Billing, Reimbursement, and Collections

Billing, Reimbursement, and Collections
CHAPTER 8 Billing, Reimbursement, and Collections

Learning Outcomes After studying this chapter, you will be able to:
8.1 Recognize and calculate charges for medical services and process patient statements based on the patient encounter form and the physician’s fee schedule. 8.2 Compare and contrast the process of completing and transmitting insurance claims using both hardcopy and electronic methods.

Learning Outcomes (cont.)
After studying this chapter, you will be able to: 8.3 Describe the different types of billing options used by medical practices for billing patients. 8.4 Paraphrase the procedures and options available for collecting delinquent accounts.

Key Terms clean claim clearinghouse CMS-1500 claim form
collection agency collection at the time of service collection ratio cycle billing dependent electronic claims EOB ERA fee adjustment fee schedule guarantor monthly billing patient information form patient statement scrubber program terminated account third-party liability write-off Teaching Notes: Review the chapter terms; define, spell, and pronounce the terms out loud if necessary. As an administrative medical assistant, you must know the meaning of each key term. Knowing the definition of these terms promotes confidence in communication with patients and coworkers.

8.1 Recording Transactions
Patient encounter form: Used to record the details of patients’ encounters for billing and insurance purposes Information that is recorded in different sections of an encounter form: Patient’s name, address, phone information, and type of insurance, as well as patient return information Date of service Diagnosis or diagnoses for the current visit Procedure information Financial information Physician identifying information Learning Outcome 8.1: Recognize and calculate charges for medical services and process patient statements based on the patient encounter form and the physician’s fee schedule. Teaching Notes: Administrative medical assistants keep track of the services rendered and any payments made during a visit to the physician. To facilitate the process of billing patients for physicians’ services, medical offices may use a patient encounter form. Patient encounter form. A blank patient encounter form (also called a charge slip, superbill, routing slip, or patient service form) is attached to the patient’s medical record for completion. It is used to record the details of patients’ encounters for billing and insurance purposes. Fee schedule. Each physician or medical practice has a fee schedule that lists the usual procedures the office performs and the corresponding charges. The administrative medical assistant should always refer to the practice’s fee schedule in determining the total cost for each patient’s visit. Patient statements . The administrative medical assistant records all transactions—that is, charges incurred by the patient for office visits, x-rays, laboratory tests, and so on, and all adjustments and payments made by the patient or the patient’s insurance company—in the patient ledger (hardcopy or electronic). Computerized billing. Most medical practices, even though they may not be using a complete EHR system, use a computerized billing program to generate patient statements.

8.1 Recording Transactions (cont.)
Procedure for using a patient encounter form An encounter form is attached to the patient’s file when the patient registers for the visit As the physician performs various procedures during the visit, check marks are made in the appropriate boxes on the encounter form (or the appropriate items on the form are circled); the diagnoses and corresponding codes are also recorded on the form At the end of the visit, the form is taken to the checkout area for the administrative medical assistant to record, or post, the necessary transactions in the office’s billing system; the patient may be asked to validate the information on the encounter form by signing the form Learning Outcome 8.1: Recognize and calculate charges for medical services and process patient statements based on the patient encounter form and the physician’s fee schedule. Teaching Notes: The following is the procedure for using a patient encounter form: 1. An encounter form is attached to the patient’s file when the patient registers for the visit. 2. As the physician performs various procedures during the visit, check marks are made in the appropriate boxes on the encounter form (or the appropriate items on the form are circled). The diagnoses and corresponding codes are also recorded on the form. 3. At the end of the visit, the form is taken to the checkout area for the administrative medical assistant to record, or post, the necessary transactions in the office’s billing system. The patient may be asked to validate the information on the encounter form by signing the form.

8.1 Recording Transactions (cont.)
Fee schedule – lists the usual procedures the office performs and the corresponding charges. Patient statement – the patient’s copy of the information stored in the patient ledger (hardcopy or electronic); also referred to as the patient bill Learning Outcome 8.1: Recognize and calculate charges for medical services and process patient statements based on the patient encounter form and the physician’s fee schedule. Teaching Notes: Each physician or medical practice has a fee schedule; most medical practices have more than one fee schedule. The administrative medical assistant should always refer to the practice’s fee schedule in determining the total cost for each patient’s visit. The patient statement shows the professional services rendered to the patient, the charge for each service, payments made, and the balance owed.

8.2 Insurance Claims Overview of the process
Complete the insurance claim form, either electronic or on paper Verify patient demographic, encounter, and insurance information Transmit, electronically or by postal mail, the claim form to the insurance company, which decides to pay the fee, deny the claim, or pay a certain portion of the claim Learning Outcome 8.2: Compare and contrast the process of completing and transmitting insurance claims using both hardcopy and electronic methods. Teaching Notes: When patients receive services from a medical practice, either they pay for services themselves or the charges are submitted to their insurance company or government agency for payment. It’s either sent by paper (hard-copy) or electronically.

8.2 Insurance Claims (cont.)
Using the CMS-1500 paper/hardcopy claim form Two medical office forms used to complete the CMS-1500 claim form: Patient information form – may also include release-of-information and assignment-of-benefits statements Patient encounter form Learning Outcome 8.2: Compare and contrast the process of completing and transmitting insurance claims using both hardcopy and electronic methods. Teaching Notes: Two medical office forms are used to complete the CMS-1500 claim form: the patient information form, which is filled out or updated by the patient, and the patient encounter form.

Submitting paper/hardcopy or electronic claims Electronic claims are prepared on a computer and transmitted electronically (from one computer to another) to an insurance carrier for processing Advantages of using electronic claims: Immediate transmission Faster payment (Medicare claims are paid within 14 days versus 29 days) Easier tracking of claim status Learning Outcome 8.2: Compare and contrast the process of completing and transmitting insurance claims using both hardcopy and electronic methods. Teaching Notes: Hardcopy or electronic claims. Medical offices are using computerized insurance claim forms, known as electronic claims, in place of paper claims. Electronic claims are prepared on a computer and transmitted electronically (from one computer to another) to an insurance carrier for processing. Using electronic claims includes immediate transmission, faster payment (Medicare claims are paid within 14 days versus 29 days), and easier tracking of claim status.

Processing by a third-party payer Step-by-step review or adjudication process: Step 1: The claim is received in the payer’s system; the claim is prescreened for any missing information Step 2: The patient’s eligibility and benefit level are determined Step 3: The discount is applied Step 4: The claim edits and payer payment rules are applied to the claim Step 5: The final payment is determined Step 6: The EOB and/or ERA is generated and the payment is sent Learning Outcome 8.2: Compare and contrast the process of completing and transmitting insurance claims using both hardcopy and electronic methods. Teaching Notes: Processing by a third-party payer. When the claim form arrives at the office of the insurance carrier, either on paper or as a computer file, the insurance carrier processes the claim. The steps used by the insurance payer are as follows (elaborate on each step): The claim is received in the payer’s system. The patient’s eligibility and benefits are determined. The discount is applied. The claim edits and payer payment rules are applied. Payment is determined. The EOB and/or ERA is generated and payment is sent.

Receiving an EOB or ERA After the insurance carrier reviews the claim and makes a final reimbursement determination, it sends a remittance advice to the patient and the provider with an explanation of its decision The remittance advice also takes into account any deductibles or coinsurance the insured may owe If the insurance company determines that there are benefits to be paid, a check for the appropriate amount is attached to the provider’s report or an electronic deposit is made into the provider’s financial account Learning Outcome 8.2: Compare and contrast the process of completing and transmitting insurance claims using both hardcopy and electronic methods. Teaching Notes: Receiving an EOB or ERA. If the insurance company determines that there are benefits to be paid, a check for the appropriate amount is attached to the provider’s report. In the case of paper claims, the remittance advice sent by the insurance company in response to the claim is transmitted through the mail and is referred to as an EOB (explanation of benefits). In the case of electronic claims, the report is transferred from one computer to another and is therefore referred to as an ERA (electronic remittance advice). Although the formats used for the EOB and the ERA differ, the information conveyed in both types of reports is the same—both explain the amount of benefits to be paid to, or on behalf of, the insured and how that amount was determined.

Checking the reimbursement details After the medical office receives the remittance advice (the EOB or ERA), the administrative medical assistant reviews it and checks it against the original claim Billing the patient If the patient still owes money to the medical practice after the EOB or ERA has been received -- usually for charges that were not fully reimbursed by the insurance company, such as deductibles or noncovered services -- the assistant bills the patient for the amount due Learning Outcome 8.2: Compare and contrast the process of completing and transmitting insurance claims using both hardcopy and electronic methods. Teaching Notes: Reimbursement details. After receiving the EOB or ERA, the administrative assistant checks it against the original claim. If all is in order, the assistant files the report with the patient’s financial records. Billing the patient. After the EOB or ERA has been received—usually for charges that were not fully reimbursed by the insurance company or for non-covered services—the assistant bills the patient for the amount due.

Appealing claims If the physician thinks that the reimbursement decision is incorrect or unfair, the medical office may initiate an appeal. Appeals must be filed within a stated period after the determination of claim benefits or denial. Most insurance carriers have an upward structure for appeals, beginning at the lowest level and progressing upward. Learning Outcome 8.2: Compare and contrast the process of completing and transmitting insurance claims using both hardcopy and electronic methods. Teaching Notes: Appealing claims. If the physician thinks that the reimbursement decision is incorrect or unfair, the medical office may initiate an appeal. Appeals must be filed within a stated period after the determination of claim benefits or denial.

Completing and transmitting the claim form Verifying insurance information Checking the accuracy of essential claim information Completing the CMS-1500 claim form Using computer billing programs Electronic claims versus paper claims Using clearinghouses Learning Outcome 8.2: Compare and contrast the process of completing and transmitting insurance claims using both hardcopy and electronic methods. Teaching Notes: Completing and transmitting the claim form accurately for a patient is one of the most important steps in successful claim reimbursement. The first step in processing a claim is to verify the patient’s insurance information. Claim forms must be completed accurately. Most insurance companies accept the CMS-1500 for processing claims. However, the assistant may need to complete a specifically designed claim form for a carrier. Generating claim forms (whether paper or electronic) on the computer is one of the major uses of computer technology in the medical office today. The main difference between electronic claims and paper claims is the means by which they are transmitted to the insurance carrier. The use of electronic claims speeds up transmission and payments. A clearinghouse is a service bureau that collects electronic claims from many different medical practices and forwards the claims to the appropriate insurance carriers.

8.3 Payments from Patients
Methods of payment - the assistant must be careful to enter each cash payment in the patient’s ledger and in the daily summary record; the patient’s name, the services rendered, the charges, the payment received on the account, and any balances should be included Sending statements - although most bills are sent out once a month, a statement may be sent at the end of a procedure or upon discharge from the hospital; practices decide to do either monthly billing or cycle billing Learning Outcome 8.3: Describe the different types of billing options used by medical practices for billing patients. Teaching Notes: The method of payment is arranged at the time of the patient’s first visit. In most offices, a combination of methods is used. Practices may decide to do either monthly billing or cycle billing. With monthly billing, bills are sent out once a month and are timed to reach the patient no later than the last day of the month, but preferably by the 25th of each month. With cycle billing, all accounts are divided into fairly equal groups, the number of groups depending on how many times you wish to do billing during a month. If cycle billing is used, the patient should be informed on the first visit approximately when the bill will be mailed.

8.3 Payments from Patients (cont.)
Payment plans For the patient who is unable to pay a medical bill in one lump sum, a schedule of payments, or contract, can be agreed upon The agreement should be in writing, and a copy of the plan should be given to the patient as a reminder of the commitment to pay the physician The amount to be paid weekly or monthly is stated in the agreement, and it is used as a reference when corresponding with the patient about unpaid bills Details of the contractual agreement should be documented in the patient’s hardcopy or electronic record Learning Outcome 8.3: Describe the different types of billing options used by medical practices for billing patients. Teaching Notes: For the patient who is unable to pay a medical bill in one lump sum, a schedule of payments, or contract, can be agreed upon. The agreement should be in writing and fully detailed.

Fee adjustment Should the need arise, the physician can adjust the cost of any procedure; the physician will then inform the administrative medical assistant of the fee adjustment Fees should not be reduced as a way to receive payment quickly and avoid collection procedures Health insurance There are two options: Patients are billed at the time of service Patients are billed after the insurance claim has been processed Learning Outcome 8.3: Describe the different types of billing options used by medical practices for billing patients. Teaching Notes: Fee adjustment. The physician can adjust the cost of any procedure, should the need arise. One type of fee adjustment a medical office makes regularly with certain health plans is called a “write-off”. Health insurance. Depending on whether or not the physician accepts the health insurance the patient has, the payment arrangement varies. Essentially, there are two options: patients are billed at the time of service or after the insurance claim has been processed.

Third-party liability Sometimes a person other than the patient assumes liability, or responsibility, for the charges; such responsibility is called third-party liability The assistant must contact this third party for verification of financial obligation Learning Outcome 8.3: Describe the different types of billing options used by medical practices for billing patients. Teaching Notes: A third party is not obligated by law unless he or she has signed an agreement to pay the charges. Therefore, a signed promise obtained prior to treatment will greatly reduce the credit risk.

8.4 Delinquent Accounts Communicating with patients
In a sense, the collection process actually begins with effective communications with patients about their responsibility to pay for services When patients understand the charges and agree to pay them in advance, collecting the payments is not usually a problem Guidelines for payment Management or the accounting department in every office must determine the collection ratio (total collections divided by net charges of the practice) The percentage will show the effectiveness of the collections (the higher the percentage, the more effective the collections) Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: Communicating with patients. Most patients pay their bills on time. However, every practice has some patients who do not pay their bills when they receive their monthly statements. It is imperative that the assistant has effective communications with patients about their responsibility to pay for services. Guidelines for payment. The accounting department in every office must determine the collection ratio. The percentage will show the effectiveness of the collections. The higher the percentage, the more effective the collections.

8.4 Delinquent Accounts (cont.)
The office collection policy It is often the duty of the administrative medical assistant to collect payments on overdue accounts; each month delinquent accounts (any unpaid accounts with a balance that is 30 days past due) should be aged to show their status in the collection process (that is, 30, 60, or 90 days past due) Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: It is often the duty of the administrative medical assistant to collect payments on overdue accounts. If a computerized billing program is used, a patient aging report is generated to show which patients’ payments are due or overdue. For this reason, payments must always be entered promptly, so that at billing time there is no question about any balance due.

Laws governing collections Collections from payers are considered business collections; collections from patients, however, are consumer collections and are regulated by federal and state law. The Fair Debt Collection Practices Act of 1977 and the Telephone Consumer Protection Act of 1991 regulate debt collections, forbidding unfair practices, such as making threats, and the use of any form of deception or violence to collect a debt Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: The Fair Debt Collection Practices Act is enforced by the Federal Trade Commission and regulates collection agencies and attorneys. Medical practices should refer to state laws governing collection practices.

Course of action Every office needs to establish a written course of action to be taken on overdue accounts The physician will need to establish the office policy regarding collection procedures, including when to send statements, reminders, and letters and when to take final action Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: Usually, an automatic reminder notice and a second statement are mailed when a bill has not been paid 30 days after it was issued. Some medical offices phone a patient with a 30-day overdue account.

Other guidelines under the FDCPA: If an attorney is used by the patient, the practice may only contact the attorney; other individuals may be contacted to find out where the patient lives and/or works If the patient is contacted, within five days after the patient is first contacted, a written notice called a validation notice must be sent to the patient stating the amount and to whom the money is owed and what action the patient may take if he or she does not believe the money is owed; it is recommended to send the letter via Certified Mail, Return Receipt requested Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: Certain actions are legally off-limits. Harassing a patient or making false statements are illegal. Medical practices cannot threaten to arrest a patient for nonpayment of a debt or garnish wages; collect interest, fees, or other charges in addition to the amount owed unless an original written/signed agreement allows such charges; or contact the patient using a postcard.

Other guidelines under the FDCPA (cont.): If the patient sends the practice a letter within 30 days after receiving the validation notice stating the money is not owed by them, do not contact the patient again about the debt; however, the patient may be contacted again to send written verification of the medical debt, such as a copy of the bill or insurance EOB/ERA Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: Some medical offices phone a patient with a 30-day overdue account. If the bill is not then paid, a series of collection letters is generated at intervals, each more stringent in its tone and more direct in its approach. Collections letters should be sent using certified mail.

Collection by telephone Techniques of phone collection: Identify yourself, the practice, and the purpose of the call Be sure you are talking to the person who is responsible for payment of the account; avoid disclosure of PHI by following HIPAA regulations Make the collection call in the evening, especially if the person who is responsible for payment is out during the day, but no later than 9 p.m.; collection calls may be placed after 8 a.m. but no later than 9 p.m. and not on Sunday or another day the patient recognizes as a Sabbath day Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: A phone call can be effective in reminding a person who has unintentionally forgotten to pay. Tact and experience are necessary in order to be effective in phone collections. The following are some guidelines of phone collection: - Always identify yourself - Ask to speak with the person responsible for the account - Make the collection call in the evening but before 9 p.m.

Techniques of phone collection (cont.): Never call a patient at a place of employment to inquire about an unpaid bill Always use a pleasant manner and positive wording (such as “May I process your payment today using your credit or debit card?”) Ask to discuss the bill to determine whether the patient has any questions Listen carefully Do not show irritation in your voice or appear to be scolding the patient Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: Phone collection guidelines continued: - Do not call the patient’s work place - Always be pleasant and positive - Ask the patient if he/she has any questions - Listen carefully to what the patient is saying - Pay attention to the tone of voice you use

Techniques of phone collection (cont.): Inform the person that you need to know why the bill has not been paid or why inquiries about the unpaid bill have not been answered If the patient promises to pay, ask when you can expect a payment, the method of payment (cash, debit card, etc.), and the amount; then make a note about the conversation If the patient would prefer that you call his or her attorney, do not contact the patient directly again, unless asked to do so by the attorney Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: Phone collection guidelines continued: - Tell the patient you are inquiring about the unpaid bill - If the patient says they will make a payment, ask for a date and amount of payment; make note of the conversation - If the patient requests you contact their attorney, do not contact patient again, unless instructed by attorney

Collection by letter Collection letters should be personal letters, not form letters The letters should show that you are sincerely interested in the patient’s problem and want to work out a solution Collection letters should be brief, with short sentences The letters should appeal to the patient’s sense of pride and fair play, as well as a desire for a good credit rating Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: The longer a bill remains unpaid, the less likelihood there is of collecting it. A bill should be followed up most vigorously after being overdue for three months. An effective method of collection at this point is to write a letter to the patient. Collection letters should be brief, with short sentences.

Terminated accounts When a physician finds it impossible to extract payment from a patient, he or she may decide to terminate the physician-patient relationship Collection by agency Once an account has been turned over for collection, the office will have no further contact with the patient concerning billing Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: Terminated accounts. A physician who finds it impossible to extract payment from a patient may decide to terminate the physician-patient relationship. The account is then referred to as a terminated account. Collection by agency. If the patient has not paid the bill after a reasonable time and routine collection procedures have failed then the office can turn the account over to a collection agency.

Statute of limitations If the physician fails to collect a fee within a certain period of time, the collection becomes illegal under the statute of limitations and no further claim on the debt is possible Each state sets its own time limitation, which varies from three to eight years The physician should obtain legal counsel for advice concerning these statutes Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: If the physician fails to collect a fee within a certain period of time, the collection becomes illegal, due to the statute of limitations. Each state sets its own time limitation, which varies from three to eight years.

Credit arrangements and the Truth in Lending Act When credit agreements are made, patients and the practice agree to divide the bill into smaller payments over a period of months; 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 If, however, the practice adds finance or late charges and the number of payments is more than four installments, the arrangement is governed by the federal Truth in Lending Act, which became law on July 1, 1968, and is part of the Consumer Credit Card Protection Act Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: Credit arrangements and the Truth in Lending Act. For large bills or special situations, some practices may elect to extend credit to patients. 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. However, if the practice adds finance or late charges and the number of payments is more than four installments, the arrangement is governed by the federal Truth in Lending Act.

Writing off uncollectible accounts If no payment has been made after the collection process, the administrative medical assistant follows the office policy on bills it does not expect to collect Usually, if all collection attempts have been exhausted and it would cost more to continue than the amount to be collected, the process is ended In this case, the amount is called an uncollectible account or bad debt and is written off from the expected revenues Learning Outcome 8.4: Paraphrase the procedures and options available for collecting delinquent accounts. Teaching Notes: Usually, if all collection attempts have been exhausted and it would cost more to continue than the amount to be collected, the process is ended. In this case, the amount is called an uncollectible account or bad debt and is written off from the expected revenues.

Chapter 8 Summary Learning Outcomes Key Concepts
8.1 Recognize and calculate charges for medical services and process patient statements based on the patient encounter forms and the physician’s fee schedule. The administrative medical assistant handles patient transactions, including entering charges for medical services rendered and payments received from patients and third-party payers. The assistant enters transactions in the appropriate patient’s account by referring to information on the patient’s encounter form for the visit and the physician’s fee schedule. Determine any charges that are the patient’s responsibility, such as an office visit copayment. Update the patient’s account.

Chapter 8 Summary (cont.)
Learning Outcomes Key Concepts 8.2 Compare and contrast the process of completing and transmitting insurance claims using both hardcopy and electronic methods. Complete the insurance claim form, either electronic or paper. The most commonly used claim form format is the CMS-1500 claim format. Verify patient demographic, encounter, and insurance information. Transmit, electronically or by postal mail, the claim form to the insurance company, which decides to pay the fee, deny the claim, or pay a certain portion of the claim. Verify the accuracy of the payment and post any payments received from the insurance company to the patient’s account.

Learning Outcomes Key Concepts Bill patient for coshares. Both paper and electronic claims - Use patient information collected during the registration. - Use diagnostic and procedural information from the patient’s encounter. - Gather needed information from either electronic or hardcopy records. Electronic claims are entered only once, creating fewer opportunities for errors, whereas paper claims—even if produced electronically—may be scanned by the payer or physically reentered, creating greater opportunities for errors.

8-37 Chapter 8 Summary (cont.) Learning Outcomes Key Concepts Payments resulting from electronic claims submission are faster and, most commonly, are electronic funds transfers. Payments from paper claims may be electronically deposited but may also be sent via a hardcopy check through the postal service creating a much slower process.

Learning Outcomes Key Concepts 8.3 Describe the different types of billing options used by medical practices for billing patients. The method of payment is arranged during the patient’s first visit and may include a combination of the following: Patients pay at the time of the visit by cash, check, debit/credit card (coshares are always collected at this time). Bills are mailed to patients monthly or at the end of a procedure or hospital stay, using either monthly or cycle billing. Patients may pay, if necessary, according to an agreed-upon payment plan.

Learning Outcomes Key Concepts Bills are sent to health insurance carriers, and after payment is received, depending on the terms of the plan, the patient is billed for any balance due. Patients pay for all charges when physicians work on a cash-only basis. The physician can adjust the cost of any procedure, should the need arise. However, the decision must be documented, in writing, to protect against a malpractice suit if the adjustment is ever misinterpreted.

Learning Outcomes Key Concepts Adjusting entries are used to make corrections to patient accounts within a computerized billing system. Transactions are never deleted—they are adjusted.

Learning Outcomes Key Concepts 8.4 Paraphrase the procedures and options available for collecting delinquent accounts. Guidelines are determined by each office in regard to payment—how much is to be collected daily, how much should be collected on each account, etc. Communications with patients from the start about what is expected from them in terms of payment are the beginning of the collection process. Patients should be notified in advance of all procedures that are not covered by insurance. Policies and procedures for handling overdue accounts are determined by each office in conjunction with state and federal laws.

Learning Outcomes Key Concepts Collection processes may be ended and the amount written off as a bad debt when the amount to be collected is less than the cost of collecting the debt. State statutes are used to determine the legal period of time to continue the collection of a debt.

Chapter 8 Review: True/False Questions
State whether the statement is true (T) or false (F) If the statement is false, tell why it is false. 1. (LO 8.1) A patient encounter form should contain codes from the most recent diagnostic and procedural coding references (i.e., coding books). 2. (LO 8.1) A day sheet shows how long an account has been due. 3. (LO 8.2) PAR providers do not need a completed assignment-of-benefits from the patient in order to receive a direct payment from a third-party payer. 4. (LO 8.2) Payments to a provider from an electronically submitted health insurance claim form are usually in the form of mailed hardcopy checks. 5. (LO 8.2) If the insured’s name is William on the insurance card, it is acceptable practice to use “Wm.” on the claim form instead of “William.” ANSWERS: 1. T 2. F: An aging report shows how long an account has been due. 3. T 4. F: Payments from electronic claim submissions are usually EFT payments. 5. F: The name placed on the claim form should be as it appears on the insurance card: William.

Chapter 8 Review: True/False Questions
State whether the statement is true (T) or false (F) If the statement is false, tell why it is false. 6. (LO 8.3) A patient who has had three checks returned for nonsufficient funds (NSF) can be asked to pay on a cash-only basis. 7. (LO 8.3) Checks should be stamped “For Deposit Only” as a group at the end of the day. 8. (LO 8.3) Patients who see a provider who uses the monthly billing method will receive statements throughout the month based on the first letter in their last name. 9. (LO 8.4) A collection ratio of percent is an effective collection rate. 10. (LO 8.4) Documentation of all collection efforts—phone calls, letters, and so on—should be maintained in the patient financial account record. ANSWERS: 6. T 7. F: Checks should be endorsed/stamped as they are received. 8. F: This is an example of cycle billing. 9. F: An effective ratio should be at least one third of the net charges. The ratio would need to be at least 33.33% or higher on any given amount. 10. T

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