1. Collections in the Medical Office10
Collections in the Medical Office

2. Learning Outcomes When you finish this chapter, you will be able to:
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When you finish this chapter, you will be able to:
10.1  Explain the importance of prompt payment laws.
Summarize the importance of a financial policy in a medical office.
10.3  Identify the laws that regulate collections from patients.
Demonstrate how to post a payment from a collection agency.
10.5  Discuss the process of writing off uncollectible accounts.
10.6  Explain how to use a patient aging report to identify past due accounts.

3. Learning Outcomes (Continued)
10-3
When you finish this chapter, you will be able to:
Demonstrate how to add an account to the collection list.
10.8  Demonstrate how to create a collection letter.
10.9  Demonstrate how to create a collection tracer report.

4. Key Terms collection agency collection list collection tracer report
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collection agency
collection list
collection tracer report
payment plan
prompt payment laws
tickler
uncollectible accounts
write off

5. 10.1 Laws Governing Timely Payment of Insurance Claims
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Receiving prompt payment for services is a critical factor in determining the financial success of a medical practice
Prompt payment laws are state laws that mandate a time period within which clean claims must be paid and that call for financial penalties to be levied against late payers
Learning Outcome: 10.1 Explain the importance of prompt payment laws.
Page: 344
Insurance carriers can dispute claims.
They can contend that patient care services were not medically necessary or that the method in which services were provided violated the payer provider contract.
Resubmitting rejected claims is a time consuming process, resulting in increased practice expenses and more delay in payment.
Prompt payment laws example
New York Prompt Payment Law, when a managed care organization or insurance company fails to make payment on a clean claim within forty-five days of submission, the physician is entitled to receive interest on the late payment at the rate of 12 percent per year.
If a clean claim is not paid within the allotted time frame, the payer should be notified in writing that payment has not been received according to applicable prompt payment laws.

6. 10.2 The Importance of a Financial Policy
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Collection process begins with a clear financial policy and effective communications with patients about their financial responsibilities
Important to have a written financial policy that spells out patients' responsibilities
Learning Outcome: 10.2 Summarize the importance of a financial policy in a medical office.
Pages:
The average patient is now responsible for paying nearly 35 percent of medical bills, more than three times the amount paid by a patient in 1980.
Patients’ reasons for not paying include
• Lack of insurance
• Lack of financial resources
• Significant medical costs
• Consumer-directed health plans with high out-of-pocket costs
• Lack of understanding that payment is their responsibility

7. 10.2 The Importance of a Financial Policy (Continued)
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Financial policies should tell patients how the practice handles:
Collecting copayments and past-due balances
Setting up financial arrangements for unpaid balances
Providing care for patients with low incomes
Payments for services not covered by insurance
Collecting prepayments
Accepted methods of payment
Learning Outcome: 10.2 Summarize the importance of a financial policy in a medical office.
Pages:
Despite the practice’s efforts to communicate the financial policy to all patients, some individuals still do not pay in full and on time.
Some practices send all accounts that are past thirty days to an outside agency.

8. 10.3 Laws Governing Patient Collections
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Patient collections are consumer collections and are regulated by federal and state laws
Collections from insurance carriers are considered business collections
Learning Outcome: 10.3 Identify the laws that regulate collections from patients.
Pages:

9. 10.3 Laws Governing Patient Collections (Continued)
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Fair Debt Collection Practices Act of 1977
Telephone Consumer Protection Act of 1991
General guidelines:
No calls before 8 am or after 9 am
No threats or profane language
Respect patient privacy
No deception or violence
Learning Outcome: 10.3 Identify the laws that regulate collections from patients.
Pages:
If the practice’s printed or displayed payment policy covers adding finance charges on late accounts, it is acceptable to do so. The amount of the finance charge must comply with federal and state law.

10. 10.3 Laws Governing Patient Collections (Continued)
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A payment plan is an agreement between a patient and a practice in which the patient agrees to make regular monthly payments over a specified period of time
Truth in Lending Act applies if practice adds finance charges and payments are made in more than four installments
Learning Outcome: 10.3 Identify the laws that regulate collections from patients.
Pages:
If no finance charges are applied to unpaid balances, this type of arrangement is between the practice and the patient, and no legal regulations apply.
The agreement must be signed by the practice manager and the patient.

11. 10.4 Working with Collection Agencies
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A collection agency is an outside firm hired to collect on delinquent accounts
Practice no longer contacts the patient if the account is turned over to a collection agency
Often paid on the basis of the amount of money they collect
When payment is received from a collection agency, it must be posted to the patient’s account
Information found on the statement provided by the agency
Exercise 10-1
Learning Outcome: 10.4 Demonstrate how to post a payment from a collection agency.
Pages:
The agency provides a statement that shows which patient accounts have paid, and the amounts of the payments.
Perform Exercise 10-1

12. 10.5 Writing Off Uncollectible Accounts
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When all collection attempts are exhausted, the collection process is ended
Amount owed is often called an uncollectible account or a bad debt, and it is written off the practice’s expected accounts receivable
A write off is a balance that has been removed from a patient’s account
Exercise 10-2
Learning Outcome: 10.5 Discuss the process of writing off uncollectible accounts.
Pages:
Perform Exercise 10-2

13. 10.6 Using a Patient Aging Report for Collections
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An aging report shows the patient’s chart number and name, and the amount of unpaid charges in each of these categories:
Current: Up to 30 days
Past: 31 to 60 days
Past: 61 to 90 days
Past: 91 to 120 days
Past: More than 120 days
Exercise 10-3
Learning Outcome: 10.6 Explain how to use a patient aging report to identify past due accounts.
Pages:
Used monitor collection activities for patients and insurance.
The collection process begins with an analysis of the aging report, which shows the status of each account over time.
Perform Exercise 10-3

14. 10.7 Adding an Account to the Collection List
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Overdue accounts are added to a collection list
The collection list is designed to track activities that need to be completed as part of the collection process
Ticklers or collection reminders are displayed as collection list items
A tickler is a reminder to follow-up on an account that is entered on the collection list
Learning Outcome: 10.7 Demonstrate how to add an account to the collection list.
Pages:
Collection List located on Activities menu.

15. 10.7 Adding an Account to the Collection List (Continued)
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The Collection List dialog box displays ticklers that have been entered into the database
Learning Outcome: 10.7 Demonstrate how to add an account to the collection list.
Pages:

16. 10.7 Adding an Account to the Collection List (Continued)
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Tickler Item dialog box
Exercise 10-4
Tickler tab
Office Notes tab
Learning Outcome: 10.7 Demonstrate how to add an account to the collection list.
Pages:
A new tickler item is created by pressing the New button in the Collection List dialog box.
Once a new tickler has been saved, the program automatically assigns a unique identifier code to the item.
For patient-responsible ticklers, the balance is the balance shown in Transaction Entry.
Perform Exercise 10-4

17. 10.8 Creating Collection Letters
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Before collection letters can be sent in Medisoft:
Patient-responsible tickler item must be entered in the collection list
Collection Letter report must be created
Report is generated when the Patient Collection Letters option is selected on the Reports menu
Learning Outcome: 10.8 Demonstrate how to create a collection letter.
Pages:

18. 10.8 Creating Collection Letters (Continued)
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The Patient Collection Report lists patients with overdue accounts to whom statements have been mailed
Learning Outcome: 10.8 Demonstrate how to create a collection letter.
Pages:

19. 10.8 Creating Collection Letters (Continued)
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After printing collection letters, an account alert appears in the Transaction Entry, Quick Ledger, and Appointment Entry windows
There are three account alert abbreviations:
RB – remainder balance
DP – delinquent on payment plan
IC – in collections
Exercise 10-5
Learning Outcome: 10.8 Demonstrate how to create a collection letter.
Pages:
Perform Exercise 10-5

20. 10.9 Creating a Collection Tracer Report
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A collection tracer report is used to keep track of collection letters that were sent
The report lists:
Tickler item number
Responsible party
Chart number
Account balance
Date collection letter was sent
Reasons the account is in collections
Created via the Collection Tracer Report feature on the Reports menu
Exercise 10-6
Learning Outcome: 10.9 Demonstrate how to create a collection tracer report.
Pages:
Perform Exercise 10-6