Chapter 8

Collection by Telephone

A common method of collection is to Consumer Protection Act of 1991 telephone calls. A phone call can be effective in reminding a (TCPA), wvith revisions, provides laws governing tele- phone the patient personally. The Telephone marketing and collection person who has unintentionally forgotten to pay. Tact and experience are necessary in order to be effective in phone collections. The following are some techniques of phone collection: -Be sure you are talking to the person who is responsible for payment of the account. Avoid disclosure of PHI by following HIPAA regulations. -Identify yourself, the practice, and the purpose of the call. -Make the collection call in the evening, especially if the person who is responsible for payment is out during the day, but no later than 9 P.M. Collection calls may be placed after 8 A.M. but no later than 9 P.M. (local time of the called party) and not on Sunday or another day the patient recognizes as a Sabbath day. -Never call a patient at a place of employment to inquire about an unpaid bill. -Always use a pleasant manner and positive wording (such as "May I process your payment today using your credit or debit card?"). In other words, speak with an expectation of payment to reflect your confidence that the problem can be resolved. -Ask to discuss the bill to determine whether the patient has any questions. This query should elicit some response, which is your cue to continue the rest of the conversation. -Listen carefully and take accurate notes of the conversation. -Inform the person that you need to know why the bill has not been paid or why inquires about the unpaid bill have not been answered. -Do not show irritation in your voice or appear to be scolding the patient. If the patient promises to pay, ask when you can expect a payment, the method of payment (cash, debit card, etc.), and the amount. Then make a note about the con- versation, saying, for example, "I am making a note in your account file that you promised to pay $100 on September 10. Is that correct?" -If the patient would prefer that you call his or her attorney, do not contact the pa- tient directly again, unless asked to do so by the attorney. If the patient requests that no more calls be made to him or her concerning the debt, continue correspon- dence through the mail, with thorough documentation and evidence of delivery. When collecting by phone, always keep complete, accurate records of who said what, who promised to pay, how much was promised, and when the payment was prom- ised. Note any unusual circumstances. Ask the person responsible for the bill to write down the arrangement. An effective collection tool is to mail a confirmation of the phone details to the patient. An important revision to the TCPA was implemented in 2014 in reference to using automated (autodialed) calls containing any telemarketing information to patients. The revision references telemarketing calls but states that collections calls sion. Under the 2014 revision, autodialed calls (collection calls) that do not contain that contain any telemarketing content do fall under the requirements of the revi. any telemarketing content can be made to wireline (landline) phones without patient expressed consent. However, before automated calls can be made to a patient's wireless number, regardless of the presence or absence of telemarketing content, the patient must have given expressed oral or written consent that his or her wireless number may be used by the medical office. It is strongly recommended that written consent be obtained from the patient. The revision applies to autodialed calls and does not apply to calls that are manually dialed and that do not contain any type of prerecorded message.

Checking the Reimbursement Details.

After the medical office receives the remit- tance advice (the ERA or EOB), the administrative medical assistant reviews it and checks it against the original claim. If all is in order, the report is filed with the patient's financial records.

Using Clearinghouses.

A clearinghouse is a service bureau that collects electronic claims from many different medical practices and forwards the claims to the appropri- ate insurance carriers. Some insurance carriers who receive insurance claims electroni- cally require information to be formatted in a particular way. Part of the service a clearinghouse provides is to translate electronic claim data to fit the setup of each car- rier's claims processing department. Because of this factor, many medical practices choose to use a clearinghouse instead of transmitting claims directly to insurance carriers themselves. Usually, a fee is negotiated with the clearinghouse for its services. With or without the use of a clearinghouse, electronic claims reach the insurance carrier almost immediately compared with paper claims.

DELINQUENT ACCOUNTS

A medical practice, like any business, has outstanding accounts. It is regrettable that patients are often slow and even delinquent in paying physicians. There are various reasons a patient may not pay a bill. For example, the patient may unintentionally or intentionally ignore the bill, the patient may not have the money to pay the bill, or the patient may be unwilling to pay the bill for a reason such as disagreeing with the amount of the bill. Examples of other reasons for nonpayment of medical bills include a pa- tient's excessive debt, unemployment, illness, disability, family problems, and marital problems. The administrative medical assistant must know how to handle patients' ac- counts properly to reduce the physician's losses from unpaid bills.

Continued

After a claim has been completed and sent to the insurance company, make a nota- tion in the patient ledger by entering the date and the phrase "Submitted to insurance" after the last entry. When insurance claims are submitted using an electronic submis- sion program, the program places the submission date in the patient's electronic ledger account. An updated patient statement is then sent to the patient for billing purposes on the next billing date. The patient or another designated person is still responsible for the complete charge, even if insurance is involved. However, the medical provider must be careful to adhere to guidelines of the insurance carrier regarding when a patient is to be billed.

Receiving an EOB or ERA.

After the insurance carrier reviews the claim and makes a advice to the patient and to final reimbursement determination, it sends a remittance the provider with an explanation of its decision. The remittance advice also takes into account any deductibles or coinsurance the insured may owe. If the insurance company determines that there are benefits to be paid, a check for the appropriate amount is at- tached to the provider's report or an electronic deposit is made into the provider's financial account. In cases in which the benefits have not been assigned to the provider, the remittance is sent directly to the patient. In the case of paper claims, the remittance advice sent by the insurance company in response to the claim is transmitted through the mail and is referred to as an explanation of benefits (EOB). Figure 8.5 shows an example of an EOB for an office visit. In the case of electronic claims, the report is transferred from one computer to another and is there- fore referred to as an electronic remittance advice (ERA). As with an electronic claim, an ERA is never printed. When an ERA is sent electronically to the provider, a hardcopy EOB is sent to the patient. Although the formats used for the EOB and the ERA differ, the information conveyed in both types of reports is the same-both explain the amount of benefits to be paid to, or on behalf of, the insured and how that amount was determined. Frequently, providers receive bulk payments-a single benefit payment that covers more than one submitted claim.

Sending Statements

Although most bills are sent out once a month, a statement may be sent at the end of a procedure or episode of care, or upon do either monthly billing or cycle billing. With discharge from the hospital. Practices decide to monthly billing, bills are sent out once a month and are timed to reach the patient no later than the last day of the month, but preferably by the 25th of each month. Such a billing schedule enables patients to pay physicians' bills along with other monthly bills. Traditionally, medical offices have used monthly billing. However, another system of billing, called cycle billing, is becoming more popular with medical offices. Cycle billing is designed to avoid once-a-month peak workloads and to stabilize the cash flow. It has been used by credit companies, utility companies, and other large businesses for some time. With cycle billing, all accounts are divided into fairly equal groups, the num- ber of groups depending on how many times you wish to do billing during a month. If you decide to do billing four times a month (once a week), for example, you would di- vide the accounts into four groups, usually alphabetically, with each group billed on a different date. If cycle billing is used, the patient should be informed on the first visit approximately when the bill will be mailed. There are two advantages of using cycle billing: (1) The workload is apportioned throughout the entire month, and (2) a consistent monetary flow occurs throughout the month versus an influx of payments during only a specific period during the month. Billing is a major task for the administrative medical assistant. If bills are prepared once a month, entire days are usually sacrificed from other routine duties during that period in order to get statements in the mail. Cycle billing allows the assistant to factor in bill- ing as part of a daily or weekly routine. An additional benefit is that the possibility of error is reduced, because more time and consideration can be given to each account.

Checking the Accuracy of Essential Claim Information.

Claim forms must be com- pleted accurately. The following basic information is required on most claim forms: -Contract numbers-that is, the group number and the insured's identification num- ber from the insured's current insurance card -The patient's complete name, date of birth, gender, and relationship to the insured -The insured's complete name, address, date of birth, and employer -Information on a secondary carrier-subscriber's name, date of birth, and employer Information about whether the condition is job-related or accident-related and whether it is an illness or an injury -The patient's account number (if the facility assigns numbers to patients) -Complete and current diagnostic codes for the submitted claim Information about the provider-name, address, identifying codes, NPI and other required identifiers, and signatures -A statement of services rendered, which should include dates, procedure codes, charges, and total charges

Laws Governing Collections

Collections from payers are considered business collections. Collections from patients, however, are consumer collections and are regulated by federal and state law. The Fair Debt Collection Practices Act of 1977 and the Telephone Consumer Protection Act of 1991 regulate debt collections, forbidding unfair practices, such as making threats, and the use of any form of deception or violence to collect a debt. The Fair Debt Collection Practices Act (FDCPA) is enforced by the Federal Trade Commission (FTC) and regulates collection agencies and attorneys. Original creditors, such as a medical practice, are governed by state laws, which closely follow the FDCPA regulations. Medical practices should refer to state laws governing collection practices. Under the FDCPA, debt collectors may contact a person by mail, telephone, e-mail, text, or fax. If a patient contacts the practice in writing to request that collection attempts stop, the practice may not contact the patient again for collection purposes except to notify the patient there will be no further contact or if the practice intends to take specific action, such as a lawsuit. Other guidelines under the FDCPA are as follows: 1. If an attorney is used by the patient, the practice may only contact the attorney. Other individuals may be contacted to find out where the patient lives and/or works. Most states prohibit contacting third parties for location information more than once. Financial issues may only be discussed with the attorney. 2. If the patient is contacted, within 5 days after the patient is first contacted, a written notice-called a validation notice-must be sent to the patient stating the amount and to whom the money is owed and what action the patient may take if he or she does not believe the money is owed. It is recommended to send the letter via Certified Mail, Return Receipt requested. 3. If the patient sends the practice a letter within 30 days after receiving the validation notice stating the money is not owed by them, the practice should not contact the pa- tient again about the debt; however, the patient may be contacted again to send writ- ten verification of the medical debt, such as a copy of the bill or insurance EOB/ERA. Certain actions are legally off-limits. Harassing a patient or making false statements are illegal. Additionally, medical practices cannot threaten to arrest a patient for non-payment of a debt or garnish wages; collect interest, fees, or other charges in addition to the amount owed unless an original written /signed agreements such as charges; or contact the patient using a postcard.

Completing and Transmitting the Claim Form

Completing and transmitting the claim form accurately for a patient is one of the most important steps in successful claim reimbursement. Therefore, the administrative medi- cal assistant should be familiar with the details of the process.

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Each office has its own schedule for sending claims The usual practice is to trans mit claims every day or every other day, Larger practices may transmit claims multiple times a day, such as late morning and afternoon, Individual carriers will have timie guidelines for providers to submit claims. Guidelines may be as little as 30 days from the date of service or as long as December 31 of the vear after the year in which the service was provided. For example, a patient had a colonoscopy performed on March 18, 2017. Under the latter guidelines, the Jast date to submit this claim to the carrier would be December 31, 2018. Provider schedules for submitting claims to carriers should be based on the carrier's guidelines and any negotiated contract time guidelines. When claims are transmitted electronically, the medical office receives a file ac- knowledgment--immediate feedback that tells the medical office the file has arrived at the insurance carrier's claims department. If the file is missing details (for example, if a required field is left blank) or if the claim form contains incorrect information, such as an invalid patient identification number, the computer will immediately notify the sender that the file has been rejected. The medical office that sent the claim can then fix the error and resubmit the claim. Whether the claim is paper or electronic, it is often the overlooked, seemingly sim- ple errors that prevent the provider from producing a clean claim-a claim that is ac- cepted by the insurance payer for adjudication. The following are some common errors: -Service facility names and associated information, such as address or phone num- ber, are missing, incomplete, or incorrect. -Referring provider information is missing. -Patient birth date is invalid. -Procedure and diagnostic codes are not current or are invalid. -There are typographical errors and transpositions of numbers. Clean claims are processed in a more timely manner; and, in turn, benefit payments are received faster by the provider. Software programs, known as scrubber programs, are used to check for errors on insurance claim forms before they are submitted.

Credit Arrangements and the Truth in Lending Act

For Jarge bills or special situations, some practices may elect to extend credit to na- applied to unpaid balances, this type of arrangement is between the practice and the the bill into smaller payments over a period of months. If no finance charges are tients. When credit agreements are made, patients and the practice agree to divide health plans and greater ou of-pocket expense for patients is contributing patient, and no legal regulations apply. High-deductible to the increase in credit arrangements for health care.

Payment Plans

For the patient who is unable to pay a medical bill in one lump sum, a schedule of pay- ments, or contract, can be agreed upon. The agreement should be in writing, and a copy of the plan should be given to the patient as a reminder of the commitment to pay the physician. The amount to be paid weekly or monthly is stated in the agreement, and it is used as a reference when corresponding with the patient about unpaid bills. Details of the contractual agreement should be documented in the patient's hardcopy or electronic record. If the practice meets all four of the following criteria, a Truth-in-Lending Agreement must be completed and given to the patient to sign: 1. Credit is offered to patients. 2. Credit is offered on a regular basis, more than 25 times per year. 3. Finance charges are applied. 4. More than four payment installments. Many practices have partnered with financial lending institutions to assist patients with paying medical debits.

Using Computer Billing Programs.

Generating claim forms (whether paper or elec- tronic) on the computer is one of the major uses of computer technology in the medical office today. The computer automatically processes the information required to create a completed claim by transferring the patient's and the insured's information, the charges, the procedure and diagnostic codes, billing/rendering/referring provider

Writing Off Uncollectible Accounts

If no payment has been made after the collection process, the administrative medical assistant follows the office policy on bills it does not expect to collect. Usually, if all collection attempts have been exhausted and it would cost more to continue than the amount to be collected, the process is ended. In this case, the amount is called an un- collectible account or bad debt and is written off from the expected revenues. Future services for patients who are responsible for uncollectible accounts are usually on a cash-only basis.

Collection by Agency

If the patient has not paid the bill after a reasonable time and routine collection proce- dures have failed, the physician has two ways of attempting collection. The physician can sue the patient and go to court, which is a time-consuming and costly procedure. The other method is to turn the account over to a collection agency. Önce an account has been turned over for collection, the office will have no further contact with the pa- tient concerning billing. The use of a collection agency is not a desirable option for collecting lower monetary unpaid bills, as most agencies work on a contingency basis. Approximately 20 to 50 percent of the amount due is lost when the account is turned over to an agency, and the longer the bill goes unpaid, the less money the physician will receive when the account is finally settled. There are various types of collection agencies, and a physician will want to investi- gate an agency thoroughly to determine its reputation.

Billing the Patient.

If the patient still owes money to the medical practice after the EOB or ERA has been received-usually for charges that were not fully reimbursed by the in- surance company, such as deductibles or noncovered services-the administrative medi- cal assistant bills the patient for the amount due. If the patient is confused or has any questions about payments, the administrative medical assistant can try to help by going over the terms of the insurance plan with the patient. The administrative medical assistant may also need to call the insurance carrier and act as a patient advocate (go-between) for patients. Goodwill can be built for the physician's office by using problem- solving and communication skills to fulfill the role of patient advocate. Patients under- standably get upset when they receive unexpectedly large bills or an incorrect payment. The administrative medical assistant is the patient's advocate with the insurance carrier. Sometimes explaining the solution again to the patient in different terms after speaking with the insurance carrier will help clear up the problem. Different forms of payment as- sistance may need to be explained to the patient. Examples include offering a payment plan or supplying information about local or governmental assistance agencies. Patients may also accuse the medical office of billing incorrectly when they are unhappy with the benefits received. Use respect and care in solving any miscommunica- tions or misunderstandings in such circumstances. It is important to separate the patient's feelings from the facts. When documented facts, such as EOB or ERA infor- mation, are professionally yet empathetically discussed with angry patients, the patient may be more accepting of the information. Be careful to avoid insurance and medial jargon; this will only add to patients' frustration. Once the patient understands the terms of the payment due, the assistant follows up with the patient to see that the amount due is collected in a timely manner. When the patient pays the balance due, the account is listed as a zero balance and the insur- ance claim process is complete.

Statute of Limitations

If the physician fails to collect a fee within a certain period of time, the collection becomes illegal under the statute of limitations and no further claim on the debt is possible. Each state sets its own time limitation, which varies from 3 to 15 years. The physician should obtain legal counsel for advice concerning these statutes.

Appealing Claims.

If the physician thinks that the reimbursement decision is incor- rect or unfair, the medical office may initiate an appeal. Appeals must be filed within a stated period after the determination of claim benefits or denial. Most insurance carriers have an upward structure for appeals, beginning at the lowest level and pro- gressing upward. For example, the first step may be to submit a formal complaint. If the provider is not satisfied with the outcome, the second step may be to file an ap- peal. A grievance would be filed if the appeal did not produce the desired results. When making an appeal of an electronic claim, include the electronic claim number. Each insurance company has its own appeal process. A representative from the insur- ance company can instruct the assistant on the appeal process the insurer uses, if necessary. This information may also be available on the Internet by initiating a search from the insurance carrier's website.

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If, however, the practice adds finance or late charges, routinely offers credit ar- rangements (25 or more times per year), or the number of payments is more than four installments, the arrangement is governed by the federal Truth in Lending Act, which became law on July 1, 1968, and is part of the Consumer Credit Card Protection Act. Regulation Z requires that a disclosure form be completed and signed. The disclosure form notifies the patient in writing about the total amount, the finance charges (stated as a percentage), when each payment is due and the amounts, and the date the last payment is due. The disclosure form must be in clear, understandable language and signed by both the practice manager and the patient. If a physician extends credit to one patient, under the Federal Equal Credit Opportunity Act (1975), the physician must extend the opportunity for credit arrange- ment to all patients who request it. Refusal can only be made based on ability or inabil- ity to pay; and, if credit is refused, the physician must notify the patient of the refusal and reason for refusal. The patient has up to 60 days to request the reason for denial in writing.

Communicating with Patients

In a sense, the collection process actually begins with effective communications with patients about their responsibility to pay for services, When patients understand the charges and agree to pay them in advance, collecting the payments is not usually a prob Tem. Most patients pay their bills on time. However, every practice has some patients who do not pay their bills when they receive their monthly statements. One way to minimize problems with payments is to notify patients in advance of the probable cost of procedures that are not going to be covered by their plan. For ex- ample, many plans do not provide coverage for experimental or elective treatments or cosmetic procedures without medical necessity, Many patients, however, consider the services as good and necessary and are willing to pay for them. For these noncovered services, patients should be asked in writing to agree to pay. A letter of agreement signed by the patient prior to service should also specify why the service will not be covered and the cost of the procedure. As mentioned previously, for Medicare patients, this form is called an Advance Beneficiary Notice (ABN) for noncovered services, a form that providers should have patients sign. It explains the service, the reason it will not be covered by Medicare, and the estimated charge. This form is also used when Medicare declares a service not reasonable and necessary and, therefore, does not cover it. Patients are asked to sign the ABN in advance of services being rendered. A patient should also be informed about fees before a complicated set of proce- dures begins. A physician-in particular, a nonPAR physician-may need to clarify the payment arrangements with a patient before services are performed.

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In contrast, when the physician accepts assignment and is going to file a claim, the patient usually pays only the required deductible and any coshare (required percentage or stated dollar amount) at the time of service. The amount of the patient's coshare payment is entered and subtracted from the balance due. Then the insurance claim for the service is created and transmitted to the insurance carrier. When the insurance pay- ment is received, it is entered in the patient's account. Ideally, the total paid by the patient and all carriers should equal the allowable amount for the service(s) provided. If there are procedures for which the insurance company did not pay or paid less than expected, the administrative medical assistant must sort out the various charges and benefits. The assistant determines which charges the patient should be billed for, if any are to be written off by the medical office, and which, if any, should be resubmitted- or even appealed-by studying the EOB or ERA. The patient's account is then updated accordingly, and a patient statement is sent on the appropriate billing date.

Submitting Paper/Hardcopy or Electronic Claims.

Increasingly, medical offices are using computerized insurance claim forms, known as electronic claims, in place of paper claims. Electronic claims are prepared on a computer and transmitted electroni- cally (from one computer to another) to an insurance carrier for processing. If neces- sary, an electronically prepared claim may be printed and a hardcopy claim sent to the carrier by Postal Service or other nonelectronic methods. The HIPAA 837, version 5010, claim is the standard format for electronic claims. Currently, HIPAA 837/5010 claim submissions are to be used by offices with 10 or more full-time employees or the equivalent of l10 full-time employees, such as 20 employees whose combined work status equals 10 full-time employees. Advantages of using electronic claims include immediate transmission, faster payment (Medicare claims are paid within 14 days versus 29 days), and easier tracking of claim status.

The Office Collection Policy

It is often the duty of the administrative medical assistant to collect payments on over- due accounts. Each month delinquent accounts (any unpaid accounts with a balance that is 30 days past due) should be aged to show their status in the collection process (that is, 30, 60, or 90 days past due). If a computerized billing program is used, a pa- tient aging report is generated to show which patients' payments are due or overdue. For this reason, payments must always be entered promptly, so that at billing time there is no question about any balance due. For example, if payments received by the office totaled $5,000 for the month of January and the net outstanding accounts (accounts receivable) was $25,000, the collection ratio is 20 percent ($5,000 divided by $25,000). Every office needs to establish a written course of action to be taken on overdue accounts. The physician will need to establish the office collection policy regarding collection procedures, including when to send statements, reminders, and letters and when to take fi- nal action. Usually, an automatic reminder notice and a second statement are mailed when a bill has not been paid 30 days after it was issued. Some medical offices phone a patient with a 30-day overdue account. If the bill is not then paid, a series of collection letters is generated at intervals, each more stringent in its tone and more direct in its approach. Collections letters should be sent using Certified Mail. Some medical offices use an outside collection agency to pursue large unpaid bills. Federal laws regulate credit and collections for businesses. Also, individual states may have laws that guide the collection process. Usually, as a last resort, payment for outstanding accounts may be pursued in small claims or civil claims court. The material in this chapter discusses basic collection procedures.

PAYMENTS FROM PATIENTS

Just as it is important for the medical office's cash flow to have claims approved and paid promptly by insurance carriers, it is also important to help ensure prompt pay ments from patients. The administrative medical assistant can facilitate the prompt receipt of payments from patients by keeping all transactions in each patient's account current and by being alert to the status of each account, uch as 30 days past due. The method of payment is arranged at the time of the patient's first visit. In most offices, a combination of methods is used and may include the following: • -Patients pay at the time of the visit by cash, check, debit card, credit card, or other electronic payment method., This type of collection is referred to as collection at the time of service. Copayments, as required by HMOS and other managed care plans, are always collected at the time of service. -Bills are mailed to patients as designated by office policy, such as weekly or monthly or at the end of a procedure or hospital stay. -Patients pay a fixed amount weekly or monthly until the bill is paid in full. -Bills are sent to health insurance carriers. -Some physicians work on a cash-only basis. -A patient with a poor credit rating or whose checks have been returned for nonsuf- ficient funds may be on a cash-only basis.

Guidelines for Payment

Management or the accounting department in every office must determine the collec- tion ratio (total collections divided by net charges of the practice). The percentage will show the effectiveness of the collections (the higher the percentage, the more effective the collections). Management would then set the guidelines for payments- how much is to be collected daily, how much should be collected on each account, and so forth. As a general rule, at least one-third of the outstanding accounts should be collected each day.

Health Insurance

Many patients carry health insurance that provides payment for a portion of their med- ical expenses. Depending on whether or not the physician accepts the health insurance the patient has, the payment arrangement varies. Essentially, there are two options: (1) Patients are billed at the time of service, or (2) they are billed after the insurance claim has been processed. After an office visit, the new charges are entered into the patient's account. If the physician has not accepted assignment, patients are usually required to pay in full at the end of the visit. The administrative assistant gives the patient a receipt for the payment. In some cases, patients in this situation arrange to be billed later for payments due de pending on the office's policy. A written agreement containing the payment amount the due date, and other pertinent payment information should be signed by the patient. and he or she should be given a copy of the contract. As a courtesy, the provider may Gle an insurance claim for the patient, even though for nonPARS this is not a requirement.

Completing the CMS-1500 Claim Form.

Most insurance companies accept the CMS-1500 for hardcopy/paper claims. However, the assistant may need to complete a specifically designed claim form for a carrier. Although the form may be different, the information required on most insurance claim forms is the same. If the assistant is familiar with the various fields on the CMS-1500 form, the same knowledge can be applied to other claim forms for successful completion.

Computerized Billing

Most medical practices using an EHR system have the capability to handle patients billing. If the EHR system does not have this capability, a separate software program may be used to handle the practice's financial tasks. In addition to generating itemized patient statements, a computerized billing system is usually used to produce the following reports for ac- counting purposes: A daily report, called a "day sheet," listing all charges, payments, and adjustments entered during that day Monthly reports summarizing the operation of the practice Aging reports, which list the outstanding balances owed to the practice by insurance companies or patients Lists of the amounts of money generated by various departments, such as laboratory, x-ray, and physical therapy Lists of the amounts generated by individual physicians in the practice Reports on the frequency of procedure codes reported by each physician in the practice A patient billing program can also be used to print out blank patient encounter forms each day for patients who have appointments on that day. Medical billing pro- grams are a valuable accounting tool for the physician, and the administrative medical assistant should be familiar with their use.

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One type of fee adjustment a medical office makes regularly with certain health plans is called a write-off. As explained elsewhere in the textbook, according to the rules of many insurance plans-for example, with most HMOS-when the physician's fee for a given service is higher than the insurance company's allowed fee for that service, a participating (PAR) provider is not permitted to bill the patient for the unclaimed portion of the fee. Instead, the physician must write off this amount by subtracting it from the patient's bill and accept the payment from the insurance company and the patient as payment in full-up to the allowable charge-for the procedure. Write-offs are entered into the patient ledger as fee adjustments. A nonparticipating (nonPAR) physician who does not accept the allowable charge may be permitted to bill the patient up to the phy- sician's normal fee and not write off the difference. As discussed earlier, this is called balance billing. If a physician chooses to reduce or cancel a fee, the decision must be in writing for the protection of the physician, since it is possible for such a reduction or canceling of a fee to be misinterpreted and even lead to a discrimination suit. For the same reasons, in computerized billing programs, it is important not to delete any transactions. Most electronic programs do not allow deletion of financial transactions. Rather, corrections, changes, and write-offs are made with adjustments to the existing transactions. Most billing programs contain a column in the patient ledger that displays such entries. The adjusting entries give both the medical office and the patient a history of events in case there is a billing inquiry or an audit. In cases that involve a considerable sum, the patient may not be able to pay the fee and may have to seek financial assistance. The assistant should be acquainted with the local agencies to which a patient can be referred when financial assistance is needed. It is common for providers to have an established business relationship with lenders, thereby enabling patients to apply for credit in the medical office. In the past, physicians have chosen to waive-not collect-charges for services ren- dered to other medical personnel, such as another physician or nurse, and their family members. However, many federal and state laws now prohibit the practice of profes- sional courtesy. Filing an insurance claim and collecting benefits while waiving deduct- ibles and other required payments are unlawful and violate Anti-Kickback laws. At times, it may be in the best interest of the practice to render services for lesser or no fees. Patients are asked to sign and date documentation of the financial agree- ment, known as a hardship agreement, which becomes a permanent part of the medical record. Patients requesting a hardship agreement will be asked to provide supporting financial documentation of hardship and income.

Fee Adjustment

Should the need arise, the physician can adjust the cost of any procedure; the physician will then inform the administrative medical assistant of the fee adjustment. Fees should not be reduced as a way to receive payment quickly and avoid collection procedures.

Third-Party Liability

Sometimes a person other than the patient assumes liability, or responsibility, for the charges. Such responsibility is called third-party liability. The assistant must contact this third party for verification of financial obligation. Relatives, particularly children of aged parents, may say they will be responsible for payment of the bill, but this promise must be in writing. Oral promises are not legally binding. A third party is not obligated by law unless he or she has signed an agreement to pay the charges. Therefore, a signed promise obtained prior to treatment will greatly reduce the credit risk. Other examples of third-party liability are workers' compensation claims and auto accidents. Claim numbers are needed to submit claims, and prior authorization, in most cases, is needed before treatment is rendered. By contrast, a guarantor is an individual who is financially responsible for the ac- count. Often, it is the policyholder of the insurance plan that covers the patient. The bot- tom line is that the individual who signed the registration form is financially responsible for payment of the account charges. For example, a parent who is a policyholder may be the guarantor for his or her dependent children. To be certain of the legal interpretation of guarantor, it is always a good idea to reference state laws for the particular state in which medical services were rendered. As part of the Health Care Reform Legislation of 2010 and effective September 23, 2010, adult children covered under a parent's insurance pol- icy may continue being covered under the parent's medical insurance policy up to the age of 26. regardless of whether the adult child is a student or married.

Patient Statements

The administrative medical assistant records all transactions-that is, charges incurred by the patient for office visits, X-rays, laboratory tests, and so on and all adjustments and payments made by the patient or the patient's insurance company-in the patient ledger. The patient's copy of the information stored in the patient ledger (hardcopy or electronic) is referred to as the patient statement, or patient bill. The patient statement shows the professional services rendered to the patient, the charge for each service, payments made, and the balance owed.

Methods of Payment

The assistant must be careful to enter each payment in the patient's ledger and in the daily summary record. The patient's name, the services rendered, the charges, the pay- ment received on the account, and any balances should be included. Payments should be given to the administrative medical assistant, not the physi- cian. A receipt must be given to the patient who pays cash. An example of a receipt is shown in Figure 8.7. Copies of receipts are kept as permanent records. The patient should be advised to keep the receipt and a copy of the patient encounter form for in- come tax purposes in claiming medical deductions. If the patient pays by check, the canceled check is the receipt. Credit, debit card, and other forms of electronic pay- ments appear on the patient's statement from his or her financial institution. Patients also receive a copy of the authorization. For smaller amounts (for example, $25 or less), patients may not need to sign an authorization form. Certain rules must be observed to safeguard money received. Cash, checks, and money orders should be kept in a secure location, such as a locked drawer. Currency should be separated by denomination. Checks should be immediately stamped on the back with a restrictive endorsement, which specifies "pay to the order of..." of "for deposit only." To minimize the danger of theft, money should be deposited in the bank daily.

Verifying Insurance Information.

The first step in processing a claim is to verily the patient's insurance information. With new patients, most practices routinely check insur- ance coverage before the patient's first appointment. Basic information about the patlent and the patient's insurance is obtained over the phone when the first appointment is scheduled. The assistant then contacts the insurer by telephone, fax, Internet, or other electronic methods specified by the insurance carrier to verify that the patient is currently enrolled in the plan as specified and has paid all required premiums or other charges.

Collection by Letter

The longer a bill remains unpaid, the less likelihood there is of collecting it. A bill should be followed up most vigorously after being overdue for 3 months. An effec- tive method of collection at this point is to write a letter to the patient. Writing col- lection letters that bring results is a skill. Collection letters should be personal letters, not form letters. The letter should show that you are sincerely interested in the patient's problem and want to work out a solution. Collection letters should be brief, with short sentences. The letters should appeal to the patient's sense of pride and fair play, as well as a desire for a good credit rating. The amount that is due should be stated clearly in each collection letter, and the patient should be asked to call the assistant to discuss the situation by a stated date. Figure 8.8 shows an example of effective first collection letter. It is common practice to send no more than three collection letters, each letter us- ing a more assertive tone. The second letter should refer to the first sent letter, and the third letter often attempts to stress the importance of payment before the account is submitted to a collection agency.

Electronic Claims Versus Paper Claims.

The main difference between electronic claims and paper claims is the means by which they are transmitted to the insurance carrier. The use of electronic claims not only speeds up transmission and payments but also ensures a greater degree of accuracy and costs less. Paper claims, whether printed from a computer billing program or typed, are usually transmitted to insurance carriers through the mail. When they reach the insurance car- rier, the information on the form must be keyed into the insurance company's computer by data entry personnel. Alternatively, the information may be scanned using an optical character reader (OCR). In either case, a certain percentage of error is introduced. The following are tips for preparing claims that will be scanned: 1. Use an eight-digit format for dates (01/02/2022). 2. Send reports and other supporting documentation unattached from the claim form. 3. Start over when a mistake is made on claim forms prepared by hand, and correct individual errors when prepared on the computer. Refrain from erasing, striking out errors, or applying white-out products. 4. Read and input ICD-10-CM, CPT, and HCPCS codes carefully. ICD-10-CM has digits and letters that look similar. Be careful to avoid interchanging the digit 0 and the alphabetic letter 0. Other combinations not to read or input incorrectly are the digit 5 and alphabetic letter S, and the combination of the digit 1 and the alpha- betic letter /. Electronic claims, on the other hand, are transmitted from one computer to an- other over the telephone, Internet, or other electronic transmission method. Because claim information is entered once, not twice, chances of error or omission are greatly reduced. It also costs less to file claims electronically; fewer personnel are involved and paper forms, envelopes, and postage are not required. An advantage to transmitting claims electronically is that the medical office re- ceives immediate feedback whenever claims are transmitted. Medical offices generally transmit claims in batches, grouped by insurer. Tracking numbers are used to follow the progress of claims. When an insurance carrier receives electronic claims, it sends a transmittal report back to the sender, acknowledging receipt of the claims. The admin- istrative medical assistant should compare the acknowledgment of claims against the reports of sent claims. If a claim is not listed on the transmittal receipt, the claim should be retransmitted.

Terminated Accounts

The physician-patient relationship may be terminated for many reasons, but all reasons must be well documented to avoid the possible appearance of medical abandonment. The physician may close the medical practice, move to a different area, leave the pa- tient's insurance network, or feel the patient needs care from a specialist. Patient behav- ior, or lack of medically compliant behavior, may also result in termination of the physician-patient relationship, such as the patient not adhering to the treatment plan. A physician who finds it impossible to extract payment from a patient may decide to terminate the physician-patient relationship. The account is then referred to as a terminated account. If a patient is dismissed, careful and thorough documentation should be made. A letter documenting the dismissal should be sent to the patient by Certified Mail, Return Receipt requested. An offer to continue providing care on a cash-only basis for a stated period of time is offered to the patient so the patient's current status of health is not endangered. It will also provide evidence that the physician has not medically aban- doned nor refused care to the patient during the time when the patient is seeking an- other medical provider. Additionally, the physician may provide referrals and copies of the patient's records to other physicians for continuity of care. If a patient comes to the office requesting medical care after an account has been terminated, the physician should be consulted and may decide to see the patient on a cash-only basis.

Using the CMS-1500 Paper/Hardcopy Claim Form.

The terms "paper" and "hard- copy" are used interchangeably and both refer to a manually produced CMS claim form. The most commonly used paper or hardcopy claim form is the CMS-1500 claim form (formerly known as the HCFA-1500 claim form). See Figure 8.4 for an example. Accepted by private as well as government-sponsored programs, it is also called the

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The timeline for the follow-up varies according to the insurance carrier, the insurance program, and, if participating, their written contract. Most medical offices follow up on claim status 7 to 14 days after the claims are submitted. Experience with insurance will enable you to know when follow-up on a claim is necessary. Some physicians automatically rebill in 30 days if they have not heard from an insurance company. This may produce a duplicate claim and result in a delay of pay- ment of the original claim. Most medical offices, however, send a tracer as the first contact about overdue claims. A tracer, whether sent in print or by e-mail, contains the basic billing information and asks the carrier about its status. Using an electronic program, an aging report can be produced and used to determine how long a claim has been submitted yet not paid or denied. Outstanding claims are aged (how long the claim has been submitted), usually by a certain number of days, such as 1-30 days or 31-60 days. In addition to regular claim follow-up, the administrative medical assistant will need to follow up claims that have been denied for unclear reasons or are late because of special situations. Examples include the following: -An unclear denial of payment or an incorrect payment is received on an EOB or ERA; follow-up should be done to determine the cause of the problem and to rectify it. -The carrier asks for more information to process the claim-namely, a report on a new procedure for which there is no CPT specific code and an unspecified code was used; the assistant should follow up with a report from the physician, describ- ing the procedure and the situation in which it was used. -The carrier notifies the medical office that a claim is being investigated with regard to a possible elective condition; after a period of 30 days from receiving such a no- tice, if nothing further has been received, follow-up should be done. In some situations, the administrative medical assistant will need to submit a new claim. Examples include the following: -A mistake has been made in billing: The physician forgot to check off a procedure on the patient encounter form. -A claim was overlooked by the physician's office: A patient had a series of visits for allergy injections, and one of the visits was not included. Similarly, there are situations in which the insurance carrier rejects a claim and asks for resubmission: -The wrong diagnosis or procedure codes are submitted. -Information is incomplete or missing (for example, no accident date is given). -The charges, units, and costs do not total properly. In short, the administrative medical assistant should study the ERA/EOB carefully other reasons for any noncoverage in the claim. If any of the explanations on a claim to understand any uncovered benefits, deductibles, copayment responsibilities, and ance carriers have staff members whose primary job is to answer questions about seem unfair or unclear, the insurance carrier should be contacted for help. Most insur- claims. If necessary, an appeal should be initiated by the medical office. It is the respon- clean insurance claims accurately and to follow up in whatever way is required, so that sibility of the assistant to take the time and care necessary to process and complete prompt and precise compensation is received.

Following Up on Claims

When an EOB or ERA from a third-party payer arrives, the assistant checks that -all the procedures listed on the claim also appear on the EOB/ERA. -any unpaid charges are explained. -the codes on the EOB/ERA match those on the claim. -the payment listed for each procedure is correct. The assistant must routinely follow up on all submitted claims. Many medical of fices use the Internet to contact carriers to check claim status. For claims submitted using HIPAA transactions, HIPAA 276 and 277 are used to ask payers about the status of a claim. The number 276 refers to the provider s inquiry, and 277 refers to the payer's response.

Overview of the Process

When patients receive services from a medical practice, either they pay for services themselves or the charges are submitted to their insurance company or government agency for payment. Most medical practices complete an insurance claim form on behalf of the patient. The insurance claim form contains both clinical and financial information and is transmitted to the patient's insurance carrier for partial or full reim- bursement of the services rendered.

Processing by a Third-Party Payer.

When the claim form arrives at the office of the insurance carrier, either on paper or as a computer file, the insurance carrier processes the claim. This entails a step-by-step review or adjudication process to determine the benefit payment level. Following are the steps used by the insurance payer: Step 1 The claim is received in the payer's system. In Step 1, the claim is prescreened for any missing information, such as a date of birth. Step 2 The patient's eligibility and benefit level are determined. In Step 2, the patient's benefit level, medical necessity, and covered/noncovered services are deter- mined based on the patient's health plan. Step 3 The discount is applied. In Step 3, the payer may reduce the physician's billed amount(s) based on the payer-provider contracted fee schedule or on the maxi- mum allowed payment. Step 4 The claim edits and payer payment rules are applied to the claim. In Step 4, further ad- justments are made to the claim to allow for modifying factors, such as global pay- ments, modifiers, and multiple procedures, which may either increase or decrease the pavment amount. Noncovered services identified in this step are denied for payment. Step 5 The final payment is determined. In Step 5, the auto-adjudication process is com- pleted and the final benefit payment is calculated. Step 6 The EOB or ERA-or both-is generated and the payment is sent. In Step 6, the EOB and ERA are sent to both the patient and the billing physician. Each of these is discussed in the next section. A claim may be removed from the automated review cycle and submitted for a manual review if data for any of the above steps are misssing or unclear.

Continue

information, and so forth from the various databases set up in the computer onto the insurance claim form. The computer stores facts about the medical practice in the practice database; in- formation about the carriers that most patients use in the insurance carrier database; information about payments made by patients, as well as benefits received from insur- ance companies, in the transaction database; and information about each patient- personal as well as clinical data-in the patient database. Careful attention must be given when keying information and updating system data. Errors in keying will be trans- ferred to the claim form. When all new data and transaction information have been entered and checked re- garding a patient's visit to the physician, the administrative medical assistant creates the electronic claim. The format for the claim-either the CMS-1500, HIPAA 837/5010 version, or a specialized claim form-is also designated. The software program then organizes the necessary databases and selects the data from each one as needed to produce a completed claim form. When this is completed, the administrative medical assistant will electronically transmit the claim to the insurance carrier for processing.