Debunking the 3 Patient Statement Myths

How can behavioral health organizations ensure compliant patient collections without compromising compassionate care?

Regulators have made it clear that the long-standing “three patient statements” practice does not satisfy the legal standard for a “regular and customary collection effort.” Behavioral health providers that rely solely on mailing three statements risk violating federal fraud and abuse statutes—including the Anti-Kickback Statute (AKS), Civil Monetary Penalties Law (CMP), Medicare Cost Reporting Requirements, and the Eliminating Kickbacks in Recovery Act (EKRA).

Federal guidance from CMS, OIG, and DOJ establishes that a bona fide collection effort requires multiple forms of outreach, documentation of hardship, and consistent adherence to written financial policies. Simply sending statements without follow-up may be interpreted as a prohibited financial inducement or de facto waiver of patient responsibility.

What proactive steps can behavioral health providers take to strengthen compliance while maintaining their mission?

Experts recommend implementing a robust, technology-enabled Patient Financial Management process that includes:

• Policy Modernization: Define and document multi-step collection protocols—statements, calls, texts, hardship review, and (when appropriate) third-party collections.

• Comprehensive Documentation: Maintain detailed electronic records of every contact attempt and hardship decision.

• Hardship & Scholarship Reviews: Standardize eligibility criteria and documentation for financial assistance.

• Cross-Team Alignment: Train admissions, clinical, and billing teams on consistent financial engagement and compliance procedures.

• Continuous Auditing: Conduct periodic reviews to ensure alignment with payer audits, CMS standards, and organizational policy.

Building compliant financial engagement into patient workflows supports transparency, ethical billing, and operational accountability—reinforcing both regulatory integrity and compassionate care delivery.