1. Chapter 4

2. Chapter 4 Medical Office Accounting Procedures

3. Learning Objectives Understand basic accounting principles.
Understand the pegboard system of patient accounting.
Apply charges to a patient in Medisoft.
Apply payments from patients and insurance companies into Medisoft.

4. Learning Objectives (cont’d.)
Apply a batch payment from an insurance company.
Print insurance claims.
Print patient statements.

5. Chapter 4
Lesson 4.1

6. Basic Accounting Principles
System for recording all transactions for the medical office
Bookkeeping:
The recording part of the accounting system
Accounting equation:
Assets - Liabilities = Owner’s Equity
Remember: A medical office is a business and all businesses rely on accounting principles.
What are assets, liabilities, and owner’s equity?
How is the accounting equation used?
What is cash flow?

7. Basic Accounting Principles (cont’d.)
Types of accounting:
Cash-basis accounting: recording revenues when cash is received
Accrual-basis accounting: revenue is recorded when services are performed
What are the pros and cons of each type of accounting?
Which type of accounting is more widely used?

8. Basic Accounting Principles (cont’d.)
Daily journal:
Used to record daily transactions in chronological order
Patient ledger:
All the transactional information for a patient
Posting:
Transferring transaction information from the journal to the patient ledger
What type of information is recorded on a patient ledger card? See Figure 4.2 Patient ledger cards.
How does a medical office checkbook work?
What is petty cash and for what is it used?

9. Pegboard System Pegboard system: Manual accounting system
One-write system
Day sheet:
Lists all the transactions for a given day
See Figure 4.1 Pegboard system.
Describe the pegboard system and how it works.
What does it mean to be a one-write system?
What information is included on the day sheet?

10. Pegboard System (cont’d.)
How does the proving (proof) method for a pegboard work?

11. Medisoft Accounting System
Accounting software package
All transactions are tied to a case
The transaction area has three areas:
Top area is demographic and insurance information
Middle area lists charges
Bottom area is for payments
Basic principles learned with the Medisoft system can be transferred to one of the many other software packages in use today.
How have computerized programs improved upon the pegboard system’s capacity for efficiency?
What is a billing number and how is it used by the system?

12. Charges and Payment Screen
Medisoft Transaction Entry screen.

13. Chapter 4
Lesson 4.2

14. Applying Patient and Insurance Payments
Medical offices receive two types of payments:
Insurance company payments
Patient payments
In patient accounting, the charges are usually connected with patient services; however, payments can come from patients or insurance companies.
What are the three ways that payments can be entered into Medisoft?
Why would you elect to use each payment method and for what tasks?

15. Applying Patient and Insurance Payments (cont’d.)
What types of information appear in each section?
With the one-write system, work is proofed by comparing the day’s totals to totals for the month. How can a check and balance system be created using Medisoft?

16. Patient Payments Apply Patient Payment:
Apply patient payments by selecting Transaction Entry from the Activities menu
Select the patient
Select New in the payment area
Make sure to press the Apply button when finished

17. Patient Payments (cont’d.)
What types of information are required to complete the screen?

18. Printing Insurance Claims
To bill and receive reimbursement from insurance, a claim must be submitted.
Creating claims in Medisoft is done through the Claim Management from Activities menu
Describe each of the printing options.

19. Printing Insurance Claims (cont’d.)
Screen for printing claims. You can select paper or electronic.

20. Insurance Payments
Provider usually receives one payment for several patients covered by a particular insurance company.
Claims are itemized in an EOB (explanation of benefits).

21. Explanation of Benefits (EOB)
What types of claims information are itemized on an EOB?
What is the difference between an EOB and a Remittance Advice (RA)?
If a claim is paid, who receives an EOB?

22. Insurance Payment
Insurance companies pay only what has been contracted with the provider.
Most contracts don’t allow the provider to charge the patient the difference.
When an insurance company pays an agreed upon fee for a service for which the provider usually charges more, what happens to the difference?
Where is that amount posted, or is it forgiven?

23. Insurance Payment Screen
What types of information must be entered into the Payment information component?

24. Insurance Payment Screen (cont’d.)
What is a charge back?

25. Printing Patient Statements
List the amount owed to the medical office
List procedures performed at time of visit
Two most common billing methods:
Once-a-month billing
Cycle billing
What billing method do most Medical Offices use to bill their patients? Why do you think they choose to bill this way?
When are once-a-month bills typically sent out? Why?
What is cycle billing? What are its advantages? What types of medical offices would benefit from cycle billing?
The text suggests spacing time between billings to allow more time to check the accuracy of charges and payments. What other types of check and balance systems would you suggest?

26. Printing Patient Statements (cont’d.)
Select the range of dates and chart numbers. You can also select by billing codes and providers.

27. Printing Patient Statements (cont’d.)
This is the print dialog box that will pop up when you want to print statements for the day. (Instructor Note: There is no option at this point to choose which printer the document will be sent to. All computers must be set up to have the correct default printer for this to work properly. Contact your IT department if the documents are sent to a printer other than the one you intended to send them to.)

28. Printing Patient Statements (cont’d.)
Pick the type of statement and select OK. The statements will print to the default printer for your computer.

29. Printing Patient Statements (cont’d.)
Select the chart range, dates, insurances carriers, as well as other options on the screen. Or leave blank to select all.