Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 1 Professional Fees, Billing, and Collecting Chapter 22
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 2 Introduction The practice of medicine is a business as well as a profession, and it is reasonable for the physician to expect to make a profit. The medical assistant must often explain professional fees to patients and collect the fees charged for examinations and treatments.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 3 This chapter will examine: Values considered when determining fees Usual, customary, and reasonable fees Value of estimates for patient treatment Basic bookkeeping computations Differences between bookkeeping and accounting Manual and computerized bookkeeping systems Billing and payment options Preparing patient accounts
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 4 This chapter will examine: Adjustments Laws that apply to billing and collecting Collecting outstanding accounts
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 5 How Fees Are Determined Physicians have three commodities to sell: Time Judgment Services Physicians must place a value on each of their services. This is called fee-for-service.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 6 Impact of Managed Care Over the past few decades, managed care has grown substantially. One of the goals of managed care is to prevent health problems before they start.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 7 Prevailing Rate in the Community The prevailing rate in the community must be taken into consideration when fees are set. Different communities have different living scales. Fees that are too low can be just as detrimental as fees that are too high.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 8 Usual, Customary, and Reasonable Fees Usual: The usual fee for a given service is the fee that the physician most frequently charges for the service. Customary: A range of the usual fees charged for the same service by physicians with similar background and training. Reasonable: Services or procedures that are particularly difficult or complicated, requiring extraordinary time and effort. Abbreviated: UCR
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 9 Fee-Setting by Third-Party Payors Third-party payors may provide the physician with a schedule of predetermined fees that the payor will approve for payment. Some require preapproval or precertifications before services are rendered.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 10 Physician’s Fee Profile A compilation and average of fees charged by the physician over an extended period, usually a year. Fiscal agents or fiscal intermediaries keep continuous records of the UCR fees Fee profiles are used to determine third-party liability for services.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 11 Insurance Allowance The insurance allowance is the amount of the reimbursement that the insurance company allows to be paid for a certain treatment or procedure.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 12 Problems with Discounting Fees before Reimbursement The lower fee will alter the physician’s fee profile. If it becomes necessary to bring suit for payment of the fee, only the reduced fee can be recovered. If the insurance allowance is paid on the basis of a certain percentage of the physician’s fee and a lower fee is charged, the insurance allowance will be correspondingly lower.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 13 Problems with Discounting Fees before Reimbursement If the physician does this with many patients, the insurance company will assume that the reduced fee is the usual fee, and reimbursements will be lowered. This process is considered fraud in some cases.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 14 Explaining Costs to Patients Patients may be hesitant to bring up costs of medical services. Do not wait for the patient to bring up the subject. The physician or medical assistant must bring up the subject of payment and costs.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 15 Advance Discussion of Fees Advance discussion of fees helps the patient plan ahead for medical expenditures. Give the patient accurate estimates of the cost of treatment. Do not hesitate to explain to the patient how a fee is established.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 16 Explanation of Additional Costs Explanation should extend beyond the physician’s own charges. Explain fees such as: costs of operation anesthesiologist charges radiology charges hospital bills
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 17 Fee Estimates Prepare estimate slips in duplicate so that the patient can have a copy. Estimates: Help to avoid forgetting that a fee was quoted May help to avoid later misquoting of the fee Help to simplify collections by preventing misunderstandings about charges
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 18 Guarantor’s Ultimate Responsibility: The Bill The guarantor is ultimately responsible for the entire bill, regardless of whether insurance pays on the bill or not.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 19 Insurance Policies Insurance policies are contracts between the patients and their insurance companies. It is not the responsibility of the office staff to ensure payment.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 20 Why the Staff Should Help the Patient with Insurance Concerns The staff is almost always more knowledgeable about insurance than the patient. By helping the patient collect from insurance, the medical assistant helps to ensure that the physician will be paid. The medical assistant will gain knowledge about the insurance industry by helping the patient at every opportunity.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 21 Reference Notebook Keep a reference notebook with information about third-party payors for guidance and suggestions. Always be sure to secure guarantors in writing.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 22 Encounter Forms Slips attached to charts while patients are in the office. Used for billing purposes. Physicians mark charges for the day and indicate a diagnosis. Form has a section to note follow-up appointments.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 23 Encounter Forms Also known as: Superbills Charge slips Multipurpose billing forms
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 24 Transactions and Accounts Business transaction Occurrence of an event or of a condition that must be recorded Account Patient’s financial record Accounts receivable ledger All patient accounts together
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 25 Account Card Columns Debit Used for entering charges and is sometimes called the charge column Credit Used for entering payments received and is sometimes headed “paid” Balance Used for recording the difference between the debit and credit columns
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 26 Adjustment Column An adjustment column is available in some systems Used for entering write-offs, disallowances by insurance companies, and other adjustments
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 27 Posting Posting is the transfer of information from one record to another.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 28 Types of Balances Account balance Charges exceed payments on the account Also called a debit balance Credit balance Exists when payments exceed charges
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 29 More Definitions Receipts Cash and checks taken in for payment for professional services rendered Receivables Charges for which payment has not yet been received Disbursements Cash paid out Payables Amounts owed to others but not yet paid
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 30 Account Cards Account cards should contain the following information: Name and address of guarantor Insurance identification Social security number Home and business telephone numbers Name of employer Special instructions for billing
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 31 Posting Methods Computer posting: Patient’s name, date, diagnosis, and procedures are posted when the patient leaves the office. The database retrieves charges and posts them onto a computerized record and the accounts receivable ledger. Manual posting: All charges and payments for professional services are posted to the ledger daily. A separate account card or page is prepared for each patient at the time of the first visit.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 32 Pegboard Systems Also called “write-it-once” systems Named for the lightweight board that has a row of pegs along one side, which holds paper forms
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 33 Write-It-Once System System generates all necessary financial records for each transaction with one writing: Encounter forms Receipts Ledger cards Journal entries Often, a statement and bank deposit slip
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 34 Entering and Posting Transactions Enter the transaction. Post the patient’s payment. Give the patient a receipt for payment. Make certain numbers are entered correctly. Avoid transposing numbers.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 35 Posting Other Payments and Charges Post payments received in the mail from patients and insurance companies. Payments made by mail do not usually require a receipt unless asked for specifically.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 36 Example of Transaction Entries The office visit charge for a new patient is $ The patient pays the copay of $30.00 The patient owes $ Insurance pays $ If contracted with the managed care to do so, $2.00 is written off and posted in the adjustment column The patient balance is zero
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 37 Example of Transaction Entries The office visit charge is $ The patient already owes $ The patient pays today’s copay of $20.00 The balance is $ Managed care pays $ The patient owes $90.00
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 38 Remember Managed care agreements, federal regulations, and other guidelines will dictate what can and cannot be adjusted on a patient’s account.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 39 Special Bookkeeping Entries Adjustments Credit balances Refunds Insufficient funds checks
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 40 Balancing Accounts Receivable and Accounts Receivable Control The accounts receivable control is a daily summary of what remains unpaid on the accounts. Most offices complete an end-of-the-day summary, end-of-the-month summary, and year-to-date summary.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 41 Payment for Medical Services Payment is accomplished in four ways: Payment at time of service Billing after making payment arrangements Insurance or other third-party billing Billing and collection assistance
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 42 Payment at Time of Service Most patients pay their copay at the time of service. Encourage time-of-service collection. Some offices insist that the copay be paid prior to the patient seeing the physician.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 43 Billing after Making Payment Arrangements Billing might be done for patients who require surgery or who incur large fees at one time. Explain professional fees to the patient. Make reasonable payment arrangements. Follow office policies and procedures. Follow up on patient payments when necessary.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 44 Credit and Debit Cards Credit and debit cards are often used to pay for medical services. Some offices offer information on outside credit services that are available to help patients pay medical costs.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 45 Billing and Collection Laws Truth-in-Lending Act Fair Debt Collection Practices Act
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 46 Insurance or Other Third-Party Billing Insurance billing is a courtesy to patients. Work with patients to obtain the maximum reimbursement possible.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 47 Billing Procedures Computer-generated statements Encounter forms Photocopied statements Online billing statements
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 48 Itemizing the First Statement Most computer-generated programs will automatically itemize the first statement. Patients should carefully review itemized statements to make certain that each charge is correct.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 49 Time and Frequency of Billing Once-a-month billing Cycle billing
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 50 Collection Procedures Most patients truly want to pay their bills. Some may need temporary assistance by using a payment plan. Work out a payment plan with patients. Expect the patient to make promised payments.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 51 Care for Those Who Cannot Pay Some patients may be medically indigent. Know which local, state, and national organizations may be able to provide assistance to patients. In rare cases, a physician may provide care during a patient’s temporary hardship. Know the pitfalls of fee adjustments.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 52 Professional Courtesy Less used today because of managed care agreements. Follow office policy and the direction of the physician in professional courtesy cases.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 53 Billing Minors Minors are not responsible for bills unless they are emancipated. Bill the parents of a minor. Financial agreements between separated or divorced parents are not enforced by the physician’s office.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 54 Account Aging Categories 0-30 days days days days
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 55 Collection Techniques Telephone calls Collection letters or reminders Personal interviews
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 56 Special Collection Situations Skips Address change of service Claims against estates
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 57 Using Outside Collection Assistance When all efforts have been exhausted, ask: Should the facility sue for payment? Should the account be sent to a collection agency? Should the account be written off as a bad debt?
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 58 Working with the Collection Agency Provide information needed to contact the patient. Notify the agency if additional information is obtained that affects the patient’s finances. Mark the patient’s account so that it is easily identifiable as a collection agency account. Follow office policies and procedures for handling subsequent patient payments.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 59 Litigation is in order when… The patient can afford to pay without hardship. The physician can produce office records that support the bill. The physician can justify the amount of the bill by comparing it with fee practices in the community.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 60 Litigation is in order when… The patient’s general condition after treatment is satisfactory. The persuasive powers of an ethical collection agency have been exhausted. The patient can be given ample warning of the physician’s intent to sue.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 61 Litigation is in order when… The defendant is legally liable for the services rendered to the patient. The statute of limitations has ruled out any possible malpractice action. The physician is not indignant or in a negative frame of mind.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 62 Summary of Scenario Be professional when dealing with all patients. Work with patients in collecting account balances. Remember that businesses operate to make a profit or earn money. Be a flexible employee.
Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 63 Closing Comments Billing and collecting are critical duties in the physician’s office. Maintain a positive attitude. Patients may not be at their best when discussing payments. Most patients want to pay their accounts.