CH 13 The Revenue Cycle: Fees, Credit, and Collection

The Medicare fee schedule Lists 3 Columns Of Figures For Each Procedure Code Number:

(1) participating physician fees, (2) nonparticipating physician fees, and (3) limiting charge.

Deadbeat

(one who evades paying bills) may be spotted in advance, so payment may be requested at the time of service. Some signals to watch for are: 1. Unfilled blanks on the patient registration form 2. Questionable employment record 3. No business or home telephone 4. Many moves of residence 5. A motel address 6. A record of doctor hopping 7. No referral 8. No insurance

UCR Definitions Include:

* Usual fee—The fee normally charged for a given professional service by an individual physician (i.e., the physician's usual fee). * Customary fee—The fee that is in the range of usual fees charged by physicians of similar training and experience for the same services within the same specific and limited socioeconomic area. * Reasonable fee—The fee that meets the two preceding criteria or is considered justifiable by responsible medical opinion, considering any special circumstances of the particular case in question.

Motivated Billing Department Keeps These On Hand:

- Contracted insurance company's provider-relations contact information - Copy of the state's prompt-pay law (if applicable) - List of deadlines that must be met by each payer to submit insurance claims and successfully resubmit denied claims - Matrix of contracted payers listing what each has agreed to pay for procedure codes the practice submits - Policy that details when to write off an account or submit it to a collection agency

An NSF Demand Letter Should Include:

1. Check date 2. Check number 3. Bank the check is drawn on 4. To whom the check was payable 5. Check amount 6. Any allowable service fee 7. Total amount due 8. Number of days the check writer has to take action

2 Basic Provisions Of The Garnishment Law:

1. It limits the amount of employee earnings withheld for garnishment in a workweek or pay period. 2. It protects the employee from being dismissed if his or her pay is garnished regardless of the number of levies included in the garnishment.

3 Kinds of Accounts:

1. Open-book account (also called open accounts)—Record of business transactions on the books that represents an unsecured account receivable where credit has been extended without a formal written contract; payment is expected by a specific period. The physician's patient accounts are usually of this type. Open accounts fall under the "oral contract" time limit. 2. Written-contract account—Agreement a patient signs to pay the bill in more than four installments under the Truth in Lending provisions. 3. Single-entry account—Account with only one charge listed and generally for a small amount.

Solutions for Payment Excuses:

1. Situation: Saying the check is in the mail. Solution/Response: Get a check number, amount, and mail date. Call in 3 days if not received. 2. Situation: Broken promise by patient. Solution/Response: Follow up within 48 hours. Determine the reason for the broken promise. Get immediate payment. 3. Situation: Sending unsigned checks that must be returned. Solution/Response: Have the patient come to the office to sign. 4. Situation: Paying an incorrect amount. Solution/Response: Have the patient come to the office and exchange a new check for the one made out in error. 5. Situation: Saying, "I never received your bill." Solution/Response: Verify name and address, and resend the bill the same day. Call in 3 days to see if the patient received it.

Verifying Checks

A check is a written order to pay a sum of money. When accepting checks, always ask to see two sources of identification. Call to verify checks drawn on out-of-state bank accounts. Examine the check to be sure it is made out to the correct party, it is for the correct amount, and the signature matches other identification. Verify the address and telephone number on the check with the patient's account.

Dun Messages

A message or phrase to inform or remind a patient about a delinquent account. If a payment has not been made after rendering professional services, then an itemized billing statement is sent every 30 days. Patients should be able to open a statement, peruse it, and understand the date of service, service rendered, amount owed, and how long past due the account is.

Capitation

A method of payment for health services by which a health group is prepaid a fixed, per capita amount for each patient enrolled without considering the actual amount of service provided to each patient. This per capita amount is usually paid on a monthly basis.

Credit Counseling

A nonprofit agency that assists people in paying off their debts. Or the debtor may contact his or her own bank or labor union, either of which may provide counseling at no charge. If these suggestions do not help, then a budget consultant might be the solution. A budget consultant is a financial planner who recommends solutions for a debt by itemizing income and expenses for a projected time period. Commercial debt consolidators charge high fees and should be sought only as a final resort.

Participating Physician

A physician who agrees to accept an insurance plan's preestablished fee or reasonable charge as the maximum amount collected for services rendered, also called member physician; in the Medicare program, a participating provider is one who accepts assignment, agrees to the approved amount based on the Medicare fee schedule as the full charge for services rendered, and receives the payment check. Patients must pay a cost share and/or deductible or both for services rendered.

Usual, Customary, and Reasonable (UCR)

A usual fee is one that an individual physician normally charges for a given professional service to a private patient; a customary fee is in the range of usual fees charged by providers of similar training and experience in a geographic area; a reasonable fee meets the two previous criteria or is justifiable by responsible medical opinion considering the special circumstances of the case.

Open Accounts

Accounts that are open to charges made from time to time; physicians' patient accounts are usually called open-book accounts. Record of business transactions on the books that represents an unsecured account receivable where credit has been extended without a formal written contract; payment is expected within a specified period.

Assignment

Agreement by which a patient assigns to another party (e.g., a physician) the right to receive payment from a third party (e.g., insurance plan or program) for the service the patient has received.

Multipurpose Billing Form

All-encompassing tracking device typically containing procedures and services, diagnoses, fees, next appointment, and other information; also called charge slip, communicator, encounter form, fee ticket, patient service slip, routing form, superbill, and transaction slip; it may be used when a patient submits an insurance claim or to extract information for insurance billing. The form contains all services and procedures typically performed in the physician's office and about 25 to 50 of the practices' most common diagnoses—precoded. Some diagnostic codes may have a short blank line following the code. This is to allow entry of additional characters, so specific diagnostic codes can be reported.

Relative Value Studies

Also referred to as a Relative Value Scale (RVS), consist of a list of five-digit CPT® procedure codes. Each code is weighted with a number that represents a unit value indicating the relative value for that service. When using this system, a higher number of units are assigned to services requiring greater resources and, therefore, a higher fee. For example, a 60-minute office visit would carry more value than a 15-minute office visit, or a heart procedure would carry a higher value than an appendectomy. The number representing the weighted value of each service or procedure is multiplied by a conversion factor (CF), which is based on historical cost experience. Periodically, the values are updated to reflect increases in actual expenses. Medicare uses its own RVS listings to establish fee schedules and workers' compensation uses either the UCR fees or the RVS fee schedule.

Concierge Fees

Also referred to as retainer-based medicine, primary care physicians opt out of insurance programs and decrease their patient load, but instead of billing patients directly they charge a monthly or annual fee for services. Additional fees may be charged for tests and procedures as well as hospital care.

Common Collections Abbreviations:

B - bankrupt BLG - belligerent EOM - end of month EOW - end of week FN - final notice H - he or husband HHCO - have husband call office HTO - he telephoned office L1, L2 - letter one, letter two (sent) LB - line busy LD - long distance LMCO - left message, call office LMVM - left message voice mail N1, N2 - note one, note two (sent) NA - no answer NF/A - no forwarding address

Fair Credit Reporting Act

Became law in 1971 and was amended in the Budget Bill of 1996. Consumer reporting agencies (CRAs) gather and assemble information on private individuals to evaluate and determine the credit standing and credit capacity of consumers; they sell consumer reports that detail the information for future creditors, employers, insurers, and other businesses. The FCRA, enforced by the Federal Trade Commission, is designed to promote accuracy and ensure the privacy of the information used in consumer reports. In most cases, a prospective employer is prohibited from using a credit report for hiring purposes.

Equal Credit Opportunity Act (ECOA)

Became law in 1975, if the physician agrees to extend credit to one patient, the same financial arrangement must be extended to all patients who request it. Refusal can be based only on ability or inability to pay, and the physician must either tell the patient the reason for a credit refusal or give the patient notice that no credit will be granted. The patient then has 60 days to request the reason in writing why credit was denied. Once the physician has granted credit, the Equal Credit law coverage applies.

Federal Truth in Lending Act

Became law on July 1, 1960, governs anyone who charges interest or agrees to more than four payments for a given service. If the physician charges interest rates, the rates may be governed by state laws; therefore, it is important to check with the appropriate agency before beginning such charges. Does not apply and no disclosures are required if a patient offers to pay in installments or whenever convenient.

Debit Card

Card used by bank customers to either withdraw cash from an affiliated automated teller machine (ATM) or make electronic transfers of cash from a customer's bank account to a merchant's account; also called a bank card. small fee may be charged to the customer's checking account when the card is used; however, this fee is usually applied once a month regardless of how many times the card is used during the month. Since these cards accompany checking accounts and are easy to use, more patients will have these. Cards are issued either by banks or through credit card companies (e.g., Visa or MasterCard debit card). There are two types of debit cards: off-line and on-line. Off-line debit cards do not require a personal identification number (PIN) and generate an electronic check that is debited in about 1 to 3 days against the bank account like a handwritten check. On-line debit cards require a PIN and withdraw money immediately from the holder's account. If the office processes credit cards electronically, then it can usually use the same electronic credit card machine to swipe the debit card for verification and approval. The bank that issued the debit card is responsible for paying the funds that were approved, so there are no checks returned for nonsufficient funds.

Notes

Codes with definitions describing action taken on the claim (e.g., R1TFP—"your other health insurance was considered in the final disposition of this claim").

Payment at Time of Service

Collection for office visits when the service is rendered is an opportunity not to be missed. It should be stated that payment will be expected when the patient checks in, along with the copayment for that day's service, if applicable. The medical practice may introduce a "pay now" policy by sending a letter to patients indicating the need for such a policy. A common excuse for nonpayment is the forgotten checkbook; a remedy is to keep early-pay envelopes, stamped and self-addressed, within easy reach to give to patients with requests to mail a check on arrival at home. Also, provide payment options such as paying online and credit or debit card payment.

Physician's Profile Or Fee Profile

Compilation kept by each insurance carrier of a physician's charges and payments made through the years for each professional service rendered to a patient; as charges are increased, so are payments, and the profile is then updated through the use of computer data.

Diagnosis & Procedure Coding

Diagnosis is the determination of the nature of the disease and substantiates medical necessity for procedures and services; procedures are medical services provided to diagnose or treat a patient.

Sliding Fee Schedule

Federally funded programs as well as clinics and physician practices may offer this to all income-eligible uninsured or under-insured patients. Criteria to be considered for such discounts are household's gross income (e.g., between 101% and 200% of the poverty level), employment status, and special circumstances. Discounts may apply only to specific services, such as office visits, and not to all services provided. A discounted fee schedule must be developed according to local fee standards, appear in writing, and be applied consistently and evenly. Discounted fees apply only to direct patient charges, not to third-party coverage.

Guidelines for Communicating Fees

Fees for medical service should be stated clearly and accurately. A misquoted cost may make a patient angry. Every patient coming to the medical office should have heard about the practice's financial policy at least three times: (1) when scheduling an appointment, (2) when confirming the appointment, and (3) when receiving a new patient letter or communication via snail mail, email, patient portals, or the practice website.

Copayment (copay)

Flat fee that is owed prior to receiving services. Type of cost-sharing whereby the insured pays a specified amount per unit of service and the insurer pays the rest of the cost.

Resubmitting Claims

Follow up procedures for unpaid insurance claims.

Write Off (adjustment, contract adjustment, courtesy adjustment)

For contracted physicians, the difference between the billed amount and the allowed amount; it is deducted from the books, that is, patient account or ledger.

Credit

From the Latin credere, "to believe" or "to trust"; trust in regard to financial obligations; in banking, a deposit or addition to a bank account.

Nonparticipating Physician Fees

Generally a nonparticipating physician (nonpar) does not accept assignment—payment goes directly to the patient, and the patient is responsible for paying the bill in full. A nonparticipating physician has two options, either not accepting assignment for all services or accepting assignment for some services and not accepting assignment for others. An exception to this policy is mandatory assignment for clinical laboratory tests and services.

Credit Laws

Govern the ways fees are collected.

Telephone Collections

If an account remains delinquent for over 60 days, it is important to make personal contact by telephone. First, arrange the accounts according to aging parameters (e.g., 30, 60, 90, 120 days) and select all accounts in the 60-day range. Next prioritize the calls that need to be made according to the amounts owed; take action on accounts that may be difficult to collect first. According to surveys, the best times to call are between 5:30 and 8:30 p.m., Tuesdays and Thursdays, and between 9:00 a.m. and 1 p.m. on Saturdays.

Collection Letters

If regular statements have been sent, 2 or 3 months have elapsed since the service, and the patient cannot be reached by telephone or a promised payment has not been received, then it is time to send a _____________. Should be brief and direct. It should mention how much is owed for a specific service; what the patient should do about the delinquency; when, where, and why the patient should remit; and how the patient can facilitate payment. When mailing a __________ toward the end of the year, it might be helpful to remind the patient that medical expenses, if large enough, could qualify as an income tax deduction if the account is settled before the year-end deadline.

Insurance Check Sent to Patient

If the "assignment of benefits" has been signed and the insurance check has gone to the patient, it is the insurance company's responsibility to generate a new check to the physician and collect the amount of the check directly from the patient. Follow up immediately in such situations.

Monthly Itemized Statement

In an EHR system, the computer can be directed to search the database and print financial account records for patients who have outstanding balances. An individual or an entire family can be listed on the account and the insurance claim submission date indicated. The statement usually shows a breakdown of the amounts that are due or delinquent, and how many days they are delinquent. This information is called aging analysis and is a feature usually not found in a manual bookkeeping system. In the event an insurance company sends a check and the patient has already paid, a credit balance will appear indicating an overpayment on the account and the patient should be sent a statement showing that there is a credit balance. The patient has the right to request a refund for the credit amount.

Bad Check Preventive Measures

Larger medical facilities may want to consider a check authorization system. With this type of system, a company supplies a terminal that gives an approval number for each check and guarantees payment on those that are authorized. To help discourage bad checks, charge a penalty for returned checks. This information should be detailed in the new patient brochures and posted in the office for all patients to see. Use of debit cards will also eliminate bad checks.

Quantum Merit

Latin for "as much as he deserves"; a common-law principle that means the patient promises to pay the physician as much as he or she deserves for labor.

Revenue Cycle

Life of the patient account from creation to payment. Managing the revenue cycle includes ways in which the health care provider ensures financial viability by capturing charges, improving cash flow, and increasing revenue. All processing points in the revenue cycle need to be executed correctly in order to produce revenue flow.

Smart Cards

Like a debit card, is used as an ATM/debit/credit card but is embedded with a programmable microchip that is able to hold much more information. They can be used for banking, electronic cash, government identification, and wireless communication; to purchase goods and services; and to access medical, financial, and other records. They can also store receipts electronically but require special equipment to read the microchip. They improve the convenience and security of any transaction and prevent fraud because data stored on the card is encrypted. They are popular in Europe but have not been used to their potential yet in the United States. American Express offers "blue cards," which are similar.

Fee Schedule

List of medical procedures and services with amounts charged. Is often organized by CPT® procedure code numbers. Must be available to all patients, and under federal regulations, a sign to this effect must be posted in the office. This schedule can be used to quote prices to patients. Practices may have more than one fee schedule except in those states with fair pricing laws that allow only one schedule, which states standard fees. Sometimes a physician charges a fee for a service that is not on the fee schedule, such as an uncanceled "no show" appointment, interest charges for delinquent accounts, or annual summary sheets of the patient's account for income tax purposes. It is wise to tactfully inform a patient before billing for any such services; otherwise, the patient-physician relationship may be adversely affected.

Hardship Discounts

May be granted dependent on the income level. Patients should be asked to verify their level of need by filling out an asset disclosure form or by bringing in their income tax returns. Document the reason for the fee reduction in the patient's financial record.

Online Payment

Medical practices that offer a secure online communication tool to pay for medical services increase collection costs and reduce billing expenses. Patients welcome this option, especially those who already use the Internet to take care of other financial transactions, such as banking, retail shopping, travel expenses, and so forth.

Meeting With The Patient

Meeting face to face with the patient at the time of service regarding outstanding balances is often more successful than telephoning or sending statements. However, an appointment reminder call can be combined with an account call to inform him or her of any balance due. The day before the visit, the patient appointment schedule can be printed from the computer or copied from the appointment book. Each patient's account balance is reviewed and balances over 60 days are flagged. Upon arrival, the patient is courteously escorted into a private room to discuss the bill. The patient can see how committed the assistant is in regard to solving the collection problem, and the chance of a mutually satisfactory resolution is greatly improved. Although the physician does not perform credit and collection work, he or she can make patients aware of their outstanding debt. The realization that the physician is aware of the delinquency is often effective in encouraging payment.

Hill-Burton Act

Most metropolitan areas have certain hospitals that have received federal construction grants to enlarge their facilities, in exchange for which they must care for indigents needing medical care. This obligation falls under the Hill-Burton Act of 1946. By contacting the local department of health, the assistant can obtain the names of hospitals participating in this service and send patients to these outpatient departments. Generally, the patients must complete financial applications to determine eligibility.

Collection Agencies

Should be a last resort; however, do not hold onto an account too long. For best collection results, agencies like to get the delinquent accounts at a maximum of 5 or 6 months after the debt has occurred. When an account has been turned over to a collection agency, the patient's financial record should be removed from the regular file and marked with the date and name of the agency. It is illegal for the physician's office to send a bill to a patient after the account has been turned over to a collection agency. If an agency has an account and payment is directed to the physician's office instead of the agency, the assistant must notify the agency immediately, because a percentage of this payment may be due the agency.

Medicare Remittance Advice (RA)

Similar to the EOB, that accompanies the payment check from the Medicare carrier, showing the breakdown of the amounts charged, allowed, paid, and denied. It may be sent electronically to the provider and the check may be automatically deposited in the medical practice's bank account.

Computer-Generated Encounter Forms

Some computer software programs offer a "check-in" process, which runs through a series of screens that has practice-specific alerts designed so that the receptionist can view details about the patient's account prior to printing an encounter form—for example, checking the patient's appointment status, demographics (active/ inactive), insurance plan, account status (paid in full/bad debt), and producing a balance due summary. By viewing these screens, the receptionist can quickly be brought up to date about each patient at the time of check-in.

Billing Services

Some medical practices employ billing services to prepare and mail patient bills. These services have a number of advantages over billing done by office personnel, on office time, using office equipment and supplies: - Patient understanding of statements is improved because all charges and payments are shown. - Prompt billing is ensured, because sending out statements is the business of the service; the medical practice is free of office disruptions while billing. - Billing services save the medical office money because expensive billing equipment is not required and valuable space need not be allocated for billing supplies. - Collection calls to patients do not disrupt the practice, because they are handled by the billing service. - Patient questions regarding charges are answered by the service. Most billing services use professional computerized monthly statements generated with dun messages, if required. These billing services either pick up copies of multipurpose forms or receive account information electronically to produce statements and complete insurance claims.

Bill

Statement of fees owed for services rendered.

Fair Credit Billing Act

States that patients have 60 days from the date the statement is mailed to complain about an error. The complaint must be acknowledged and documented within 30 days of receiving it. The provider has two billing cycles (maximum of 90 days) to correct the error if an actual error occurred; otherwise, the accuracy of the bill should be explained to the patient.

Insurance Claims Processing

Submitting insurance claims to federal and private insurance carriers for reimbursement.

Collections

Taking action on money owed in delinquent accounts in order to receive payment.

Medicare Fee Schedule

The Centers for Medicare and Medicaid Services (CMS) pays all covered benefits for physicians' services based on the Medicare fee schedule, which is determined by a Resource-Based Relative Value System (RBRVS). Annually, the CMS posts the new local Medicare fee schedule for each area or region on the Medicare website. In a RBRVS system, payment amounts are calculated by taking into account the relative value for: * Work done by the physician (work RVU) * Practice expense (overhead RVU) * Malpractice insurance (malpractice RVU) The RVU is adjusted by each Medicare local carrier, which determines a Geographic Adjustment Factor (GAF) according to the cost of living in its region by using geographic practice cost indices (GPCIs—pronounced "gypsies"). To determine a payment amount, a conversion factor (CF) is used that is updated each year and published in Medicare newsletters and the Federal Register each November. The formula is RVA X GAF X CF = $ amount of Medicare service.

Value-Based Reimbursement

The VBR model is centered around providing the minimum number of services necessary to improve a patient's condition—thus reducing the expense to treat a patient. With the onset of the Affordable Care Act, payment reform for both state and government payers has taken place. Through Healthcare Innovation Awards, CMS has provided $1 billion to organizations implementing the most compelling new ideas to: (1) deliver better health care, (2) ensure improved outcomes, and (3) lower costs to the public.

Allowed Amount (approved amount, covered amount, covered charges)

The amount the insurance company will pay under contract with the physician.

Coinsurance Payment

The amount the patient is responsible for after insurance payment; it may be a percentage of the allowed amount, for example, 20%.

Billed Amount (charged amount, fee)

The amount the physician charges the patient and insurance company according to the fee schedule.

Obtaining Billing & Collection Information

The first step to ensure payment is to obtain a complete and accurate registration of the patient at the time of the first visit, securing enough personal and financial history to be able to effectively collect on an account or trace a patient who moves. Verify the patient's identity, and review the information on the form before the patient leaves the office to make sure it is legible and complete. If a patient invokes the privacy laws and refuses to divulge any information, it should be policy to require payment for services at the time care is rendered. It is important to update this form regularly, so data is current. This can be done by having the patient review a copy of the original registration form and inserting changes in red ink. This will be vital when follow-up on a delinquent account is necessary.

Credit Bureaus

The industry is divided into two branches. The first branch consists of companies that issue noninvestigative consumer credit reports when someone applies for credit. The second branch consists of companies that issue consumer investigative reports requested by insurance companies, employers, prospective employers, credit grantors, and others who show a legitimate business need. Some also operate a collection department, receiving delinquent accounts from participating businesses.

Diagnosis Relate Group (DRG)

This system classifies patients who are medically related in regard to diagnosis and treatment and statistically similar in length of hospital stay; in other words, it relates patients treated to the resources they consume. Instead of a fee-for-service system, the hospital receives a lump-sum, fixed-fee payment that is based on the diagnosis rather than on time or services rendered. Certain cases or cost outliers (extraordinarily high costs) that cannot be assigned to a DRG because they are considered atypical, such as leaving the hospital against medical advice, rare condition, death, and so forth, are paid the full DRG rate plus an additional amount.

History of Credit

Through the Depression years and before, when a patient was unable to pay cash, the doctor was paid in chickens, vegetables, or other material or by an exchange of labor. In societies, such as ancient China, the doctor regularly visited the patient every 3 to 6 months in order to keep the patient healthy and was paid when the patient was well; payment was suspended when the patient became ill, until the patient was cured or much improved. Times have changed; today in Western society, payment is now expected at the time of service even when an insurance contract is in place.

Small-Claims Court

To be eligible for small-claims court, the bill must be within the limit the state has set on the amount. This figure varies from $300 to $25,000 state to state and, in some instances, within the state. The majority of states have increased maximum amounts from $2000-$3000 to $5000-$10,000. There may also be limits on the number of claims over specific dollar amounts per year, and other dollar limits regarding claims filed against a guarantor of a debt. In many states, lawyers are not permitted to represent litigants; however, an incorporated physician must usually be represented by an attorney.

Accounts Receivable (A/R)

Total amount of money owed for services rendered by all parties.

Participating Physician Fees

When a participating physician signs up in the Medicare program, the physician agrees to accept payment from Medicare (80% of the approved charges/allowed amount) plus payment from the patient (20% of the approved charges/allowed amount) after the deductible has been met. When a physician participates, this is referred to as accepting assignment and the Medicare payment is sent directly to the physician. It is permissible but less confusing not to collect the Medicare copayment up front. The deductible should be collected after the claim has been paid.

Nonsufficient Funds

When notice is received from a bank indicating a check was not honored because of nonsufficient funds (NSF), call the bank and patient to see if they suggest redepositing it. If it is not worthwhile or if a second NSF notice is received, call the person who wrote the check and tell him or her to bring in payment to the office immediately. Accept only cash, a certified check, a money order, or in certain cases a credit or debit card. Be courteous but straight to the point. If restitution is not received within 3 days, notify the patient in writing to start the legal process. In most states, if the debtor has not responded within 30 days, a claim may be filed in small-claims court. It may be possible to collect an additional $100 in damages, and in some states, the person can be sued for three times the amount of the check. Section 1719 of the State Civil Code addresses penal sanctions for individuals who pass checks on nonsufficient funds. The district attorney, district justice, state attorney, or other government official may also help with the collection of a bad check.

Fee Splitting

When one physician offers to pay another physician for the referral of patients, this is referred to as fee splitting. It is considered unethical and a felony in several states. Antifraud and abuse provisions in the Medicare and Medicaid programs state that "anyone who receives or pays money directly or indirectly for the referral of a patient for service under Medicare or Medicaid is guilty of a felony punishable by five years' imprisonment or a $25,000 fine, or both."

Garnishment

means attaching a debtor's property and wage by court order, so monies can be obtained to pay debts. Personal earnings include wages, salary, tips, commissions, bonuses, and income from pensions or retirement programs. Enforcement is carried out by the compliance offices of the Wage and Hour Office, U.S. Department of Labor, which are located across the United States.

Fair Debt Collection Practices Act (FDCPA)

Although the FDCPA is not designed to govern most medical collection activities, it does affect anyone who collects a debt in the same manner as a collection agency. The following guidelines will help avoid negative patient relations and enhance collections: 1. Debtors may be contacted only once a day. 2. Calls may be placed after 8 a.m. and before 9 p.m. 3. Debtors may not be contacted on a Sunday or a day the debtor recognizes as the Sabbath. 4. Contact the debtor at work only if attempts to contact the debtor elsewhere have failed; if the employer disapproves, no contact should be made. 5. Collectors must identify themselves and the medical practice they represent; they must not mislead the patient. 6. The physician or representative may not contact the debtor except to convey the message that there will be no further contact if the debtor states in writing that the physician is not to contact him or her. 7. An action must be taken, such as turning the patient over to a collection agency, if the physician or representative states that a certain action will be taken. 8. All contact must be made through the attorney if an attorney represents the debtor. 9. The medical assistant may contact other people for tracing purposes only; the nature of the call should not be disclosed to another party. 10. Postcards are not allowed for collection purposes. 11. Collectors should not threaten or use obscene language. 12. Collectors are obligated to send the patient written verification of the name of the creditor and the amount of the debt within 5 days of the initial contact.

Payment

Amount of monies received from the insurance carrier, plan, or program.

Participating Fee

Amount paid to physicians who have contracts with Medicare.

Aging Accounts

Analysis of accounts receivable indicating 30-, 60-, 90-, and 120-day delinquency.

Individual Responsibility Program (IRP)

In some states, a program has been established whereby physicians accept all patients but refuse to accept reimbursement from any third-party, private, or government program. Instead, physicians choose to "opt out" of insurance programs and bill the patient directly; the patient then applies to the carrier or program for reimbursement.

Copayment Waiver

In the past, to reduce the cost of medical care for some patients, a physician who accepted assignment (received payment directly from the insurance company) might waive the copayment amount. However, the physician could be accused of not treating everyone with the same insurance coverage equally. In most situations, both private insurers and the federal government ban waiving the copayment. It is, therefore, not recommended. There is one exception to this rule: Medicare recognizes a credit adjustment for this purpose on a doctor-to-doctor basis.

Receiving Payment

Incoming monies paid for services and procedures.

Ledger Card

Individual financial record indicating charges, payments, adjustments, and balances owed.

Federal Wage Garnishment Law

Is a continuous garnishment judgment. In other words, if the debt is not paid within 90 days, the garnishment can be continued for another 90 days. The garnishment law does not apply to federal government employees, or court orders in personal bankruptcy cases. The amount of wages subject to garnishment is based on the patient's disposable earnings. This is the amount left after deductions for federal, state, and local taxes and Social Security. Union dues, health and life insurance, assignment of wages, and savings bonds are not considered in disposable earnings. Garnishment is limited to the lesser of 25% of disposable earnings in any workweek or the amount by which disposable earnings for that week exceed 30 times the highest current federal minimum wage.

Professional Courtesy

Is a euphemism for a discount or a no-charge exemption extended to certain people by the physician. This policy has a long tradition; however, in today's legal climate, the decision to provide professional courtesy to colleagues and their families is not an easy decision. The physician must use sound judgment in deciding whether to waive or reduce the fees and must document the reason in the medical record. Currently, the trend among physicians is toward billing their colleagues; psychiatrists bill all patients including fellow doctors. The medical assistant must know the physician's policy so as not to bill in error. Computerized systems allow accounts to be coded, so no statements are sent to the patient.

Limiting Charge

Is a percentage limit on fees that nonpar physicians may bill Medicare beneficiaries above the fee schedule allowed amount; therefore, no charges are to be submitted to Medicare that are greater than this. Medicare pays 80% of the nonpar allowable fee. The physician can collect 20% of the nonpar allowable fee from the patient and the difference between the allowable fee amount and the limiting charge amount. For assignment claims, nonpar physicians may submit usual and customary fees; thus, two fee schedules are often maintained, one with usual fees and the other with limiting charges.

Medicare Summary Notice (MSN)

Issued within 30 days of processing a claim. The summary, written in laymen's terms, indicates the disposition of the claim including the status of the deductible, services received, and appeal rights. If a claim was processed but no payment was made, the MSN is issued on a quarterly (90-day) basis.

Truth in Lending Consumer Credit Cost Disclosure

It requires that providers disclose ALL costs including interest, late charges, and so on, PRIOR to the time of service. If interest is charged on monthly billing, the amount of each payment, due date, unpaid balance at the beginning of the billing period, finance charge, and date balance due must be included on each statement.

Credit Card Billing

Often used in group practices and in specialties that entail major expenditures such as dental care, eye care, and surgical procedures. After swiping a card, the card and amount are verified by the credit card company. The patient makes payment directly to the credit card company, which sends the payment to the physician. Always check with the credit card company for specific procedures and written instructions for completing telephone transactions. Credit card companies (e.g., Visa, MasterCard, Discover) charge a minimum monthly fee per location as well as a percentage based on the charges submitted. This method reduces office overhead and collection costs. However, under certain circumstances, banks may hold participating merchants or professionals liable for the collection of credit card accounts. For instance, if the bank previously circulated a list of card numbers that should not be honored and if the physician accepted one, the physician could be responsible for the amount charged. A record of the credit card number should always be kept with the patient's financial records and may be useful if the patient needs to be traced or if collection action is necessary. If the patient is reluctant to charge a large amount to a credit card, a payment plan may be instituted, which allows monthly payments via credit card.

Email Collection

Patients may communicate with the medical practice via email and ask questions about their bill. However, email letters CANNOT be used to collect on a debt—this is in violation of HIPAA privacy laws.

Nonparticipating Physician (Nonpar)

Physician who decides not to accept the determined allowable charge from an insurance plan as the full fee for professional services rendered; in the Medicare program, a nonparticipating provider is one who does not accept assignment—payment goes directly to the patient, and the patient is responsible for paying the bill in full. However, a nonparticipating physician has two options of either not accepting assignment for all services or accepting assignment for some services and not accepting assignment for others.

Discussing Fees

Physicians generally prefer not to discuss financial matters (e.g., insurance deductibles, unpaid bills) with their patients. The job of discussing and collecting fees is the responsibility of the medical assistant. There is a right time and a wrong time for everything, including the discussion of medical fees. Most patients who come to the office seeking medical care are more concerned with their health problem than with the expense incurred by their office visit. The assistant begins by listening to the patient's chief complaint but is prepared to discuss the expense. After the patient explains the medical problem, the assistant should tactfully ask about the patient's health insurance coverage. It is wise to ask, "Would you like to know something about the expense?" because occasionally a patient is emotionally unable to handle a discussion of fees. If a patient is elderly and someone in the family is responsible for the bill, the fee discussion should take place with both the guarantor (paying party) and the patient. Never assume anything about a patient's financial status, and do not judge by outward appearance. Even if someone appears poorly dressed, or conveys the impression that they cannot afford to pay, the medical assistant must refrain from asking embarrassing questions. Tact is called for in all inquiries, whether dealing with credit (the ability to pay) or with other decisions. To eliminate psychologically misleading statements about "credit," it is best to use the terminology "patient accounts department" when referring to the credit department. "Our payment policy" is preferable to "our credit policy." Terms that project a positive tone, such as fee instead of charge, will be reflected in patients' attitudes. If a patient is having financial difficulties, this may come out during the initial interview. Then the assistant can discuss a payment plan or a discount if it is warranted. Physicians expect patients to make acceptable monthly payments on their accounts regardless of pending payments by insurance companies.

Collection Ratio

Proportion of money owed to money collected on accounts receivable.

Treating Physician

Provider who renders service to patients.

Patient Registration

Questionnaire designed to provide identifying data to open an account.

Explanation of Benefits (EOB)

Recap sheet that accompanies an insurance check from a private or federal insurance plan, showing the breakdown of payment determination on a claim. In the Medicare program, this document is called a Remittance Advice (RA) for physicians and a Medicare Summary Notice (MSN) for patients; in the Medicaid program, this document is called a Remittance Advice (RA); and in the TRICARE program, this document is called a Summary Payment Voucher.

Collection Reimbursement

Receiving money from collection action.

Third-Party Payer Reimbursement

Receiving payment from insurance companies.

Charge Capture

Recording and posting of all encounters, that is, procedures and services.

Patient Billing

Sending itemized statements to patients who have outstanding balances.

Cycle Billing

Sending itemized statements to portions of the accounts receivable at certain times of the month; can be divided by alphabet, account number, insurance type, or by calendar day of first visit.

Appeals Process

Sending unpaid insurance claims to insurance carriers with additional documentation requesting reconsideration for payment.

Nonparticipating Fee

Set amount paid to physicians who do not have a Medicare contract.