CHAPTER © 2011 The McGraw-Hill Companies, Inc. All rights reserved. 17 Patient Billing and...

CHAPTER

© 2011 The McGraw-Hill Companies, Inc. All rights reserved.

17Patient Billing and

Collections


17-2

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.


17-3

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.


17-4

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


17-5

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


17-6

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


17-7

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


17-8

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


17-9

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


17-10

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?


17-11

Accepting Payment (cont.)

• Cash– Count money carefully– Record payment on

ledger– Give patient a receipt

• Check – Check date and

amount– Be sure check is

properly filled out– Endorse it immediately


17-12

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


17-13

Pegboard System

• Not often used

• Post payment on ledger card

• Generates receipt at same time


17-14

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


17-15

Determining Payment Responsibility (cont.)


17-16

Apply Your Knowledge

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.


17-17

Preparing Invoices

• Preparing and mailing– 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 – photocopyand send to patient


17-18

Preparing Invoices (cont.)

• Generating computer invoice – print invoice for balance due

• Using independent billing services

• Sending invoices electronically


17-19

Using the Superbill

• Encounter form– Includes

• 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


17-20

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


17-21


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!


17-22

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


17-23

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


17-24

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


17-25

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


17-26

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 SampleAge Analysis


17-28

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


17-29

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


17-30

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


17-31

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


17-32

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


17-33


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.

Mr. Jansen has not paid his bill for an office visit three months ago. What will guide your attempt to collect this debt?

Correct!


17-34

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


17-35

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


17-36

Extending Credit

• Unilateral decision– 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


17-37


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!


17-38

Common Collection Problems


17-39


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!


17-40

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.


17-41

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.


17-42

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.


17-43

End of Chapter 17

Remember that credit is money.

~ Benjamin Franklin

CHAPTER © 2011 The McGraw-Hill Companies, Inc. All rights reserved. 17 Patient Billing and...

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