1. Collections in the Medical Office10
Collections in the Medical Office

2. Learning Outcomes When you finish this chapter, you will be able to:
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When you finish this chapter, you will be able to:
10.1  Explain the importance of prompt follow-up on insurance claims.
Summarize the importance of a financial policy in a medical office.
10.3  Identify the laws that regulate collections from patients.
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.

3. Learning Outcomes (continued)
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When you finish this chapter, you will be able to:
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.

4. Key Terms 10-4 collection agency collection list
collection tracer report
payment plan
prompt payment laws
Tickler
timely filing
uncollectible accounts
write-off
Teaching Notes:
Have students define all key terms as an assignment. Then, in class, ask each student to define one key term aloud.
Optional assignment: Have students do an Internet search of one key term and write a short paragraph describing what they learned about that term from looking at a few websites.

5. 10.1 Following Up On Insurance Claims
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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; if they are not, financial penalties are levied against the payer.
Timely filing is the requirement that claims must be submitted to payers within a specific number of days from the date of service.
Learning Outcome: 10.1 Explain the importance of prompt follow-up on insurance claims.
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Teaching Notes:
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.
An example of a prompt payment law is the 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.

6. 10.2 The Importance of a Financial Policy
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The collection process begins with a clear financial policy and effective communications with patients about their financial responsibilities.
Most patients pay their bills, but every practice has some patients who do not. 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.
Learning Outcome: 10.2 Summarize the importance of a financial policy in a medical office.
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Teaching Notes:
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.

7. 10.2 The Importance of a Financial Policy (continued)
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It is important to have a written financial policy that spells out patients' responsibilities.
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.
Collecting payments for services not covered by insurance.
Collecting prepayments for services.
Accepted different methods of payment.
Learning Outcome: 10.2 Summarize the importance of a financial policy in a medical office.
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Teaching Notes:
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.

8. 10.3 Laws Governing Patient Collections
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Patient collections are consumer collections and are regulated by federal and state laws.
Collections from insurance carriers are considered business collections.
The Fair Debt Collection Practices Act of 1977 and the Telephone Consumer Protection Act of 1991 regulate debt collections, forbidding unfair practices.
Learning Outcome: 10.3 Identify the laws that regulate collections from patients.
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Teaching Notes:
Explain to the students that collection laws were enacted to protect consumers from harassment from bill collectors.

9. 10.3 Laws Governing Patient Collections (continued)
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10.3 Laws Governing Patient Collections (continued)
General guidelines forbidding unfair practices include the following:
No calls before 8 A.M. or after 9 P.M.
No threats or profane language
Respect for patient privacy
No deception or violence
Learning Outcome: 10.3 Identify the laws that regulate collections from patients.
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Teaching Notes:
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. 10.3 Laws Governing Patient Collections (continued)
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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.
The Truth in Lending Act applies if the practice adds finance charges and the payments are made in more than four installments.
Learning Outcome: 10.3 Identify the laws that regulate collections from patients.
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Teaching Notes:
If no finance charges are applied to unpaid balances, the 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.

11. 10.4 Working with Collection Agencies
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A collection agency is an outside firm hired to collect on delinquent accounts.
The practice no longer contacts the patient if the account is turned over to a collection agency.
Collection agencies are 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.
The agency provides a statement that shows which patient accounts have paid and the amounts of the payments.
Learning Outcome: 10.4 Demonstrate how to post a payment from a collection agency.
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Teaching Notes:

12. 10.4 Working with Collection Agencies (continued)
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Transaction Entry dialog box after collections payment is entered
Learning Outcome: 10.4 Demonstrate how to post a payment from a collection agency.
Pages:
Teaching Notes:
Have the students complete Exercise 10-1.

13. 10.5 Writing Off Uncollectible Accounts
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When all collection attempts are exhausted, the collection process is ended.
An uncollectable account is an account that does not respond to collection efforts and is written off the practice’s expected accounts receivable.
A write off is a balance that has been removed from a patient’s account.
Learning Outcome: 10.5 Discuss the process of writing off uncollectible accounts.
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Teaching Notes:
In the Medicare and Medicaid programs, it is fraudulent to forgive or write off any payments that beneficiaries are responsible for, such as copayments and coinsurance.
Have the students give examples of when they believe a practice should write off a balance on a patient’s account.

14. 10.5 Writing Off Uncollectible Accounts (continued)
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Transaction Entry dialog box after write-off is entered
Learning Outcome: 10.5 Discuss the process of writing off uncollectible accounts.
Pages:
Teaching Notes:
Have the students complete Exercise 10-2.

15. 10.6 Using a Patient Aging Report for Collections
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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 121 days
Learning Outcome: 10.6 Explain how to use a patient aging report to identify past due accounts.
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Teaching Notes:
A collection list is 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.

16. 10.6 Using a Patient Aging Report for Collections (continued)
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Sample patient aging report
Learning Outcome: 10.6 Explain how to use a patient aging report to identify past due accounts.
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Teaching Notes:
Have the students complete Exercise 10-3.

17. 10.7 Adding an Account to the Collection List
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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.
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Teaching Notes:
The Collection List is located on Activities menu.

18. 10.7 Adding an Account to the Collection List (continued)
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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.
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Teaching Notes:
Have the students give examples of why ticklers are important in a medical office.

19. 10.7 Adding an Account to the Collection List (continued)
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Additional information available in the Patient field of the Collection List dialog box
Learning Outcome: 10.7 Demonstrate how to add an account to the collection list.
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Teaching Notes:
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.

20. 10.7 Adding an Account to the Collection List (continued)
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Tickler Item dialog box
Tickler tab
Office Notes tab
Learning Outcome: 10.7 Demonstrate how to add an account to the collection list.
Pages:
Teaching Notes:
Have the students complete Exercise 10-4.

21. 10.8 Creating Collection Letters
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Before collection letters can be sent in Medisoft:
A patient-responsible tickler item for the patient’s account must be entered in the collection list.
A collection letter report must be created.
This report is generated when the Patient Collection Letters option is selected on the Collection Reports submenu of the Reports menu.
When an account is added to the collection list, the current balance for the tickler is determined. Once recorded in the tickler, it is not updated when new transactions are entered in the program.
Learning Outcome: 10.8 Demonstrate how to create a collection letter.
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Teaching Notes:
Have the students write a collection letter for a medical practice and read it in class.

22. 10.8 Creating Collection Letters (continued)
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Patient Collection Letters selected on the Collection Reports submenu
Learning Outcome: 10.8 Demonstrate how to create a collection letter.
Pages:
Teaching Notes:
Have the students explain why collection letters are important and give their opinion as to their effectiveness.

23. 10.8 Creating Collection Letters (continued)
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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:
Teaching Notes:
Explain the importance of the Patient Collection Report.

24. 10.8 Creating Collection Letters (continued)
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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
Learning Outcome: 10.8 Demonstrate how to create a collection letter.
Pages:
Teaching Notes:
Explain the importance of the account alert abbreviations.

25. 10.8 Creating Collection Letters (continued)
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Transaction Entry dialog box with account alert message displayed
Learning Outcome: 10.8 Demonstrate how to create a collection letter.
Pages:
Teaching Notes:
Have the students complete Exercise 10-5.

26. 10.9 Creating a Collection Tracer Report
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A collection tracer report is a tool for keeping 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
Learning Outcome: 10.9 Demonstrate how to create a collection tracer report.
Pages:
Teaching Notes:
Have the students complete Exercise 10-6.

27. 10.9 Creating a Collection Tracer Report (continued)
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Collection Tracer Report
Learning Outcome: 10.9 Demonstrate how to create a collection tracer report.
Pages:
Teaching Notes:
Have the students complete Applying Your Skills 13 and 14.