payments On File Programs (PPOF) help practices reduce the risk of extending credit to patients for services rendered.  It is an effective, legal, and growing method to collect patient balances and reduce the administrative burden of patient collections. With PPOF the mode of payment can be a major credit card, debit card, HSA / FSA cards and ACH checking.

What is a Credit Card on File Program?

It is helpful to understand that in 2010, Visa identified the healthcare industry as a market with significant payment processing improvement opportunities. One of the solutions they offered was preauthorized healthcare transactions, and shortly thereafter, the other major credit cards followed suit.  Visa, MasterCard, Discover and American Express all allow preauthorized healthcare transactions.

With PPOF, the patient provides their credit or debit card information for the medical practice to use at a later date to pay the patient’s bill. The card on file can be used for copays, deductibles, non-covered services paid out of pocket, or for amounts due not covered after the insurance company has paid its portion.

PPOF programs allow medical practices to establish a recurring payment plan, with preset limits and a predetermined date that meets the patient’s needs and fulfills their payment obligation to the practice.

There are numerous advantages to PPOF. A few include:

  • Improves cash flow.
  • Supports bringing patient accounts receivable days down to 30 days, instead of 60, 90, 120 days or more.
  • Reduces administration costs as it eliminates the need to send statements to patients and streamlines the post visit billing process.
  • Secures payments as patients make up-front payment arrangements for costs not covered by their health plans.
  • Lowers bad debt, thereby improving net revenue.
  • Reduces the amount of resources needed to process, track, and research delinquent fees.
  • Helps healthcare provider staff control and manage cash better, as staff knows immediately when receivables are reconciled and processed.
  • Visa, MasterCard, Discover and American Express settle together, reducing reconciliation time.
  • Gross receipts are deposited directly into the practice checking account.


In implementing a successful PPOF program, practices need cooperation and buy-in on the importance of it by staff, especially at the front desk. The policy should be introduced in such a way that patients understand the need for it, are informed on the advantages from the patient’s perspective, and trust that that their information is secure.

For staff, it can be helpful to let them know how much getting paid matters to the existence of the practice; and that in today’s marketplace a greater percentage of practice revenue is coming from patients, therefore the practice needs to minimize bad debt and improve its collection process.

Before introducing PPOF to patients, practices should have their policies completed; have a communication plan for the program and have staff well trained and prepared to answer questions. Patients will have peace of mind when they understand security is important to your office and that their information is protected.

Equipment is not needed in the basic implementation of a PPOF, all you need is a written policy, signed by patient and stored in a locked document cabinet. With this basic program make sure you set reminders to run the monthly transactions so you do not forget to pay yourself as per the term of the agreement.

Equipment essential to a more secure and automated process for implementing PPOF is a payment gateway software connected to a point-to-point encryption (P2PE) terminal that allows the practice to securely store the patients credit card in a third party off-site server. The credit card information is encrypted and stored in a manner that is PCI compliant and can be retrieved for post insurance claim balances as well as recurring payments such as a payment plan.

PCI refers to The Payment Card Industry Data Security Standard (PCI DSS), which is a set of security standards designed to ensure that all entities that accept, process, store or transmit credit card information maintain a secure environment.

More Payment Options Are Available Today

Whether a practice decides to implement a PPOF program or not, we highly recommend that they accept on-line payments. Many people today do all of their banking on-line and more and more consumers pay bills with their pads or cell phones. A new generation of tools are available to consumers that allow healthcare organizations to collect receivables faster, and at less cost.

A practice does not need a website in order to accept-online payments. Their credit card processor can provide a dedicated, secure and compliant web page for payments. It is quick, convenient and fast. It is our experience that patients appreciate it when their healthcare provider offers their preferred payment methods.

At CardChoice International we are always available to PMI members to review their merchant account statements for cost savings opportunities and to comprehensively answer any questions about the full scope of electronic payment options that are available to them, to speed up and improve their accounts receivable process. We want all of our customers to have a healthy bottom line.

Established in 2003, and headquartered in Fairfield, NJ, CardChoice International is an electronic payments solutions company that offers credit card processing and equipment, ACH check processing, cash advance, consumer finance, payroll and software payment integration. For more information call 866-350-3200.

A leading advisor to the healthcare industry, CardChoice International’s endorsements include the Practice Management Institute, American Medical Billing Association, New Jersey Association of Osteopathic Physicians and Surgeons, and the New York State Society of CPAs.

Subscribe Here!

Recent Posts

Posts by Tag

See all