Patient Billing and Collection 20 Patient Billing and Collection

Learning Outcomes (cont.) 20.4 Explain the purposes of the following credit and collections acts: ECOA, FCRA, and FDCPA, and TLA. 20.5 Relate the required components of a Truth in Lending statement. 20.6 Summarize two common types of problem collection accounts in the medical office.

Laws That Govern Credit and Collection Fair Debt Collection Practices Act of 1977 Governs collection of unpaid debts Guidelines: Do not call before 8 A.M. or after 9 P.M. Do not make threats or use profane language Do not discuss patient’s debt with anyone else Do not use any form of deception or violence to collect a debt Learning Outcome: 20.4 Explain the purposes of the following credit and collections acts: ECOA, FCRA, and FDCPA, and TLA. Fair Debt Collection Practices Act of 1977 Governs the methods that can be used to collect unpaid debts. Goal is to eliminate abusive, deceptive, or unfair debt collection practices. Refer to Table 20-1 Laws that Govern Credit and Collection Procedures

Laws That Govern Credit and Collection (cont.) Telephone Consumer Protection Act Protects against telemarketing Prohibits Automated dialing to certain numbers Prerecorded calls to homes Unsolicited advertising via fax Most provisions do not apply to medical practices Learning Outcome: 20.4 Explain the purposes of the following credit and collections acts: ECOA, FCRA, and FDCPA, and TLA. Telephone Consumer Protection Act (TCPA) of 1991 Protects telephone subscribers from unwanted telephone solicitations. Prohibits autodialed calls to emergency service providers, cellular and paging numbers, and patients’ hospital rooms. Prohibits prerecorded calls to homes without prior permission of the resident, and it prohibits unsolicited advertising via fax machine. Does not apply if there is an established business relationship. Does not apply to calls placed by tax-exempt nonprofit organization. Although most provisions of this federal law do not apply to medical practices, you should be aware of the law. To help ensure compliance with TCPA provisions Limit calls to patients to the hours between 8 A.M. and 9 P.M. Place the calls yourself; do not use an automated dialing device. Refer to Table 20-1 Laws that Govern Credit and Collection Procedures

Laws That Govern Credit and Collection (cont.) Professional guidelines AMA ~ appropriate to assess finance charges or late charges on past-due accounts if the patient is notified in advance The physician must adhere to federal and state guidelines Learning Outcome: 20.4 Explain the purposes of the following credit and collections acts: ECOA, FCRA, and FDCPA, and TLA. Refer to Table 20-1 Laws that Govern Credit and Collection Procedures

Using Outside Collection Agencies Avoid those that use harsh or harassing collection practices Once agency has the account No further contact with the patient Maintain list of files sent for collection Practice decides how best to deal with the account Learning Outcome: 20.4 Explain the purposes of the following credit and collections acts: ECOA, FCRA, and FDCPA, and TLA. The office staff should use all reasonable methods to collect unpaid balances prior to sending an account to collection as the collection agencies keep a percentage of any funds they collect. Refer to Points on Practice: Choosing a Collection Agency Once an account has been turned over to the collection agency, all communication between the patient and the office concerning the debt must cease. Keep a list of all accounts that have been turned over to a collection agency. It should always be the decision of the practice (and not the collection agency) whether to pursue legal action regarding an account or to adjust the debt off the books. Give the collection agency a set amount of time to collect the debt. After that time, the practice should decide how to best deal with the account Refer to Procedure 20-3 Referring an Account to a Collection Agency and Posting the Payment from the Agency

Insuring Accounts Receivable Protects the practice from lost income Nonpayment Destruction of A/R records Protects cash flow and ensures that the practice will have funds to cover expected expenses Learning Outcome: 20.4 Explain the purposes of the following credit and collections acts: ECOA, FCRA, and FDCPA, and TLA. Accounts receivable insurance Protects the practice from lost income due to nonpayment by a large number of patients or one large account or insurance plan. Protects the practice in the event that its A/R records are destroyed. It will allow for recoupment of at least some of the outstanding A/R.

Apply Your Knowledge What law governs the methods that can be used to collect unpaid debts? ANSWER: The Fair Debt Collection Practices Act of 1977 Learning Outcome: 20.4 Explain the purposes of the following credit and collections acts: ECOA, FCRA, and FDCPA, and TLA. Right!

Credit Arrangements Credit – extended by physician Equal Credit Opportunity Act Reasons for not denying credit Must tell patient why credit was denied Perform a credit check Learning Outcome: 20.5 Relate the required components of a Truth in Lending statement. When a patient cannot pay immediately, extending credit gives the patient time to pay for services, which are provided on trust. Laws that govern extension of credit – Equal Credit Opportunity Act Credit arrangements may not be denied based on a patient’s sex, race, religion, national origin, marital status, or age. Credit cannot be denied because the patient receives public assistance or has exercised rights under the Consumer Credit Protection Act. The patient has a right to know the specific reason that credit was denied. To comply with ECOA, a credit check is required on any patient the practice is considering for extension of credit.

Credit Arrangements (cont.) Performing a credit check Verify employment Credit bureau report Creditworthiness of person seeking credit Payment history Fair Credit Reporting Act Learning Outcome: 20.5 Relate the required components of a Truth in Lending statement. Employment Verification Explain to the patient that you will be calling his employer to verify employment. Record the updated information on the patient’s registration card, along with any credit references obtained from the patient. Credit Bureau Report A credit bureau – provides information about the creditworthiness of someone seeking credit. Provides information about an individual’s payment history on credit cards, student loans, and similar accounts. The three leading national credit bureaus are TRW Inc., Equifax Inc., and Trans Union Credit Information Company. If the practice decides not to extend credit based on the credit report, the Fair Credit Reporting Act states that you must inform the patient in writing that credit was denied based on the credit report.

Credit Arrangements (cont.) Unilateral Agreement Physician agrees to patient offer Not subject to Truth in Lending Act Mutual Agreement Between patient and physician Subject to Truth in Lending Act Finance charges More than four payments Learning Outcome: 20.5 Relate the required components of a Truth in Lending statement. Unilateral Agreement   The physician agrees to the patient’s offer to pay the debt over a period of months. The patient is billed every month for the full amount owed and makes whatever payment is possible each month. It is not regulated by the Truth in Lending Act. Mutual Agreement   Bilateral agreement between physician and patient. If the physician does not assess finance charges, and if the total number of payments is four or fewer, this type of agreement is also not covered by the Truth in Lending Act. If the agreement includes more than four payments, or finance charges are assessed, the agreement is subject to the requirements of the Truth in Lending Act.

Truth in Lending Act Consumer Credit Protection Act Credit agreements of more than four payments The practice must Discuss agreement with patient Sign and retain disclosure statement Learning Outcome: 20.5 Relate the required components of a Truth in Lending statement. Truth in Lending Act – part of the Consumer Credit Protection Act. This act covers credit agreements that involve more than four payments

Truth in Lending Act (cont.) Disclosure statement Truth in Lending Statement Agreement on payment terms Total amount of debt Down payment and payment amount Final due date Interest rate and total finance charges Learning Outcome: 20.5 Relate the required components of a Truth in Lending statement. Disclosure statement must meet two requirements The agreement must be discussed with the patient when the terms are first determined. The physician and the patient must agree on the payment terms. Both the physician and the patient must sign the document to indicate mutual agreement on the written terms. Disclosure statement must also include The amount of total debt The amount of the down payment. The amount of each payment and the date it is due. The due date for the final payment and the amount of the final payment. The interest rate expressed as an annual percentage. The total finance charges. Refer to Procedure 20-4 Completing a Truth in Lending Statement (Agreement)

Apply Your Knowledge Excellent! Match: Credit cannot be denied based on sex, race, religion, etc. Provides a credit history. Not regulated by the Truth in Lending Act Bilateral agreement between the patient and physician Covers credit agreements of more than four payments Description of agreed terms of payment ANSWER: Disclosure statement Credit bureau Equal Credit Opportunity Act Unilateral agreement Truth in Lending Act Mutual agreement C B D F Learning Outcome: 20.5 Relate the required components of a Truth in Lending statement. E A

Common Collection Problems Hardship cases ECOA – all patients in the same circumstances must be afforded the same consideration May refer to clinics that provide free or reduced-fee services Learning Outcome: 20.6 Summarize the two common types of problem collection accounts in the medical office. Hardship Cases Physician may decide to treat some patients without charge or at a deep discount because they cannot pay. Hardship cases includes poor, uninsured, and under insured as well as elderly on a limited income and someone who has suffered a severe financial loss or family tragedy. Providing free care must be undertaken very carefully, because of the Equal Credit Opportunity Act (ECOA). All patients in similar circumstances must be extended the same financial consideration or a charge of discrimination may be levied against the physician.

Common Collection Problems (cont.) Patient relocation and address changes Skips Telephone or e-mail Ask post office for forwarding address Keep all returned statements and envelopes as proof of reasonable attempts to collect Learning Outcome: 20.6 Summarize the two common types of problem collection accounts in the medical office. Patient relocation and address changes Skips – patients who move without leaving a forwarding address. Attempts to contact Telephone When you make a telephone call for collection, you may ask a third party for the patient’s new address or phone number. If the third party states the new address is not known, do not call again. E-mail – if patient has previously given permission. Ask the post office for a forwarding address. If these avenues do not locate the patient, he may be labeled a skip and then referred a collection agency. Be sure to keep the returned statements and envelopes stamped by the post office as “addressee unknown” or “no forwarding address” to prove a reasonable attempt to collect the debt.

Yes! Apply Your Knowledge What is a “skip”? ANSWER: A patient who moves without leaving a forwarding address to which the office can sent a statement of unpaid charges. Learning Outcome: 20.6 Summarize the two common types of problem collection accounts in the medical office. Yes!

In Summary (cont.) 20.4 ECOA is the Equal Credit Opportunity Act. It prohibits discrimination against loan applicants. The Fair Credit Reporting Act (FCRA) requires credit bureaus supply correct and complete information to businesses to use in evaluating a person’s application for credit, insurance, or a job. The Fair Debt Collections Practices Act or FDCPA requires debt collectors to treat debtors fairly and prohibits certain collection tactics. The Truth in Lending Act requires creditors to provide applicants with accurate and complete credit costs and terms. . 20.4 ECOA is the Equal Credit Opportunity Act. It prohibits discrimination based on sex, marital status, race, national origin, religion, or age. Applicants also cannot be discriminated against for receiving public assistance income or exercising their rights under the Consumer Credit Protection Act. The Fair Credit Reporting Act (FCRA) requires credit bureaus supply correct and complete information to businesses to use in evaluating a person’s application for credit, insurance, or a job. The Fair Debt Collections Practices Act or FDCPA requires debt collectors to treat debtors fairly and prohibits certain collection tactics, including harassment, false statements, threats, and unfair practices. The Truth in Lending Act requires creditors to provide applicants with accurate and complete credit costs and terms.

In Summary (cont.) 20.5 The Truth in Lending Statement must include the following elements: amount of total debt, amount of the down payment, amount of each payment and date due, due date for the final payment, interest rate, expressed as an annual percentage rate, and total finance charges 20.6 The two most common types of collection problems in the medical office are hardship cases, who simply cannot afford to pay their debt, and accounts known as skips, where the debtor moved and left no valid forwarding information so it is not possible to bill the patient. .

End of Chapter 20 Remember that credit is money. ~ Benjamin Franklin