CHAPTER 17 Patient Billing and Collections © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 1710 Accepting Payment • Complete charge slip and request payment • Most practices accept: – – – – For today’s visit, the total charge is $50 How would you like to pay? Cash Check Credit cards Insurance © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d Laws Governing Debt Collection (cont.) 1729 • 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 not apply to medical practices © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d Observing Professional Guidelines for Finance Charges and Late Charges 1730 • 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d Using Outside Collection Agencies 1731 • 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d Insuring Accounts Receivable 1732 • 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 1733 Apply Your Knowledge Mr Jansen has not paid his bill for an office visit three months ago What will guide your attempt to collect this debt? 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 Correct! © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 1734 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d Laws Governing Extension of Credit 1735 • 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 1736 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 1737 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d Common Collection Problems 1738 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 1739 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! © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 1740 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 1741 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 nonpayment 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 1742 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 © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d 1743 End of Chapter 17 Remember that credit is money ~ Benjamin Franklin © 2011 The McGraw -Hill Com panies, Inc A ll rights reserv e d