Patient Billing and Collections 17 Patient Billing and Collections

Learning Outcomes 17.1 Discuss the importance of accounts receivable to a medical practice. 17.2 Explain how to accept and account for payment from patients. 17.3 Prepare an invoice. 17.4 Manage a billing cycle efficiently.

Learning Outcomes (cont.) 17.5 Describe standard collection techniques. 17.6 Explain how to perform a credit check. 17.7 Identify credit arrangements. 17.8 Recognize common collection problems.

Introduction Medical assistants take on duties that are administrative in nature Customers have various payment options Third-party payers (insurance carriers) Payment plans Some have large outstanding balances A proper understanding and administration of billing and payment collection methods is required

Basic Accounting Managing Accounts receivable – money owed to the business Accounts payable – money owed by the business Billing and collections convert account receivable into readily available income

Standard Payment Procedures Collect payments from patients at each office visit Brings income into practice faster Saves cost of Preparing and mailing bills Collecting on past-due accounts

Determine Appropriate Fee Fee schedule is based on Cost of services Doctor’s experience Charges of other doctors in the area Fee allowed by insurance policies Usual and customary fees Average fee charged for a service by comparable doctors OR The 90th percentile of all fees charged by comparable doctors for the same procedure

Determine Appropriate Fee (cont.) Relative value unit (RVU) Doctor’s skill and time Professional liability expenses Overhead costs RVU converted to $ amount for a service This methodology has reduced the growth rate of spending for Doctors’ professional services Related services and supplies Other Medicare B services

Charge Slips Also called fee slips or transaction slips Numbered consecutively Preprinted with common services and charges Uses: Pad of charge slips on physician’s desk Given to doctor with patient record at time of appointment Doctor enters services provided

For today’s visit, the total charge is $50. How would you like to pay? Accepting Payment Complete charge slip and request payment Most practices accept: Cash Check Credit cards Insurance For today’s visit, the total charge is $50. How would you like to pay?

Accepting Payment (cont.) Check Check date and amount Be sure check is properly filled out Endorse it immediately Cash Count money carefully Record payment on ledger Give patient a receipt

Accepting Payment (cont.) Debit card Immediate removal of funds from bank account Processed like credit card Patient enters PIN Credit card Prompt payment and reduces expense of mailing bills Costs practice a percentage of each charge Check expiration date before processing

Pegboard System Not often used Post payment on ledger card Generates receipt at same time

Determining Payment Responsibility Third-party liability – responsibility of insurance company to pay Minors Parents or person with legal custody Emancipated minor Elderly patients/patients with disabilities –proof of guardianship

Determining Payment Responsibility (cont.) Refunding and overpayment Maintaining a credit balance vs. Refunding overpayment Professional courtesy – waived charges or accept amount that the insurance pays

Apply Your Knowledge Good Job! What is the difference between accounts receivable and accounts payable? ANSWER: Accounts receivable are monies owed to the medical practice and accounts payable are monies owed by the medical practice. Good Job!

Preparing Invoices Preparing and mailing Using codes on the invoice Patients who do not pay at time of appointment Patients who make only a partial payment Using codes on the invoice For common procedures Itemized list on invoice Using ledger cards – photocopy and send to patient

Preparing Invoices (cont.) Generating computer invoice – print invoice for balance due Using independent billing services Sending invoices electronically

Using the Superbill Encounter form Includes May be computerized Charges for services rendered that day Invoice for payment or insurance copayment Information needed to submit insurance claim May be computerized Attach to medical record for physician to complete at time of visit

Managing Billing Cycles Cycle billing Bills each patient only once a month Spreads the work of billing over the month Invoice groups of patients every few days

Excellent! Apply Your Knowledge What is cycle billing? ANSWER: Cycle billing is a common billing system in which each patient is billed only once a month but groups of patients are billed every few days—spreads the work of billing over the month. Excellent!

Standard Collection Procedures Collection of payment if not paid during standard period is guided by Statute of limitations – sets time limit on when a collection suit on a past-due account can legally be filed

Standard Collection Procedures (cont.) Statute of limitations and account types Open-book account Open to charges made occasionally Last date of payment or charge for each illness Written-contract account Contract with patient to pay over four installations Regulated by Truth in Lending Act Single-entry account Account with only one charge Shorter time limit than open-book accounts

Using Collection Techniques Initial telephone calls or letters Friendly and sympathetic Call the patient at home Do not Call patients at work Leave a message on an answering machine

Using Collection Techniques (cont.) Preparing statements Invoice with a courteous reminder that payment is due Send a collection letter when account is past due 60 days – nice but firm 90 days – stronger wording 120 days – final letter before forwarding to a collection agency

Preparing an Age Analysis The process of classifying and reviewing past-due accounts by age from the first date of billing List all patients’ account balances and when the charges originated Use patient ledger cards and color-coded tags to indicate the number of days past due Click for Sample Age Analysis

Sample Age Analysis Back

Laws Governing Debt Collection Fair Debt Collection Practices Act of 1977 Prevents threats to take action that is illegal or that you do not intend to take Eliminates abusive, deceptive, or unfair practices 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

Laws Governing Debt Collection (cont.) Telephone Consumer Protection Act of 1991 Protects against unwanted telephone solicitations (telemarketing) Prohibits Automated dialing device for calls to patients Prerecorded calls to homes without prior permission Unsolicited advertising via fax machine Most provisions do not apply to medical practices

Observing Professional Guidelines for Finance Charges and Late Charges Appropriate to assess finances charges or late charges on past-due accounts if the patient is notified in advance Must adhere to federal and state guidelines that govern these charges The physician should use compassion and discretion when assigning charges in hardship cases

Using Outside Collection Agencies Management of the account Avoid collection agencies that use harsh or harassing collection practices Provide agency with needed information only Do not send bills to or contact patient; refer patient to collection agency

Insuring Accounts Receivable Protects the practice from lost income due to non-payment Protects cash flow and ensures that the practice will have funds to cover expected expenses

Correct! Apply Your Knowledge Mr. Jansen has not paid his bill for an office visit three months ago. What will guide your attempt to collect this debt? ANSWER: The statute of limitations, Fair Debt Collection Practices Act of 1977, and Telephone Consumer Protection Act of 1991 guide the attempt to collect this debt. Correct!

Credit Arrangements Credit – gives the patient time to pay for services provided on trust when patient is unable to pay immediately Performing a credit check Must have current information Verify employment Request a credit bureau report

Laws Governing Extension of Credit Equal Credit Opportunity Act May not deny credit based on patient’s sex, race, religion, national origin, martial status, or age Patient has right to know why credit was denied Truth in Lending Act Covers credit agreements that involve more than four payments Must sign, discuss, and retain copies of a disclosure statement – a written description of the agreed terms of payment

Extending Credit Unilateral decision Mutual (bilateral) agreement Physician decides that patient will be billed for full amount each month Patient makes whatever payment possible each month Mutual (bilateral) agreement Between patient and physician If no finance charges and if number of payments four or less, not subject to Truth in Lending Act

Very Good! Apply Your Knowledge What two places will the medical assistant contact when performing a credit check? ANSWER: When performing a credit check, the medical assistant will need to contact the patient’s employer to verify employment and the credit bureau to obtain information about the creditworthiness of the patient seeking credit. Very Good!

Common Collection Problems Hardship cases – patients may be poor, uninsured, or underinsured Patient relocation and address changes Do not to discuss a debt with anyone except the person responsible for the charge May ask for forwarding address only

Apply Your Knowledge What are common reasons for difficulty collecting a medical bill? ANSWER: A patient may be unable to pay the bill because of economic circumstances (poor, uninsured, underinsured, elderly and on limited income) or the patient moved and did not receive the invoice or provide a forwarding address. Right!

In Summary  17.1 Accounts receivable is important to a medical practice. An understanding of accounts receivable ensures that money is collected, managed, and documented properly. 17.2 Payments from patients can be accepted by check, debit card, cash, and credit cards. Give a charge slip to the patient and place a copy of the charge slip in the medical record. Record on the ledger sheet to track accounts receivable. 17.3 Preparing an invoice is essential in the medical office. Invoices can be computer-generated, and you can apply all of the necessary information, such as name and amount due.

In Summary (cont.) 17.4 To manage a billing cycle efficiently, maintain consistency in sending out bills. 17.5 Standard collection techniques include calling or writing patients to determine the reason for non- payment or to set up a payment arrangement. 17.6 To perform a credit check, you must have current information. Make sure you get the patient’s consent to perform a credit check.

In Summary (cont.) 17.7 Credit arrangements for patients include extending credit based on trust, performing employment verification, and requesting a credit report. 17.8 Two of the most common collection problems are 1) patients who cannot make payment; and 2) patients relocating without providing forwarding information.

End of Chapter 17 Remember that credit is money. ~ Benjamin Franklin