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Can Our Medical Organization Charge Our Patients a Fee for Nonpayment of a Copay?

We all understand the frustration when patients cost your business time and money because they fail, or refuse, to pay their copay at the time of service. Many questions may arise about the nuanced details of interest on a copay and how to deal specifically with this unpaid fee.


To simplify matters, at the end of the day, they have not paid the amount they owe you and interest may accrue if it is applied at the rate allowed by law! You can call the fee a service charge, finance charge, late fee, or merely interest; these phrases are all one in the same. Regardless of whether it is by civil statute for an open book account, or for a legally and properly written agreement, you cannot accrue more interest than is allowed by law.

Avoid Arbitrary Rates

In addition to following the law, anything you choose to do should be done consistently, as long as it is a good practice! For example, arbitrarily charging a fee of $15 would be poor practice. This is because the next question to ask yourself is inevitably: “How much is the copay and what percentage does $15 represent of that copay?” If the copay is $15 and you’re charging a service charge of $15, then you are accruing interest at 100%, assuming they pay both the copay and fee right away upon billing. If you add the $15 fee each month that the debt is outstanding for a year, you will have charged them $180 on a $15 debt, another way of saying 1200%.

If you are to apply a proper accrual rate of interest on the unpaid debt, that which is not covered by insurance (i.e., their portion of responsibility), then the interest should be controlled by the rates allowed by law. In California, without an agreement, a 10% simple interest can be accrued on the unpaid principal; if there is a written agreement, prior to the rendering of services, then you may accrue an agreed upon interest rate so long as it is not considered usury. Most choose the 10% simple interest as it is easier to stay in compliance with the law.

How to Prevent Unpaid Copays

If your patient doesn't pay their copay at the time of service, our recommendation is to advise patients that your policy (on non-emergency accounts) is that they will not be seen that day, and they will need to reschedule their appointment.

Another option is to provide patients with an envelope to mail the copay, with the understanding that you don’t send monthly statements for copays and they won’t be seen for future (non-emergency) appointments unless their copays and account are up-to-date. If you have a patient that continues to abuse the courtesy you have extended them, you properly dismiss them as a patient.

This structure is based on the cost of money for services rendered or money that is borrowed. The cost of patients not paying on time is a major cause of rising prices for your services. Either way, you cannot accrue interest that is usurious, as the risk is much greater than the reward.



Tavelli Co., Inc. has over 37 years of unparalleled experience in the debt collection and receivables management industry. Our mission is to achieve the right balance between getting clients paid and being empathetic to debtor circumstances, through implementing innovative practices, hiring experienced people, and improving business decisions through analytics. We provide peace of mind to all involved by collecting money with no complaints. Tavelli Co., Inc. takes the time to carefully listen to your customers and share their feedback with you through meaningful data and transparent communication, so you have access to the information you need to make quality decisions and improve your processes in the future. Contact us today and let the debt collection experts at Tavelli Co., Inc. help you set your business up for success.


IMPORTANT: Information provided by Tavelli Co., Inc., any employees of Tavelli Co., Inc., or its subsidiaries is not intended as legal advice and may not be used as legal advice. It is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own legal counsel.

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