Collections in the Medical Office 10 Collections in the Medical Office

Learning Outcomes When you finish this chapter, you will be able to: 10-2 When you finish this chapter, you will be able to: 10.1  Explain the importance of prompt payment laws. 10.2 Summarize the importance of a financial policy in a medical office. 10.3  Identify the laws that regulate collections from patients. 10.4 Demonstrate how to post a payment from a collection agency. 10.5  Discuss the process of writing off uncollectible accounts. 10.6  Explain how to use a patient aging report to identify past due accounts.

Learning Outcomes (Continued) 10-3 When you finish this chapter, you will be able to: 10.7 Demonstrate how to add an account to the collection list. 10.8  Demonstrate how to create a collection letter. 10.9  Demonstrate how to create a collection tracer report.

Key Terms collection agency collection list collection tracer report 10-4 collection agency collection list collection tracer report payment plan prompt payment laws tickler uncollectible accounts write off

10.1 Laws Governing Timely Payment of Insurance Claims 10-5 Receiving prompt payment for services is a critical factor in determining the financial success of a medical practice Prompt payment laws are state laws that mandate a time period within which clean claims must be paid and that call for financial penalties to be levied against late payers Learning Outcome: 10.1 Explain the importance of prompt payment laws. Page: 344 Insurance carriers can dispute claims. They can contend that patient care services were not medically necessary or that the method in which services were provided violated the payer provider contract. Resubmitting rejected claims is a time consuming process, resulting in increased practice expenses and more delay in payment. Prompt payment laws example New York Prompt Payment Law, when a managed care organization or insurance company fails to make payment on a clean claim within forty-five days of submission, the physician is entitled to receive interest on the late payment at the rate of 12 percent per year. If a clean claim is not paid within the allotted time frame, the payer should be notified in writing that payment has not been received according to applicable prompt payment laws.

10.2 The Importance of a Financial Policy 10-6 Collection process begins with a clear financial policy and effective communications with patients about their financial responsibilities Important to have a written financial policy that spells out patients' responsibilities Learning Outcome: 10.2 Summarize the importance of a financial policy in a medical office. Pages: 344-347 The average patient is now responsible for paying nearly 35 percent of medical bills, more than three times the amount paid by a patient in 1980. Patients’ reasons for not paying include • Lack of insurance • Lack of financial resources • Significant medical costs • Consumer-directed health plans with high out-of-pocket costs • Lack of understanding that payment is their responsibility

10.2 The Importance of a Financial Policy (Continued) 10-7 Financial policies should tell patients how the practice handles: Collecting copayments and past-due balances Setting up financial arrangements for unpaid balances Providing care for patients with low incomes Payments for services not covered by insurance Collecting prepayments Accepted methods of payment Learning Outcome: 10.2 Summarize the importance of a financial policy in a medical office. Pages: 344-347 Despite the practice’s efforts to communicate the financial policy to all patients, some individuals still do not pay in full and on time. Some practices send all accounts that are past thirty days to an outside agency.

10.3 Laws Governing Patient Collections 10-8 Patient collections are consumer collections and are regulated by federal and state laws Collections from insurance carriers are considered business collections Learning Outcome: 10.3 Identify the laws that regulate collections from patients. Pages: 347-348

10.3 Laws Governing Patient Collections (Continued) 10-9 Fair Debt Collection Practices Act of 1977 Telephone Consumer Protection Act of 1991 General guidelines: No calls before 8 am or after 9 am No threats or profane language Respect patient privacy No deception or violence Learning Outcome: 10.3 Identify the laws that regulate collections from patients. Pages: 347-348 If the practice’s printed or displayed payment policy covers adding finance charges on late accounts, it is acceptable to do so. The amount of the finance charge must comply with federal and state law.

10.3 Laws Governing Patient Collections (Continued) 10-10 A payment plan is an agreement between a patient and a practice in which the patient agrees to make regular monthly payments over a specified period of time Truth in Lending Act applies if practice adds finance charges and payments are made in more than four installments Learning Outcome: 10.3 Identify the laws that regulate collections from patients. Pages: 347-348 If no finance charges are applied to unpaid balances, this type of arrangement is between the practice and the patient, and no legal regulations apply. The agreement must be signed by the practice manager and the patient.

10.4 Working with Collection Agencies 10-11 A collection agency is an outside firm hired to collect on delinquent accounts Practice no longer contacts the patient if the account is turned over to a collection agency Often paid on the basis of the amount of money they collect When payment is received from a collection agency, it must be posted to the patient’s account Information found on the statement provided by the agency Exercise 10-1 Learning Outcome: 10.4 Demonstrate how to post a payment from a collection agency. Pages: 348-350 The agency provides a statement that shows which patient accounts have paid, and the amounts of the payments. Perform Exercise 10-1

10.5 Writing Off Uncollectible Accounts 10-12 When all collection attempts are exhausted, the collection process is ended Amount owed is often called an uncollectible account or a bad debt, and it is written off the practice’s expected accounts receivable A write off is a balance that has been removed from a patient’s account Exercise 10-2 Learning Outcome: 10.5 Discuss the process of writing off uncollectible accounts. Pages: 350-352 Perform Exercise 10-2

10.6 Using a Patient Aging Report for Collections 10-13 An aging report shows the patient’s chart number and name, and the amount of unpaid charges in each of these categories: Current: Up to 30 days Past: 31 to 60 days Past: 61 to 90 days Past: 91 to 120 days Past: More than 120 days Exercise 10-3 Learning Outcome: 10.6 Explain how to use a patient aging report to identify past due accounts. Pages: 352-353 Used monitor collection activities for patients and insurance. The collection process begins with an analysis of the aging report, which shows the status of each account over time. Perform Exercise 10-3

10.7 Adding an Account to the Collection List 10-14 Overdue accounts are added to a collection list The collection list is designed to track activities that need to be completed as part of the collection process Ticklers or collection reminders are displayed as collection list items A tickler is a reminder to follow-up on an account that is entered on the collection list Learning Outcome: 10.7 Demonstrate how to add an account to the collection list. Pages: 353-361 Collection List located on Activities menu.

10.7 Adding an Account to the Collection List (Continued) 10-15 The Collection List dialog box displays ticklers that have been entered into the database Learning Outcome: 10.7 Demonstrate how to add an account to the collection list. Pages: 353-361

10.7 Adding an Account to the Collection List (Continued) 10-16 Tickler Item dialog box Exercise 10-4 Tickler tab Office Notes tab Learning Outcome: 10.7 Demonstrate how to add an account to the collection list. Pages: 353-361 A new tickler item is created by pressing the New button in the Collection List dialog box. Once a new tickler has been saved, the program automatically assigns a unique identifier code to the item. For patient-responsible ticklers, the balance is the balance shown in Transaction Entry. Perform Exercise 10-4

10.8 Creating Collection Letters 10-17 Before collection letters can be sent in Medisoft: Patient-responsible tickler item must be entered in the collection list Collection Letter report must be created Report is generated when the Patient Collection Letters option is selected on the Reports menu Learning Outcome: 10.8 Demonstrate how to create a collection letter. Pages: 361-366

10.8 Creating Collection Letters (Continued) 10-18 The Patient Collection Report lists patients with overdue accounts to whom statements have been mailed Learning Outcome: 10.8 Demonstrate how to create a collection letter. Pages: 361-366

10.8 Creating Collection Letters (Continued) 10-19 After printing collection letters, an account alert appears in the Transaction Entry, Quick Ledger, and Appointment Entry windows There are three account alert abbreviations: RB – remainder balance DP – delinquent on payment plan IC – in collections Exercise 10-5 Learning Outcome: 10.8 Demonstrate how to create a collection letter. Pages: 361-366 Perform Exercise 10-5

10.9 Creating a Collection Tracer Report 10-20 A collection tracer report is used to keep track of collection letters that were sent The report lists: Tickler item number Responsible party Chart number Account balance Date collection letter was sent Reasons the account is in collections Created via the Collection Tracer Report feature on the Reports menu Exercise 10-6 Learning Outcome: 10.9 Demonstrate how to create a collection tracer report. Pages: 366-368 Perform Exercise 10-6