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Patient Billing and Collections

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1 Patient Billing and Collections
Chapter 15 © 2010 The McGraw-Hill Companies, Inc. All rights reserved.

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. Chapter 15

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. Chapter 15

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. Chapter 15

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) Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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. Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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.” Chapter 15

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 Chapter 15

23 Credit Counseling Consumer credit counseling services and debt management programs are nonprofit organizations that can assist patients struggling to pay their bills Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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 Chapter 15

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