1. Learning Objectives Chapter 16
Define, spell, & pronounce the terms listed in the vocabulary.
Define bookkeeping & all the different transactions recorded in patient accounts.
Do the following related to patient account records:
List the necessary data elements in patient account records
Discuss a pegboard (manual bookkeeping) system
Explain when transactions are recorded in the patient account
Perform accounts receivable procedures for patient accounts, including charges, payments, & adjustments.
Describe special bookkeeping procedures for patient account records, including credit balances, third-party payments, & refunds; explain how to interact professionally with third-party representatives
Discuss payment of the time of service, & give an example of displaying sensitivity when requesting payment for services rendered
Describe the impact of the Truth in Lending Act on collection policies for patient accounts
Discuss ways to obtain credit information, & explain patient billing & payment options.
Review policies & produces for collecting outstanding balances on patient accounts.
Do the following related to collection procedures:
Describe successful collection techniques for patients accounts
Discuss strategies for collecting outstanding balances through personal finance interviews
Describe types of adjustments made to patient accounts, including nonsufficient checks (NSF) & collection agency transactions
Define bookkeeping terms, including accounts receivable & accounts payable
Discuss patient education, in addition to legal & ethical issues, related to patient accounts, collections, & practice management.

2. Patient Accounts, Collections, & Practice Management
Pages

3. Bookkeeping in the Healthcare Facility
Page 305
Bookkeeping in the Healthcare Facility
Bookkeeping = the recording of financial transactions in the patient account records.
The charges documented on the encounter form are used to complete the health insurance form, which shows the diagnosis, procedures, & associated charges.
Payments to the healthcare facility come as reimbursement from the insurance company of a patient payment.
Adjustments are made to a patient’s account when it is necessary to add or subtract an amount, which is not a payment, from the balance.
Most healthcare facilities use practice management software for daily bookkeeping transactions.

4. Patient Account Records
Page 305
Patient Account Records
The patient account record should have information pertinent to collecting the account, such as:
Name & address of the guarantor
Insurance identification information
Home & business telephone numbers
Name of Employer
Any special instructions for billing
Emergency or alternative contact information
It provides a running balance, the result of the different financial transactions performed in the account (charges, payments, adjustments, & credits).
Guarantor = the individual who subscribes to an insurance plan & accepts financial responsibility for the patient

5. Patient Account Records: Cont.
Page 305
Patient Account Records: Cont.
Entering & Posting Transactions in Patient Accounts
When practice management software is used, charges are entered into the record automatically after the office visit.
When a pegboard system is used, the transactions are initiated before the patient goes to the exam room.
The patient account ledger card is inserted under the first or next available receipt, & the first available writing line of the card is aligned with the carbonized strip on the receipt. Enter the receipt number & date; enter the account balance in the space labeled previous balance; & then enter the patients’ name. A copy of the receipt is detached & clipped to the patient’s chart to be routed to the provider.

6. Patient Account Records: Cont.
Pages 305 – 307
Patient Account Records: Cont.
Posting Charges
Charges to the patient’s account should be taken from the provider’s fee schedule.
Patient account management software systems automatically put in the correct fees or charges when the code is entered.
When the pegboard system is used, check to make sure that the correct card is being used before recording anything. Then record the service by procedure code, post the charge from the fee schedule, enter any payment made, then write in the current balance.
If there is no balance, place a zero or a straight line in the balance column.

7. Patient Account Records: Cont.
Page 310
Patient Account Records: Cont.
Posting Payments
All payments are entered into the patient’s account as a credit.
Payments should be posed by line item corresponding to the submitted health insurance claim.
All insurance payment amounts posted should math the total amount paid on the Explanation of Benefits (EOB)
All payments = received by mail/electronically/copays at the time of appointment

8. Patient Account Records: Cont.
Pages 310 – 311
Patient Account Records: Cont.
Posting Adjustments
Adjustments are credits posted to the patient account record when the provider’s fee exceeds the amount allowed stated on the EOB.
Adjustments should always be posted to the patient account record at the same time as the payment.
HITECH states that providers may not discount patient’s financial responsibility after the health insurance has paid it portion.
HITECH – Health Information Technology of Economic & Clinical Health
Providers can adjust only the amount in the patient account approved by the health insurance company. (Or if the patient files for bankruptcy. The entire account is then adjusted off the books)

9. Patient Account Records: Cont.
Page 311
Patient Account Records: Cont.
Special Booking Entries for Patient Account Records
There are 3 special entries that are used to keep the patient account record in balance & they are:
Credit balances
Third-party payments
Refunds

10. Patient Account Records: Cont.
Pages 311 – 313
Patient Account Records: Cont.
Credit Balances
This occurs when a patient has paid in advance or an overpayment or duplicate payment is made.
A credit balance creates a debit in the patient account, or an amount that is due by the provider to the patient or the insurance company, depending on which party made the overpayment.

11. Patient Account Records: Cont.
Page 313
Patient Account Records: Cont.
Third-Party Payments
These are reimbursement payments made by an insurance company that provides benefits for the patient.
Refunds
Refunds are return payments made to the insurance companies for overpayment made on patient accounts.
The total charged = insurance payment amount + amount adjusted + patient responsibility or secondary insurance responsibility.
Sometimes they will pay the bill of a patient twice.

12. Patient Account Records: Cont.
Page 313
Patient Account Records: Cont.
Interacting with Third-Party Representatives
Most of the time you can do all of your interacting with the insurance company over the Internet but if you have to call here is some advice:
Before calling have all documents readily accessible
Use a headset so while you are on hold you can do something else while waiting
When the representative comes on the line don’t tell them how long you’ve had to wait (they don’t have control over that)

13. Patient Account Records: Cont.
Page 313
Patient Account Records: Cont.
Identify the patient quickly so you can get to the purpose of the call
Document all details of the call in the patient’s health record (include the representative’s name & date & time)
If the call is a follow up call share the details of the previous call with the representative (they should be in the patient’s health record)

14. Patient Account Records: Cont.
Pages 313 – 314
Patient Account Records: Cont.
Payment at the Time of Service
Copays are paid before being seen
If the patient doesn’t have insurance then they should be told that payment is expected at the time of service when the appointment is made so that they are not surprised
They pay after the appointment is over & everything is totaled up

15. Patient Account Records: Cont.
Page 314
Patient Account Records: Cont.
Displaying Sensitivity When Requesting Payment
Don’t be embarrassed when asking for payment
Use tact, be courteous & show a sincere desire to help the patient with financial problems.

16. Patient Account Records: Cont.
Page 314
Patient Account Records: Cont.
Billing After a Payment Agreement Has Been Made
Sometimes if a surgery or extensive therapy are warranted a payment arrangement contract is offered.
These state the monthly payment, the due date, whether an interest will be charged & penalties for nonpayment.

17. Patient Account Records: Cont.
Page 314
Patient Account Records: Cont.
Using Credit for Medical Services
These have become popular in recent years but can cause the patient to have a greater bill in the long run.
To help the patient the practice may break the payment up into two or three interest-free lump sum payments so that the patient does not incur credit care interest charges.

18. Truth in Lending Act Page 314
TILA – requires the an individual be provided with certain information when credit is extended:
Annul percentage rate (APR)
Terms of the loans
Total costs to the borrower
If an agreement exists between provider & patient the the practice will accept full payment in more than four installments, the practice must provide a Federal Truth in Lending Statement.

19. Obtaining Credit Information
Page 314
Obtaining Credit Information
This information should be treated as confidential information & guarded like all health information in the practice.
Never access a credit report on patients unless it is necessary to process an application for credit privileges at the healthcare facility & the patient authorizes it.

20. Monthly Patient Account Statements
Pages 314 – 315
Monthly Patient Account Statements
Healthcare facilities should send monthly statements for all patient account records that have a balance due.
The patient statement should have payment options presented clearly. The font on the statement should be large enough to be read easily & should itemized details of the following:
Charges for the date of service
Insurance payments & adjustments
Patient payments, including copayments at the time of service
These statements should be computer generated at the beginning of each month for patient accounts that are 90 days past due or less.
Also include how many days past due the account is

21. Monthly Patient Account Statements: Cont.
Page 315
Monthly Patient Account Statements: Cont.
Medicare Advance Beneficiary Notices
Medicare doesn't cover some healthcare services so the Advanced Beneficiary Notice (ABN) is presented to patients in these circumstances.
The ABN provides the option for patients to pay the provider’s fee for the services that Medicare doesn’t cover.
The patient decides whether they still want to receive the services from the provider & then completes the information on the form.

22. Monthly Patient Account Statements: Cont.
Pages 315 – 316
Monthly Patient Account Statements: Cont.
Professional Courtesy
Stark Law imposes the following restrictions:
It must be extended to all members of the healthcare facility (not just a single provider)
Services must be routine for the healthcare facility extending the professional courtesy
It has to be set forth in writing in advanced by the healthcare facility’s board of directors
It can not be extended to Medicare patients or other federal beneficiaries unless there is documentation of financial need
It can not violate any anti-kickback statue/state law
Stark Law, which was passed to eliminate fraud,

23. Monthly Patient Account Statements: Cont.
Page 316
Monthly Patient Account Statements: Cont.
Billing Minors
According to federal regulations minors cannot be held financially responsible for their patient accounts unless they are emancipated.
For divorced parents: the parent who brings the child in is responsible for the payment & should be informed of the responsibility
Minors can be treated for certain conditions (STDs, pregnancy, & birth control) without parental consent. In these cases consult with the provider or office manager about how to bill.
NEVER make a bill out to a minor unless they are emancipated

24. Monthly Patient Account Statements: Cont.
Pages 316 – 317
Monthly Patient Account Statements: Cont.
Medical Care For Those Who Cannot Pay
Learn about local organizations & agencies that can aid indigent patients in obtaining the necessary assistance.
Talk to your provider about what they do to help these patients
Fees in Hardship Cases
This is something that you have to find out the provider’s policy about. It may be handled in a case to case basis.

25. Monthly Patient Account Statements: Cont.
Page 317
Monthly Patient Account Statements: Cont.
Pitfalls of Fee Adjustments
Make fee reductions the exception rather than the norm.
If a provider reduces fees once the patient may expect it next time.
Patients may doubt the competency of a provider who habitually reduces fees.
If you reduce fees for a patient who dies the family may misinterpret it & sue for malpractice.
Discounts offered should always be done in writing.
Never offer a reduce fee because of a poor result or as a means of obtaining payment to avoid the use of a collection agency

26. Collection Procedures
Page 318
Collection Procedures
When to Start Collection Procedures
Collection = the process of using all legal resources available to collect payment for past due patient account balances.
Terms can be arranged for collecting payments in full when the office & the patient cooperate with each other.
You should attempt to work out a plan that the patient can abide by, & the patient should be expected to make promised payments.

27. Collection Procedures: Cont.
Page 318
Collection Procedures: Cont.
Preparing Patient Accounts for Collection Activity
Before you begin collection action determine which accounts have a balance due & how old the account balance is.
Techniques to collect on accounts are:
Collection phone calls
Collections letters
Skip tracing
Accounts that are more than 90 or 120 days old require a final demand letter before the account is turned over to a collection agency
Computer software can be setup to “age” accounts into certain categories:
0-30
30-60
60-90
90-120
Always allow the provider to review & approve the list of patient accounts to be sent to the collection agency

28. Collection Procedures: Cont.
Pages 318 – 319
Collection Procedures: Cont.
Collection Phone Calls
A phone call at the right time, in a negotiable demeanor, is more successful than notes, patient account statements, or collection letters.
Always abide by office policy when making payment arrangements in collection situations.
Never be belligerent with a patient. If they become irate, simply state that the person can call back when ready to discuss a solution for paying the account, say goodbye, & gently hang up
Never listen to expletives or allow verbal abuse. Respectfully end the phone call by saying thank you & good bye; do not slam the phone down.
Written notification is needed before making the final demand for payment indicating that legal or collection proceedings will be started.

29. Collection Procedures: Cont.
Page 319
Collection Procedures: Cont.
General Rules for Telephone Collections
What to Do
Call the patient when it can be done privately but only call between 8 am & 9 pm
Determine the identity of the person with whom you are speaking. (Use the patient’s full name)
Ask the patient whether it is a convenient time to talk (if not get a call back time)
After a brief greeting, state the purpose of the call
Keep the conversation brief & to the point
Try to get a definite commitment
Follow up any promises made by the patient
Be dignified & respectful/Assume a positive attitude
Don’t make threats of any kind

30. Collection Procedures: Cont.
Page 319
Collection Procedures: Cont.
What Not to Do
Call between 9 pm & 8 am = harassment
Make repeated phone calls in the same day
Call the debtor's place of work if personal phone calls are not allowed
Call the debtor’s place of work & leave a message that reveals the nature of the call
Show hostility of any kind – people who feel insulted often do not pay at all.

31. Collection Procedures: Cont.
Page 319
Collection Procedures: Cont.
Collection Letters
Be forceful but courteous.
Make suggestions that previous letters may have been lost or over looked to reduce the patient’s embarrassment for not paying.
Invite the patient to come in to talk about the situation.
Allow the provider to read & approve collection letters.

32. Collection Procedures: Cont.
Page 320
Collection Procedures: Cont.
Personal Finance Interviews
These interviews can be more effective than a whole series of collection letters.
By speaking face-to-face you can come to an understanding of the problem more quickly, & an agreement about future payment plans can be reached.
All collection activity is costly but because of the nature of medical care it becomes hard to collect the more time goes by so don’t delay contacting a reputable collection agency. Know when to stop & call on the services of a professional agency.

33. Collection Procedures: Cont.
Page 320
Collection Procedures: Cont.
Special Collection Situations
Tracing “Skips”
When a patient account statement is returned marked – “Moved – no forwarding address” this account is considered a “skip”
It may be an innocent over look but it could also be someone trying to avoid the liability for debts
Initiate a search immediately for the patient
IF you are unable to find them quickly turn the case over to collections

34. Collection Procedures: Cont.
Page 320
Collection Procedures: Cont.
Suggestions for Tracing Skips
Examine the patient’s original office registration card
Call the number listed in the patient account record
Make discrete phone calls to references listed on the registration
Check the internet for names & numbers of neighbors & landlords
Check the guarantor’s place of employment for information on the person
Do not inform third parties of the debt just that you are trying to verify the persons whereabouts.
Do not communicate with a third party more than once. This is forbidden by law (unless the third party requests you to do so)

35. Collection Procedures: Cont.
Pages 320 – 321
Collection Procedures: Cont.
Claims Against Estates
Courtesy dictates that a bill not be sent during the initial period of bereavement, but do not delay longer than 30 days. Use the following format:
Estate of (Name of patient)
c/o (spouse or next of kin, if known)
Patient’s last known address
If you wait too long to send the bill the law will not be on your side.

36. Collection Procedures: Cont.
Page 321
Collection Procedures: Cont.
Bankruptcy
If you get a notice that one of your patients has filed for bankruptcy do not contact them.
Talk to the provider about how to proceed.

37. Collection Procedures: Cont.
Page 321
Collection Procedures: Cont.
Using a Collection Agency
This usually means sacrificing 40% to 60% of what is due.
Working With the Collection Agency
Data to turn over to the collections agency:
Full name of the guarantor
Name of spouse
Last known address
Full amount of debt
Date of the last entry on account
Occupation of the debtor
Employer address & phone number
After all you can do it’s time to turn over the account to a collections agency.
Once the account has been turned over make no more attempts to collect on the account.

38. Collection Procedures: Cont.
Pages 321 – 322
Collection Procedures: Cont.
Making the Decision to Sue
Never threaten legal proceedings without the express permission of the provider
Litigation to collect a balance due generally is in order when the following are true:
The patient can afford to pay without hardship
You can provide records that support the bill
You can justify the amount of the bill by comparing it with fee practices in the community
The patient’s general condition after treatment is satisfactory
Persuasive powers of an ethical collection agency have been exhausted & the agency advises suing
The patient can be given ample warning of the provider's intent to sue
The defendant is legally liable for the services rendered
The statue of limitations has ruled out any possible malpractice action
The provider is neither indignant nor in a negative frame of mind

39. Collection Procedures: Cont.
Page 322
Collection Procedures: Cont.
Small Claims Court
Providers often send medical assistants with records of unpaid accounts to show the judge.
It would be wise for a medical assistant who has never appeared in court to attend once as a spectator to preview the procedure
This should allow them to feel more at ease when appearing for the provider.

40. Collection Procedures: Cont.
Page 322
Collection Procedures: Cont.
Special Bookkeeping Entries for Collections
Nonsufficient Funds Checks (NSF)
Occur when a patient pays with a check without having sufficient funds in the bank to cover the payment
Bank returns the check to the practice stamped NSF & charges you a fee
Reverse the “paid” on the patient account
Some practices also charge a fee for a NSF but that is up to the provider

41. Collection Procedures: Cont.
Page 322
Collection Procedures: Cont.
Posting Collection Agency Transactions
Because collection agencies charge a percentage of the bill when recording a payment made to them you would record on the patient account:
If the bill was $100 & their fee is 25%
$75 payment
$25 adjustment

42. Managing Funds in the Healthcare Facility
Pages 322 – 323
Managing Funds in the Healthcare Facility
It is crucial for you to understand the difference between accounts receivable & accounts payable.
Accounts Receivable (A/R)
Accounts receivable = money that is expected but has not yet been received
Accounts Payable (A/P)
Accounts payable = the management of debt incurred & not yet paid

43. Managing Funds in the Healthcare Facility: Cont.
Page 323
Managing Funds in the Healthcare Facility: Cont.
Invoices & Statements
If delivered products are not paid for at the time of purchase, the vendor usually includes an invoice.
Place invoices in the accounts payable file until it is paid
Paying for Purchases
Once paid the invoice & receipt of payment can be stapled & placed in the paid file