1. Office and Insurance Collection Strategies
Chapter 10
Office and Insurance Collection Strategies
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

2. Chapter 10
Lesson 10.1
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

3. Learning Objectives
Define credit and collection key words terminology and abbreviations.
Define accounts receivable and explain how it is handled.
Recite types of fee adjustments available to patients.
Name payment options available to patients.
Define aging analysis.
List the names of the federal credit laws applicable to a physician office setting.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

4. 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 for an overview of the billing procedures in a medical practice.
Physicians are reimbursed by third-payer payers according to contract provisions.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

5. 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.)
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

6. New Patient Confirmation Letter
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.
FIGURE 10-2 New patient confirmation letter emphasizing information to incorporate when writing to a new patient.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

7. 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.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

8. Fee Adjustments discount cash discounts financial hardship write-offs
professional courtesy
copayment waiver
no charge
reduced fee
What is a “fee schedule”? (A listing of accepted charges or established allowances for specific medical procedures)
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)
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

9. Ledger Card Financial Accounting Record
Fig is an example of a financial accounting record showing various attempts of a medical office to receive payment from a patient.
Explain why this documentation is important. (The letter confirms office policies [fees, appointment time, patient education, etc.] in writing for the patient.)
FIGURE 10-3 Electronic hard copy of a patient’s financial accounting record showing dun messages, posted payments, and cash discount.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

10. 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.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

11. Communicating Fees (cont’d.)
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 )
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12. Collecting Fees Payment at time of service Payment by check
Itemized statements
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.
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.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

13. Financial Agreement Form
Fig. 10-7
The financial agreement form is used for financial payment plans.
The Truth in Lending Act requires full disclosure of financial charges.
FIGURE 10-7 Financial payment plan agreement that provides full disclosure of all information by the Truth in Lending Act, Regulation Z.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

14. Demand Letter for Returned Check
Hi Jennifer, ?
Thank you,
Stephen
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.
FIGURE 10-9 Demand letter for returned check. This letter serves as a formal notice to collect payment and notifies a patient of impending legal action.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

15. 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)
FIGURE 10-10 Computerized statement. A credit card option should be printed near the bottom of the statement to encourage payment. (Form adapted courtesy Bibbero Systems, Inc., Petaluma, CA; phone: ; fax: ;
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

16. Collection Decision Tree
Fig
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.
FIGURE 10-11 Collection decision tree. This is a quick reference used to help determine when to send statements, make telephone calls, and send accounts to a collection agency.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

17. Billing and Collection Guidelines
First statement at time of service
Mail second itemized statement
Third statement 30 days later
First phone call/suspense
Second phone call with 5-day notice
Written 10-day notice with next steps
Take steps indicated in prior statement
Ask students how they might conduct the first and second telephone calls.
What are “dun messages”? (Phrases printed on statements to inform or remind a patient about a delinquent account and to promote payment)
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

18. Payment Options cash check credit card online payment debit card
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)
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

19. Credit and Collection Laws
Equal Credit Opportunity Act
Fair Credit Reporting Act
Fair Credit Billing Act
Truth in Lending Act
Truth in Lending Consumer Credit Cost Discloser
Fair Debt Collection Practices Act
Statute of limitations
See Box 10-1, Federal Credit and Collection Laws.
Discuss statutes of limitations and other state laws pertaining to credit and collection in the medical practice. (Answers will vary depending on the state.)
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

20. Chapter 10
Lesson 10.2
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

21. Learning Objectives
Perform oral and written communication collection techniques.
State the role of a billing service, collection agency, and credit bureau in the collection process.
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.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

22. 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.)
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

23. Collection Form Letter
Fig
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)
FIGURE 10-15 Collection form letter sent to all patients who have not responded after two billing cycles.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

24. Multipurpose Collection Letter
Fig
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.
FIGURE 10-16 Multipurpose collection letter with checklist. This advises the patient of a seriously past due account, offers the patient three payment options, and warns the patient that failure to respond will result in a referral to a collection agency.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

25. Collection Abbreviations
Table 10-3
Explain what the abbreviations stand for.
Tell the students about other abbreviations you have encountered.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

26. Insurance Payments 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.
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27. 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.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

28. 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 mail)
Collection agencies may also act as credit bureaus or do credit counseling.
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29. 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)
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30. Tracing a Debtor (“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, Search Techniques Used to Trace a Debtor)
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

31. Special Collection Issues
bankruptcy
terminally ill patients
estate claims
Discuss approaches and ask the class for its input on appropriate collection communications with terminally ill patients. (Answers will vary.)
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32. Types of Bankruptcy Chapter 7 Chapter 9 Chapter 11 Chapter 12
See Table 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.
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33. 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.
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34. 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?
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35. Other Considerations Collection controls Embezzlement
Precautions for financial protection
Bonding
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.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.