Lecture Medical assisting: Administrative and clinical procedures with anatomy and physiology (4/e) – Chapter 17

Chapter 17 - Patient billing and collections. After studying this chapter you will be able to: Discuss the importance of accounts receivable to a medical practice, explain how to accept and account for payment from patients, prepare an invoice, manage a billing cycle efficiently,...

Patient Billing and

Collections

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.

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

– Third-party payers (insurance carriers) – Payment plans

– Some have large outstanding

balances

A proper understanding and administration of billing and

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

Determine Appropriate Fee

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

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

– Pad of charge slips on physician’s desk

– Given to doctor with patient record at time of

appointment

Accepting Payment

• Complete charge slip

and request payment

• Most practices accept:

$50.  How would  you like to pay?

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

Accepting Payment (cont.)

– Prompt payment and reduces

expense of mailing bills– Costs practice a percentage of each

charge– Check expiration date before

processing

Pegboard System

• Not often used

• Post payment on ledger

card

• Generates receipt at same

time

Determining Payment Responsibility

• Third-party liability – responsibility

of insurance company to pay

Determining Payment Responsibility (cont.)

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.

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 – p hotocopy

and send to patient

Preparing Invoices (cont.)

• Generating computer invoice – p rint invoice for

balance due

• Using independent billing services

• Sending invoices electronically

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

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

Apply Your Knowledge

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!

Standard Collection Procedures

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

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

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

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 Sample Age Analysis

Sample Age Analysis

Back

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

Laws Governing Debt Collection ( cont )

• Telephone Consumer Protection Act of 1991

– Protects against unwanted telephone

solicitations (telemarketing)– Prohibits

• Automated dialing device for calls

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

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

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

Apply Your Knowledge

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!

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

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

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

Apply Your Knowledge

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

Common Collection Problems

Apply Your Knowledge

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!

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

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 payment or to set up a payment arrangement

non-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

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

End of Chapter 17

Remember that credit is money  

~ Benjamin Franklin