1. Patient Billing and Collection20
Patient Billing and Collection

2. Learning Outcomes (cont.)
20.1 Describe accounts receivable and accounts payable and the common payment methods accepted in medical practices today.
20.2 Identify the different types of documents used as statements to bill patients and how these documents are used in cycle billing.
20.3 Compare open book, written-contract, and single- entry accounts, and purpose of creating an accounts receivable aging.

3. Introduction Payment arrangements
Third-party payers
Balance billing
Payment plans
Outstanding balances
You must understand and administer billing as well as payment collection methods
Learning Outcomes: Describe accounts receivable and accounts payable and the common payment methods accepted in medical practices today.
Medical practices have customers who have various payment arrangements including third-party payers, balance billing of the patient, patients who require payment plans, and others who have large outstanding balances.
A proper understanding and administration of billing for all of these patient situations, as well as payment collection methods is needed.

4. Patient Payments in the Office
Management of
Accounts receivable (A/R)
Accounts payable (A/P)
Billing and collections – vital tasks
Copayment – immediate collection
Learning Outcomes: Describe accounts receivable and accounts payable and the common payment methods accepted in medical practices today.
Basic administrative functions involve managing accounts receivable and accounts payable.
Accounts receivable (A/R) – income, or money, owed to the business.
It represents the money patients and insurance companies owe in return for medical services.
Accounts payable (A/P) – money owed by the business. It is the money the medical practice must pay out to run the practice.
Billing and collections are vitally important tasks. They convert the practice’s accounts receivable into income from which the accounts payable can be paid.
You will need to know about standard payment, billing, and collection procedures as well as credit arrangements and common problems in collecting payments.
Collect the copayment at each visit. Immediate patient payment brings income into the practice faster and saves the cost of preparing and mailing statements and collection of past-due accounts.

5. Accepting Patient Payment
For today’s visit, the total charge is $50. How would you like to pay?
Enter charges for services provided
Most practices accept
Cash
Check
Credit cards
Insurance
Learning Outcomes: Describe accounts receivable and accounts payable and the common payment methods accepted in medical practices today.
When the patient comes to you at the completion of his visit with the superbill, enter the charges for the services provided and ask for payment.
Do not ask the patient if he would like to pay for the service now. This leaves him open to say, “No, bill me,” which will slow your cash flow and cost the practice the expense of sending a billing statement.

6. Accepting Patient Payment (cont.)
Cash
Count money carefully
Record payment
Give patient a receipt
Check
Check id
Check date and amount
Endorse it immediately
Debit card
Immediate transfer of funds
Processed like credit card
Learning Outcomes: Describe accounts receivable and accounts payable and the common payment methods accepted in medical practices today.
Cash
Record the payment on the patient’s ledger card or, with a computerized system, credit the patient’s account.
Be sure to keep a copy of the patient receipt for the practice.
Place money in cash drawer.
Check
Always ask for proof of identity if you do not know the person writing the check.
Verify that the check is dated for the current date and signed.
Endorse it immediately and place it with other checks for the day’s deposit.
If a check is returned for nonsufficient funds (NSF), notify the patient immediately and request payment in full by another method.
The office is also allowed to charge the patient an additional fee for the expense of processing the NSF check.
Debit Card
Processed like a credit card using like an electronic reader.
If there are insufficient funds in the account, the transaction will be refused and other arrangements can be made immediately.

7. Accepting Patient Payment (cont.)
Credit card
Check expiration date
Keep signed receipt, give patient a copy
Transaction fee ~ adjust patient account
On-line payments
Learning Outcomes: Describe accounts receivable and accounts payable and the common payment methods accepted in medical practices today.
Credit Card  
Advantages
Prompt payment from the credit card company
Reduces the amount of time and money spent on preparing and mailing statements, thus decreasing expenses.
Disadvantage – the credit card company deducts a percentage of each transaction for its collection service
The AMA suggests several guidelines.
Do not set higher fees for patients who pay by credit card.
Do not encourage patients to use credit cards for payment.
Do not advertise outside the office that the practice accepts credit cards.
You will need to adjust the amount withheld by the credit card company so the patient is not inadvertently billed for this charge.
On-line Payments - practices that accept credit and debit card payments are may also accept payments on line through their websites.

8. Payment Responsibility
Guarantor
Minors
Parents or person with legal custody
Emancipated minor
Divorce
Elderly patients and patients with disabilities
Consent
Proof of guardianship
Learning Outcomes: Describe accounts receivable and accounts payable and the common payment methods accepted in medical practices today.
The guarantor
The person with financial responsibility for the patient.
A patient who is 18 or over is legally considered to be his own guarantor even if someone else is the person who carries the insurance for the family.
Responsibility for Minors
Usually only one parent is listed on the patient’s account as the guarantor.
With legal proof of emancipation the emancipated minor is responsible for payment.
Divorced couple – assume that the parent bringing the patient to the office has consent ability and payment responsibility.
Elderly Patients and Patients with Disabilities
You must obtain written consent from the patient and the person accepting responsibility for payment.
If the patient has been found to be incompetent, request proof of legal guardianship prior to sending a bill to the guardian and place a copy in the patient’s financial file.
Check your practice’s policies for specifics on how to handle these situations correctly.

9. Payment Responsibility (cont.)
Professional courtesy
Waived charges or accept amount that the insurance pays
Must collect copayments
Learning Outcomes: Describe accounts receivable and accounts payable and the common payment methods accepted in medical practices today.
Professional courtesy
Other doctors and their families
Staff members and their families
Other healthcare professionals
Clergy members
If the patient is part of a managed care organization or has Medicare, the provider must collect any copayment or deductible as part of the contracted agreement with the insurance carrier.
It is considered fraud to consistently not collect copayments or deductibles if the collection of such payments is stipulated in the provider-insurer contract.
Follow the office policy regarding provision of professional courtesy.

10. Apply Your Knowledge Good Job!
What is the difference between accounts receivable and accounts payable?
ANSWER: Accounts receivable is the money owed to the medical practice and accounts payable is the money owed by the medical practice.
Learning Outcomes: Describe accounts receivable and accounts payable and the common payment methods accepted in medical practices today.
Good Job!

11. Standard Billing Procedures
Preparing statements
Practice contact information
Patient name and address
Guarantor’s name
Balance
Itemized list of services and charges
Payments received
Total balance due
Learning Outcome: Identify the different types of documents used as statements to bill patients and how these documents are used in cycle billing.
As the medical assistant, part of your duties may include preparing patient billing statements and establishing and maintaining billing cycles.
Preparing Statements
Obtain information for the statement from the patient ledger card or from the patient’s computerized account
Enclose a self-addressed envelope with the statement

12. Standard Billing Procedures (cont.)
Manual statements
Ledger card
Computer generated statements
Independent billing service
Superbill
Learning Outcome: Identify the different types of documents used as statements to bill patients and how these documents are used in cycle billing.
Manual Statements – each procedure and associated CPT code should be listed .
The Patient’s Ledger Card as a Statement – photocopy the patient’s ledger card.
Computer Generated Statements 
Statements can be produced using an electronic billing program
Follow the instructions in the software procedure manual.
Using an Independent Billing Service – may copy ledger cards or produce computer-generated statements which are the service mails to patients, usually with an envelope for sending payment directly to the provider’s office.
Using the Superbill as a Statement
Lists the charges and procedure codes (CPT) for services rendered on that day, including appropriate diagnoses and codes (ICD-9).
As a carbonless form, an automatic receipt and first statement are generated as charges and payments are entered.
Refer to Procedure 20-1 Using the Superbill as Bill/Receipt

13. Managing Billing Cycles
Cycle billing
Bills each patient monthly
Staggers billing workload
More even cash flow
Learning Outcome: Identify the different types of documents used as statements to bill patients and how these documents are used in cycle billing.
Smaller practices send out their statements monthly.
Larger practices tend to spread the billing process out over the month in a process known as cycle billing.
Statement mailing dates are staggered.
Example – bills are sent on the
5th of the month to patients with last names beginning A through D
10th of the month – patient with last names beginning E through H, etc.
Using cycle billing
Staggers the work load
Spreads out the payments coming into the office resulting in a more even cash flow.

14. Excellent! Apply Your Knowledge What is cycle billing?
ANSWER: Cycle billing is a system in which each patient is billed only once a month but groups of patients are billed every few days. It spreads the work of billing over the month.
Learning Outcome: Identify the different types of documents used as statements to bill patients and how these documents are used in cycle billing.
Excellent!

15. Standard Collection Procedures
Collection of payment is guided by
Laws
Professional standards
Guidelines
Statute of Limitations
Learning Outcome: Compare open book, written-contract, and single-entry accounts, and purpose of creating an accounts receivable aging.
When a patient does not pay his bill during the standard period, you need to take steps to collect the payment.
Statute of limitations
The time limit defining when a collection suit on a past-due account can legally be filed.
Varies by type of account and by state.

16. Standard Collection Procedures (cont.)
Statute of limitations and account types
Open-book account ~ last payment date or charge for each illness
Written-contract account
Payment agreement stipulated
Regulated by Truth in Lending Act
Single-entry account ~ shorter time limits
Learning Outcome: Compare open book, written-contract, and single-entry accounts, and purpose of creating an accounts receivable aging.
Open-Book Account
Left open to charges that are made on an intermittent basis.
Uses the last payment date or the date of the last charge for each illness as the start date to determine the time limit for that specific debt.
Written-Contract Account
The physician and patient sign an agreement regarding the treatment and the payment agreement.
Written-contract accounts are regulated by the Truth in Lending Act.
Single-Entry Account
Consists of only one charge.
Some states impose shorter time limits on single-entry accounts than on open-book accounts.

17. Using Collection Techniques
Initial telephone calls or letters
Friendly and sympathetic
Call the patient at home
Assume the patient forgot
Ask for full amount
Acceptable amount
Expected payment date
Learning Outcome: Compare open book, written-contract, and single-entry accounts, and purpose of creating an accounts receivable aging.
Initial telephone calls or letters
Made or sent if payment has not been received after 30 to 45 days .
Any statement mailed is essentially the second notice of payment due since patient received superbill at time of service.
First mailed statement usually contains a message that is friendly in tone.
Assume that the patient forgot to pay or was temporarily unable to pay. Ask for the full amount due but have a minimum amount you would accept in mind.
If patient cannot afford full payment, ask what amount could be sent and obtain a date you can expect to receive the payment.
If you do not receive the payment within 24 hours of the stated date, a phone call may be made and another statement sent.
The message on this statement will be more urgent in tone because the patient did not respond to your phone call and the tone of any subsequent communication will be still more urgent.

18. Using Collection Techniques (cont.)
Follow-up statements and collection letters
60 days past due – friendly but firm
90 days past due – stronger wording
120 days or more past due
Final letter
Verify cutoff date on ledger card
Send certified/return receipt
Learning Outcome: Compare open book, written-contract, and single-entry accounts, and purpose of creating an accounts receivable aging.
60 days past due
Initial letter of inquiry
Give the patient options to take care of his obligation, but makes it clear that he must take some sort of action.
120 days or more past due
A final letter
Account will be given to a collection agency.
Check cutoff date on ledger card; do not threaten to send an account to a collection agency unless it will actually be sent on that cutoff date
This collection letter should be mailed by certified mail with return receipt.

19. Preparing an Age Analysis
The process of classifying and reviewing past-due accounts by age from the first date of billing
Use patient ledger cards and color-coded tags to indicate the number of days past due
List all patients’ account balances and when the charges originated
Learning Outcome: Compare open book, written-contract, and single-entry accounts, and purpose of creating an accounts receivable aging.
Preparing an Age Analysis helps you keep on top of past-due accounts and determine which ones need follow-up.
Most computer billing programs can generate an age analysis automatically.
Offices that use ledger cards to track patient accounts often have a procedure to track how long since the last payment has been received.

20. Preparing an Age Analysis (cont.)
Accounts Receivable – Age Analysis
Date: October 1, 20XX
Patient
Balance
Date of Charges
Most Recent Payment
30 days
60 days
90 days
120 days
Remarks
Black, K.
120.00
5/24
75.00
45.00
3rd notice
Brown, R.
66.00
8/30
65.00
Green, C.
340.00
8/25
Medicare filed
Jones, T.
500.00
6/1
6/30
125.00
250.00
Perry, S.
150.00
7/28
1st notice
Smith, J.
375.00
6/15
7/1
2nd notice
White, L.
200.00
6/24
7/5
20.00
30.00
Learning Outcome: Compare open book, written-contract, and single-entry accounts, and purpose of creating an accounts receivable aging.
Use a spread sheet
Include the patient’s name
Balance due
Date of charges
Date of most recent payment
How long each part of the balance has been “waiting” on the A/R.
Action the office has taken in attempting to collect this debt
Refer to Procedure 20-2 Preparing an Age Analysis

21. Apply Your Knowledge Correct! True or False:
An open-book account consists of only one charge.
A written-contract account is regulated by the Truth in Lending Act.
A single-entry account might be used for a person who will not become a regular patient.
The statute of limitations sets an amount limit on when an account can be filed as past due.
An age analysis is a process for reviewing past-due accounts by age from the first date of billing.
ANSWER:
single-entry F T T
Learning Outcome: Compare open book, written-contract, and single-entry accounts, and purpose of creating an accounts receivable aging. F
time T

22. In Summary
 20.1 Accounts Receivable refers to the money that is owed to the practice.
Accounts Payable refers to the money that the practice owes other vendors.
Common payment methods include cash, check, and debit and credit cards.
20.2 Common statement documents include the use of superbills, typed or computer-produced itemized statements, and copies of ledger cards.
In cycle billing the accounts are split in groups and statement mailing dates are staggered.
20.1 Accounts Receivable refers to the money that is owed to the practice (able to be received).
Accounts Payable refers to the money that the practice owes other vendors (able to be paid).
Common payment methods accepted by medical practices include cash, check, and debit and credit cards.

23. In Summary (cont.)
20.3 An open-book account consists of periodic charges and payments added as needed when patients are seen in the practice.
A written-contract account is used when the physician and patient sign a contract for a specific service or procedure.
A single-entry account is one used for patients when it is expected they will be seen only once, such as for a relative visiting the area on vacation.
An age analysis is the process of classifying and reviewing past-due accounts by age from the first date of billing.
20.3 An open-book account is the account type most commonly found in a medical practice, consisting of periodic charges and payments added as needed when patients are seen in the practice.
A written-contract account is used when the physician and patient sign a contract for a specific service or procedure.
A single-entry account is one used for patients when it is expected they will be seen only once, such as for a relative visiting the area on vacation.
An age analysis is the process of classifying and reviewing past-due accounts by age from the first date of billing. It helps you keep on top of past-due accounts and determine which ones need follow-up.

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