Insurance Handbook for the Medical Office 13th edition Chapter 10 Office and Insurance Collection Strategies

Accounts Receivable Basics Lesson 10.1 Accounts Receivable Basics Explain the cash flow cycle in a medical office. Define accounts receivable, and explain how it is handled. Describe procedures for educating patients to the medical office. State policies of a medical office’s fee schedule.

Accounts Receivable Basics (cont’d) Lesson 9.1 Accounts Receivable Basics (cont’d) Describe guidelines for missed appointments. Recite types of fee adjustments available to patients. Discuss fees with patients. Name payment options available to patients.

Accounts Receivable Basics (cont’d) Lesson 9.1 Accounts Receivable Basics (cont’d) Define aging analysis. List the names of the federal credit laws applicable to a physician office setting. Explain statutes of limitations of three kinds of financial accounts.

Cash Flow Cycle Physician revenue largely from reimbursement by third-party payers Insurance contracts with payers Reimbursement provisions Medical services not covered Patient responsibilities Reimbursement process See Fig. 10-1 for an overview of the billing procedures in a medical practice. Physicians are reimbursed by third-payer payers according to contract provisions.

Accounts Receivable Reasons for accounts receivable Increased healthcare expenses Health care perceived as a right Legal proceedings Insurance delays What is “cash flow”? (The amount of actual cash generated and available for use by the medical practice within a given period of time.) What is the “collection ratio”? (The relationship between the amount of money owed and the amount of money collected in reference to the doctor’s accounts receivable.) Engage the class in an open discussion of forces at play in the healthcare industry today (uninsured, malpractice litigation, etc.) and how they cause payment problems that trickle down to the medical practice. (Answers will vary, depending on discussion.)

Patient Education Fig. 10-2 Information about office fees and payment policies should always be provided to patients at the initial visit. This sample letter emphasizes the information to incorporate when writing to a new patient and establishes the relationship between the patient and the physician and the medical office. Explain why these bits of information are important to include in this letter.

Patient Registration Form Signs of potential nonpaying patient Incomplete information on registration form Multiple changes of residence Questionable employment record No business or home telephone Post office box listed with no street address; or motel address listed Incomplete insurance information No referral Patient information should be updated at every visit (or every 6 months) to ensure the practice can bill the patient, if necessary.

Fee Schedule Always quote fees and state policies about collection of fees at initial visit List must be available to all patients Inform patients of any fees that are not on fee schedule Helps preserve patient-physician relationship Define fee schedule. (Listing of all accepted charges or established allowances for specific medical procedures.) If the fee schedule is increased at a later date, a notice should be placed in the reception room and communicated to patients via their monthly billing statements.

Missed Appointments CMS allows a no-show fee billed to patients Medical must do the following: Establish written office policy on missed appointments Inform patients of what will happen for a missed appointment, if no cancellation Apply missed appointment policy to all patients Bill all patients for missed appointments Most providers charge of fee in the $35 to $50 range.

Fee Adjustments Discounted fees Cash discounts Financial hardship Write-off or courtesy adjustment Professional courtesy Copayment waiver No charge Reduced fee Give an example of when a cash discount might be given. (Example: to reward those who pay in full.) Define “professional courtesy.” (When a physician treats another physician; make sure this is done ethically to ensure professional standards are met.) Explain what a copayment waiver is. (Accepting just the insurance payment.)

Communicating Fees Be courteous at all times but express a firm, businesslike approach that will not offend the patient Never badger or intimidate a patient into paying; merely state the payment policy and educate the patient Inform the patient of the fee and any deductible and balance due in a clear manner Verify the patient’s copayment listed on his or her insurance card and collect this amount before the patient’s office visit Financial arrangements should be communicated up-front.

Communicating Fees Make it easier for the patient to pay rather than leave without making payment Do not give the patient an option by asking if he or she would like to pay now or have a bill sent Motivate the patient to pay by appealing to his or her honesty, integrity, and pride Explaining absorbed services to patients may help with understanding of provider fees. (See Fig. 10-6.)

Collecting Fees Payment at the time of service Payment by check Itemized patient statements Dun messages The patient office visit is the best opportunity to collect payment due; most professionals do this before the patient sees the physician, not on the way out. Payment by check requires some verification efforts to ensure that checks are valid. Itemized statements show the details of charges and payments. What are “dun messages”? (Phrases printed on statements to inform or remind a patient about a delinquent account and to promote payment.) Set up role-play exercises of face-to-face interviews or phone calls in which the medical administrator seeks payment from a patient who is reluctant to pay.

Collecting Fees Financial payment plan agreement Fig. 10-7 The financial agreement form is used for financial payment plans. The Truth in Lending Act requires full disclosure of financial charges.

Collecting Fees Demand letter for returned check Fig. 10-9 The demand letter serves as a formal notice to collect payment and notifies the patient of a pending legal action. Be sure to include the check date, check number, name of bank, name of person the check is payable to, check amount, any allowable service charge, total amount due, and the number of days the check writer has to take action.

Collecting Fees Itemized statement Fig. 10-10 Timeliness, accuracy, and consistency of itemized statements have a significant effect on the cash flow and collection process. What is “age analysis”? (The procedure of systematically arranging the A/R by age from the date of service, usually in 30-day increments.)

Collecting Fees Collection decision tree Fig. 10-11 The collection decision tree is a quick reference that you can use to help determine when to send statements, when to make phone calls, and when to send accounts to a collection agency.

Payment Options Credit card billing Debit cards E-checks Payment plans Explain which methods are most favorable to the physician. (Cash, check, debit cards, to promote cash flow.) Explain which methods are most favorable to the patient. (Credit cards, payment plans, if the costs are high, so they can pay over time.)

Credit and Collection Laws Equal Credit Opportunity Act (ECOA) Fair Credit Reporting Act (FCRA) Fair and Accurate Credit Transactions (FACT) Act (Public Law 108-159) Fair Credit Billing Act (FCBA) Electronic Fund Transfer Act (EFTA) Truth in Lending Act (TILA) Truth in Lending Consumer Credit Cost Disclosure Fair Debt Collection Practice Act (FDCPA) See Box 10-1

Statute of Limitations Regulation or law setting time limits on legal action Maximum time legal collection may be rendered against a debtor Vary according to three kinds of accounts: Open book accounts Written contract accounts Single-entry accounts Discuss statutes of limitations and other state laws pertaining to credit and collection in the medical practice. (Answers will vary depending on the state.)

Collection Techniques Lesson 10.2 Collection Techniques Perform oral and written communication collection techniques. Describe insurance collection from the patient and from third-party payers. State the role of a billing service, collection agency, and credit bureau in the collection process. Describe credit counseling in a medical office.

Collection Techniques (Cont’d) Lesson 10.2 Collection Techniques (Cont’d) Explain the purpose of small claims court in the collection process. Name basic actions in tracing a debtor who has moved and left no forwarding address. Identify special collection issues.

Telephone Collection Procedures Telephone “Don’ts” Don’t raise your voice. Don’t accuse the patient of lying. Don’t act tough. Don’t consent to partial payment. Don’t debate. Don’t report disputed accounts to collection agency or bureau. Use an organized approach to determine which collection calls to make first. Make sure to review state collection laws before making calls. Discuss and build a telephone collection plan with input from the class. (See Table 10-2 for collection scenarios.)

Collection Letters Collection form letter Fig. 10-15 This is a typical collection form letter to send to patients who have not responded after two billing cycles. What should be included in a collection letter? (Full amount owed, services performed, what action the patient should take, time frame in which the patient should respond, how the patient should take care of the bill, why the patient should take care of the bill, address for payment to be sent, telephone number to contact the office, contact person’s name, signature)

Collection Letters Multipurpose collection letter Fig. 10-16 This collection letter: includes a checklist for the patient to choose a payment option, advises the patient of a past due account, offers payment options, and warns the patient that failure to respond will result in a referral to a collection agency.

Insurance Collection History of accounts Coinsurance payments Insurance checks sent to patients Managed care organizations Medicare Medigap insurance Workers’ compensation Suing a third-party payer Keeping a history of the account will provide information if the account needs to go to collection. Advise the patient when insurance payment has been received and if any action is required. A managed care desk reference is helpful to find information about managed care requirements. Verify information for Medicare, Medicaid, and workers’ compensation claims before sending an account to collection. Suing based on claim for damages falls entirely under state law.

Collection Agencies When to use a collection agency When patient says he/she won’t pay When patient breaks promise to pay When partial payments, but 60-day lapse Failure to respond Returned check Insurance company payment not forwarded Misinformation Can’t be located Another sign of difficulty in collecting is the coexistence of personal problems, such as divorce. It’s a difficult step to turn a patient’s account over to a collection agency. Don’t do it until all reasonable attempts have been made to collect payment yourself.

Collection Agencies Choosing an agency Types of agencies Agency operating techniques Agency charges Agency assigned accounts What is a “netback”? (Amount collected, minus the agency’s fees.) Choose a reputable agency, because the agency’s behavior will reflect on the medical practice. Determine what type of agency—local, regional, national—to employ. Find out the experience level of the staff and make sure the agency values the physician’s business. Collection agencies must follow all laws stated in the Fair Debt Collection Practices Act. What should be sent to a patient whose account is in collection? (A letter of withdrawal, via certified mail6) Collection agencies may also act as credit bureaus or do credit counseling.

Small Claims Court Filing a court claim Obtain claim of plaintiff form File papers with the court Pay the filing fee Arrange to serve the defendant Set trial date If a nonpayment goes to small claims court, check with your state and county laws on monetary limits on the amount that can be handled in this judicial setting. The person filing the petition is called the plaintiff. The patient or other party is the defendant. Discuss with the class what options the patient has once he or she is served. (Pay the claim, ignore the claim, answer the petition, demand a jury trial.) Be sure to have all documents and statements prepared for a trial. What is a “garnishment”? (A court order attaching a debtor’s property or wages to pay off a debt.)

Tracing a Skip Check the address on returned envelope Check the ZIP code File a request at the post office Look in the phone book Call the primary care physician Check with hospital accounts department Inquire at place of employment Call contacts on patient’s registration form A patient who owes a balance and moves and leaves no forwarding information is a “skip.” Ask for additional skip search techniques from the class. (Answers will vary. See Box 10-3.)

Special Collection Issues Bankruptcy Terminally ill patients Estate claims Litigation Patient complaints Collection controls Embezzlement Precautions for financial protection Bonding Discuss approaches and ask the class for its input on appropriate collection communications with terminally ill patients. (Answers will vary.) What is “embezzlement”? (Stealing money that has been entrusted to one’s care.) Office policies should be in place to prevent dishonesty in reporting practices. What is “bonding”? (An insurance contract by which a bonding agency guarantees payment of a certain sum to a physician in case of a financial loss caused by an employee or some contingency over which the payee has no control.) Insurance billers, claims assistance professionals, or anyone who handles checks or cash should be bonded or insured. This covers financial loss, should it occur.

Bankruptcy Types of bankruptcy Chapter 7 Chapter 9 Chapter 11 See Box 10-4 for different types of bankruptcy. Under Chapter 7: assets are liquidated and distributed to creditors; secured creditors are first in line; most medical bills are unsecured debt, so-called because they are not backed by collateral.

Estate Claims Filing an estate claim Confirm death Pursue payment from third parties Contact the county File the claim Send itemized statement to the attorney Follow up as needed Great care and sensitivity should be taken when you try to collect on a deceased patient’s account. Don’t call the family during the time of bereavement.

Patient Complaints Listen Thank the person Apologize Answer the complaint Be professional, sincere Take it seriously Respond in letter form Be cordial Be sure to follow up on the complaint by looking at the root of the problem and communicating with the office manager. Take patient complaints seriously. Ask students if they have ever complained to a business and what the experience was like and what the result was. Were the lines of communication open? Was the problem addressed in writing?

Questions?