Medical assisting Administrative and clinical procedures (5e) Chapter 20 Patient billing and collection

The learning objectives for this chapter include: Describe accounts receivable and accounts payable and the common payment methods accepted in medical practices today; identify the different types of documents used as statements to bill patients and how these documents are used in cycle billing; compare open book, writtencontract, and singleentry accounts, and purpose of creating an accounts receivable aging;...

Patient Billing and

Collection

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

Learning Outcomes (cont.)

20.4 Explain the purposes of the following credit and

collections acts: ECOA, FCRA, and FDCPA, and

TLA

20.5 Relate the required components of a Truth in

Lending statement

20.6 Summarize two common types of problem collection

accounts in the medical office

• You must understand and administer

billing as well as payment collection

methods

Patient Payments in the Office

• Management of

– Accounts receivable (A/R)

– Accounts payable (A/P)

• Billing and collections – vital tasks

• Copayment – immediate collection

Accepting Patient Payment

• Enter charges for

How would you like to pay?

Accepting Patient Payment (cont.)

• Debit card

– Immediate transfer of funds

– Processed like credit card

Accepting Patient Payment (cont.)

• Credit card

– Check expiration date

– Keep signed receipt, give patient a copy

– Transaction fee ~ adjust patient account

– On-line payments

– Divorce

• Elderly patients and patients with disabilities

– Consent

– Proof of guardianship

Payment Responsibility (cont.)

• Professional courtesy

– Waived charges or accept amount that the insurance pays

– Must collect copayments

Apply Your Knowledge

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.

Standard Billing Procedures

• Preparing statements

– Practice contact information

– Patient name and address

Standard Billing Procedures (cont.)

• Manual statements

• Ledger card

• Computer generated statements

• Independent billing service

• Superbill

Managing Billing Cycles

• Cycle billing

– Bills each patient monthly

– Staggers billing workload

– More even cash flow

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.

Excellent!

Standard Collection Procedures

Standard Collection Procedures (cont.)

• Statute of limitations and account types

– Open-book account ~ l ast 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

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

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

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

Preparing an Age Analysis (cont.)

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

Apply Your Knowledge

Laws That Govern Credit and Collection

• Fair Debt Collection Practices Act of 1977

– Governs collection of unpaid debts

– 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

( cont )

• Telephone Consumer Protection Act

– Protects against telemarketing

– Prohibits

• Automated dialing to certain numbers

• Prerecorded calls to homes

• Unsolicited advertising via fax

– Most provisions do not apply to medical

practices

• Professional guidelines

– AMA ~ appropriate to assess finance charges

or late charges on past-due accounts if the patient is notified in advance

– The physician must adhere to federal and

state guidelines

Using Outside Collection Agencies

• Avoid those that use harsh or harassing

collection practices

• Once agency has the account

– No further contact with the patient

– Maintain list of files sent for collection

– Practice decides how best to deal with the

account

Insuring Accounts Receivable

• Protects the practice from lost income

– Nonpayment

– Destruction of A/R records

• Protects cash flow and ensures that the

practice will have funds to cover expected

expenses

Apply Your Knowledge

What law governs the methods that can be used

to collect unpaid debts?

ANSWER: The Fair Debt Collection Practices Act of

1977

Right!

Credit Arrangements

• Credit – extended by physician

• Equal Credit Opportunity Act

– Reasons for not denying credit

– Must tell patient why credit was denied

– Perform a credit check

Credit Arrangements (cont.)

• Performing a credit check

– Verify employment

– Credit bureau report

• Fair Credit Reporting Act

Credit Arrangements (cont.)

• Unilateral Agreement

– Physician agrees to patient offer

– Not subject to Truth in Lending Act

• Mutual Agreement

– Between patient and physician

– Subject to Truth in Lending Act

• Finance charges

• More than four payments

Truth in Lending Act

• Consumer Credit Protection Act

• Credit agreements of more than four

payments

• The practice must

– Discuss agreement with patient

– Sign and retain disclosure statement

Truth in Lending Act (cont.)

• Disclosure statement

– Truth in Lending Statement

– Agreement on payment terms

• Total amount of debt

• Down payment and payment amount

• Final due date

• Interest rate and total finance charges

Apply Your Knowledge

Match:

Credit cannot be denied based on

sex, race, religion, etc

Provides a credit history

Not regulated by the Truth in

Lending Act

Bilateral agreement between the

patient and physician

Covers credit agreements of more

than four payments

Description of agreed terms of

Common Collection Problems

• Hardship cases

– ECOA – all patients in the same

circumstances must be afforded the same consideration

– May refer to clinics that provide free or

reduced-fee services

Common Collection Problems (cont.)

• Patient relocation and address changes

– Skips

– Telephone or e-mail

– Ask post office for forwarding address

– Keep all returned statements

and envelopes as proof

of reasonable attempts

to collect

Apply Your Knowledge

What is a “skip”?

ANSWER: A patient who moves without leaving a

forwarding address to which the office can sent a

statement of unpaid charges.

Yes !

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

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

In Summary (cont.)

20.4 ECOA is the Equal Credit Opportunity Act It

prohibits discrimination against loan applicants

The Fair Credit Reporting Act (FCRA) requires credit bureaus supply correct and complete information to businesses to use in evaluating a person’s

application for credit, insurance, or a job

The Fair Debt Collections Practices Act or FDCPA requires debt collectors to treat debtors fairly and prohibits certain collection tactics

The Truth in Lending Act requires creditors to provide applicants with accurate and complete credit costs and terms

In Summary (cont.)

20.5 The Truth in Lending Statement must include the

following elements: amount of total debt, amount of the down payment, amount of each payment and date due, due date for the final payment, interest rate, expressed as an annual percentage rate, and total finance charges

20.6 The two most common types of collection problems

in the medical office are hardship cases, who simply cannot afford to pay their debt, and accounts known

as skips, where the debtor moved and left no valid forwarding information so it is not possible to bill the patient

End of Chapter 20

Remember that credit is money.

~ Benjamin Franklin