1. Patient Billing and Collections
Chapter 15
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2. Learning Outcomes After studying this chapter, you should be able to:
15.1 Discuss the ways practices explain their financial policies to patients.
15.2 Describe the purpose and content of patients’ statements and the procedures for working with them.
15.3 Compare individual patient billing and guarantor billing.
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3. Learning Outcomes (Continued)
15.4 Discuss the responsibilities of a collection specialist, and describe other positions that are typically part of the billing and collections function.
15.5 Describe the processes and methods used to collect outstanding balances due to the medical practice.
15.6 Explain how the medical practice can pursue patients who have not paid their overdue bills.
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4. Learning Outcomes (Continued)
15.7 Discuss the tools that can be used to locate unresponsive or missing patients.
15.8 Describe the procedures for clearing uncollectible balances from the practice’s accounts receivable.
15.9 Explain the purpose of a retention schedule and the requirements for retaining patient information.
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5. Key Terms Bankruptcy Bad debt Collection agency Collections
Collections specialist
Credit bureaus
Credit reporting
Cycle billing
Day sheet
Embezzlement
Fair and Accurate Credit Transaction Act (FACTA)
Fair Credit Reporting Act (FCRA)
Fair Debt Collection Practices Act of 1977 (FDCPA)
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6. Key Terms (Continued) Guarantor billing Identity-theft red flag
Means test
Patient aging report
Patient refunds
Patient statement
Payment plan
Prepayment plan
Retention schedule
Skip trace
Telephone Consumer Protection Act of 1991
Truth in Lending Act
Uncollectible account
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7. Patient Billing and Collections
As the last steps in the billing process, they involve:
Generating and mailing patient statements to show the balances that patients owe
Posting patients’ payments
Examining aging reports for patients’ accounts and handling collections
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8. Patient Billing
A practice’s financial policy tells patients how the following will be handled:
Collection of copayments, deductibles, and past-due balances
Financial arrangements for unpaid balances
Charity care or low-income patient payments
Payments for services not covered by insurance
Prepayment for services
Day-of-service discounts
Acceptance of cash, checks, money orders, and credit or debit cards
Any special circumstances
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9. Patient Statements
When a claim is filed, and the resulting payment from the patient’s insurance carrier is posted, based on the RA/EOB:
The payer’s payment for each reported procedure is entered.
The amount the patient owes for each reported procedure is calculated.
If any part of a charge must be written off due to a payer’s required adjustment, this amount is also entered.
Also, the PMP updates the day sheet—a summary of the daily financial transactions for the practice.
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10. The Content of Statements
Patient statements include information about:
The name of the practice and the patient’s name, address, and account number
A cost breakdown of all services provided
An explanation of the costs covered by the patient’s payer(s)
The date of the statement
The balance due
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11. Guarantor Billing
Offers the following advantages over individual billing:
Reduces the amount of time and money spent on billing by reducing paper and mailing costs and by reducing time spent on billing follow-up
Allows the practice to prioritize its accounts receivable and collection efforts by combining several small bills into one large bill
Improves patient satisfaction because patients will not receive multiple calls and letters
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12. Organizing for Effective Collections
A patient may not pay a bill for several reasons:
The patient thinks the bill is too high
The patient thinks the care rendered was not appropriate or effective
The patient has personal financial problems
The bill was sent to an incorrect address
There is a misunderstanding about the amount the patient’s insurance pays on the bill
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13. Staffing Assignments
Each practice’s billing and collection efforts must be organized for efficiency
Small offices may assign collections duties to coders or billers on certain days of the week
Large practices may have separate collections departments with these typical job functions:
Billing/collections manager
Bookkeeper
Collections specialist
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14. Billing/Collections Manager
Either a physician, a practice administrator, an office manager, or a collections manager handles these tasks:
Create and implement the practice’s collection policies for all involved employees
Monitor the results of collections activities
Organize the accounts and develop strategies
Assist and train collections specialists
Supervise and evaluate collections specialists
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15. The Bookkeeper
Managing the finances of the medical practice is a complicated task, and most practices choose to dedicate an employee to this responsibility
Makes sure that all funds coming into and owed to the practice are accurately recorded
An outside accountant usually audits this work periodically
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16. The Collections Specialists
Collections specialists are trained to work directly with the practice’s patients to resolve overdue bills
They are held accountable for their results
Some practices provide incentives such as additional pay, prizes, or paid time off work
They must always remember to act ethically and professionally
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17. Avoiding Opportunities for Fraud
Practices can decrease opportunities for fraud by:
Dividing financial tasks among several people with different responsibilities
Involving at least two or more people
Depositing funds daily and having two people responsible for closing a day’s financial records
Bond or theft insurance may be purchased
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18. Collection Regulations
The Federal Trade Commission enforces the Fair Debt Collection Practices Act of 1977 (FDCPA) and the Telephone Consumer Protection Act of 1991, and their guidelines include these rules:
Contact patients only once daily, and leave no more than three messages per week
Do not call a patient before 8 A.M. or after 9 P.M.
Do not threaten the patient or use profane language
Do not discuss the patient’s debt with another person
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19. Collections Procedures
The medical office tracks overdue bills by reviewing the patient aging report
The patient aging report includes the patient’s name, most recent payment, remaining balance
It also divides the information into categories based on each statement’s beginning date:
1. Current or up to date: Thirty days
2. Past due: Thirty-one to sixty days
3. Past due: Sixty-one to ninety days
4. Past due: More than ninety days
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20. Collections Letters
For most patients, the collections letter is the first notice that their bill is past due. Collections letters should:
Be professional, courteous, brief, and to the point
Remind the patient of the practice’s payment options and their financial responsibility
Become more aggressive for accounts that are farther past due
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21. Collections Call Strategies
General strategies for collections specialists to follow on patient phone calls include:
Be straightforward, honest, and informative
Maintain a professional attitude
Allow time for the patient to respond, and do not provide excuses for the patients
Stay in control off the conversation
Do not intimidate, yell, or be disrespectful
After the call, the conversation is documented, using standard abbreviations such as HU for “hung up.”
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22. Credit Arrangements and Payment Plans
Practices may decide to extend credit by:
Setting up prepayment plans based on an estimate of charges
Allowing patients to pay their bills over time via a payment plan
Following Truth in Lending Act if more than four installments are planned
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23. Credit Counseling
Consumer credit counseling services and debt management programs are nonprofit organizations that can assist patients struggling to pay their bills
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24. Collection Agencies
These reasons could force a practice to send patients’ bills to a collection agency:
Attempts to contact have been unsuccessful, and phone calls and letters unanswered
A patient has declared he/she will not pay a bill
A patient’s check has been returned for lack of funds in the account
A patient failed to honor a payment plan
A patient has received payment from the insurance company but withholds payment to the practice
The patient cannot be located or contacted
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25. Selecting a Collection Agency
When choosing a collection agency, practices should consider the following:
The agency represents the practice, and should have a history of fair and ethical practices
Some agencies specialize in handling medical office accounts, and are generally preferred
Reviewing an agency’s references and statistics
The advantages of local and regional agencies
The cost of the agency vs. their expected results
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26. Credit Reporting
One advantage of using a collection agency is its ability to use credit reporting as a collection tool
Crediting reporting on a patient’s account will:
Place unpaid medical bills on their record where they can be viewed by creditors
Hinder their ability to receive future credit
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27. Skip Tracing
When the standard attempts to contact a patient are unsuccessful, it may become necessary to skip trace the debtor
Sometimes patients have forgotten their bill and will gladly pay
Other patients will purposefully avoid contact with the medical office in an attempt to escape their overdue bills
The FDCPA guidelines still apply to calls
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28. Tracing a Debtor The following methods can be used to locate a debtor:
Contact the post office to find a new address for the patient, or clear up any errors in the address on file
Search telephone directories for relatives with the same last name
Run an Internet search with a free person-finding service
Examine public state and federal records
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29. Other Skip Tracing Methods
Professional skip tracing assistance
Large practices or those with many skip traces consider hiring a specialized external agency
Online directories and databases can be used for skip tracing at a fee
These services may allow the practice to search for a patient by their name, address, telephone number, relatives, and/or neighbors
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30. Writing Off Uncollectible Accounts
If a practice has exhausted all of its collection efforts and a patient’s account is still unpaid, it may be labeled an uncollectible or write-off account
Practices decide which debts to write off and whether to continue to treat the patients
After an account is determined uncollectible, it is removed from the practice’s expected accounts receivable and classified as a bad debt
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31. Common Types of Uncollectible Accounts
The most common reason an account becomes uncollectible is that a patient cannot pay the bill
Other reasons why an account may be written off include:
The patient cannot be located through skip tracing
The patient has died with an unpaid bill
The patient has filed for bankruptcy
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32. Dismissing Patients Who Do Not Pay
A physician has the right to terminate the physician-patient relationship for any reason under the regulations of the state
If a patient is to be dismissed, this action should be documented in a letter to the patient that:
Offers to continue care for a specific period of time
Provides referrals to other physicians
Does not state a specific reason for the dismissal
Is signed by the physician and mailed certified
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33. Record Retention
Patients’ medical records and financial records are retained according to the practice’s policy
The practice’s policy is summarized in a retention schedule, a list of the terms from a record that are retained and for how long
The retention schedule protects both the practice and the patient
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