MAP 1010 Medical Office Administration Chapter 20: Patient Collections and Financial Management

Qualified endorsement

Endorsement by a party which can accept a check for someone else but has no liability to pay further bills.

ECOA

Equal Credit Opportunity Act, federal law prohibiting discrimination in credit/lending. Protects against discrimination from sex, marital status, race, national origin, religion, age, receipt of public assistance, or previous exercise of rights under the Consumer Credit Protection Act

FCRA

Fair Credit Reporting Act of 1970 regulates the collection and use of consumer credit information. Requires credit bureaus to supply correct and complete information to businesses to use in evaluating a person's application for credit, insurance, or a job.

FDCPA

Fair Debt Collection Practices Act; legislation enacted as the result of evidence that debt collectors were using abusive, deceptive, and unfair collection practices; it imposes strict limitations and prohibitions on debt collection practices. Requires debt collectors to treat debtors fairly, and prohibits use of harassment, threatening of illegal/ not actually planned action, false statements, threats, and unfair practices.

Unilateral agreement

In medical settings, it's when a patient offers to pay the debt over a period of months and is billed each month until it's paid off. This type of arrangement is not regulated by the truth in lending act.

Accounts Receivable

Income or money owed to a business.

Accounts Payable

Money owed by a business; the practice's expenses.

Accounts Receivable Insurance

Policy that can pay a practice when a large number of patients (or a large account / insurance plan) don't pay and the practice must absorb the lost income. May also protect the practice if the A/R are destroyed or unavailable.

Endorsement

Signature on the back of a check with the terms for accepting the check as payment.

Types of non-computerized accounting systems

Single entry, double entry, & write it once (pegboard) systems

Power of Attorney

The legal right to act as the attorney or agent of another person, including handling that person's financial matters.

Guarantor

The patient, caregiver, or entity responsible for payment of the healthcare bill. In general, any adult over 18 is ;egally considered to be their own (one of these).

Capital

The portion of the asset that is paid for

Age analysis

The process of clarifying and reviewing past-due accounts by age from the first date of billing. A monthly _ helps you keep on top of past-due accounts and determine which ones need follow up.

Accounting

The process of communicating the income and expenses of a business and its financial health.

Journalizing

The process of logging charges (what it was for) and receipts in a chronological list each day; used in the single-entry system of bookkeeping.C

Regardless of the bookkeeping method used, you need to

Track charges and receipts for each patient, and records of house calls or nursing home visits

Common arrangements for extending credit

Unilateral and mutual (bilateral) agreements

Common banking tasks in the medical office practice include

Writing, accepting, and endorsing checks, making deposits, reconciling bank statements, & recordkeeping of banking and individual accounts.

Charges

amounts a provider bills for the services performed, money owed to the practice

Before tracking, check your calculations by

performing a trial balance. 1. Total the check amount column 2. Calculate the total for each expense column

Cash Flow

the total amount of money being transferred into and out of a business, especially as affecting liquidity. Shows how much money is available to cover expenses, invest, or take as profit.

Negotiable

Legally transferable from one person to another.

Disbursements

Money paid out by the practice for goods or services.

TCPA

Telephone Consumer Protection Act. Protects emergency service providers, certain cell and paging numbers, and patient hospital rooms from telemarketing (auto-dialing). Also prohibits recorded calls to a patient's home without prior resident permission, and prohibits unsolicited fax machine advertising.

Charge Slip

The original record of all of the doctor's charges and services performed on the day of an individual patient's appointment.

Bookkeeping

The systematic recording of business transactions.

Tracking

Watching for changes in spending so as to help control expenses.

Disclosure Statement

-A written description of agreed terms of payment; also called a federal Truth in Lending Statement. -Agreement must be discussed with the patient when the terms are first determined, and practice and patient must agree on both -Both practitioner (or their representative) and patient must sign the document to indicate mutual agreement on the written terms -Must also include all 6: the amount of total debt for which the patient is receiving credit; the amount of the down payment; the amount of each payment (weekly or monthly) and the date it's due; the due date of the final payment and the amount of the final payment if different from other payment amounts; the interest rate expressed as an annual percentage; and the total finance charges (ex: the total amount of interest accrued during the course of the debt).

Accepting Checks

-Always check the proof of identity of the person giving the check unless you know them well -If the check is returned for non-sufficient funds, notify the patient ASAP and request payment in full by another method -Many offices only see patients on a cash/credit card only basis after a check is bounced

Record of Office Disbursements

-Amounts paid for items like medical supplies, rent, utilities, employee wages and more -Shows the payee, date, check number, amount paid, and type of expense -Checkbook register, disbursement journal or bottom of a daily log can be used for this

Single entry system

-An account consisting of only one charge (one visit) -A transaction is listed once each in the patient ledger, the daily log, and the checkbook.

Suggestions for bookkeeping accuracy

-Be organized -Be consistent (ex. endorse all checks with the same information, regardless of who wrote/is depositing them) -Make check marks as you work to avoid losing your place -Always use the same type and color of pen and make sure your handwriting is clear -If more than one person does the bookkeeping, initial what you've done -Never erase errors or delete them with tape/correction fluid- all financial documents are legal documents and everything needs to be readable -Use straight columns in which decimal points align correctly

In order to be considered negotiable, a check must

-Be written and signed by the payer/maker -Include the amount of money to be paid, considered a promise to pay the amount -Be made payable to the payee -Be made payable on demand or on a specific date -Include the name of the bank that is directed to make the payment

Using the Superbill as a Statement

-Can use the superbill as the first bill -Can give a patient an envelope to encourage speedy payments

Major disadvantage of credit cards to the practice

-Credit card company deducts a percentage of each transaction -This leads to less $ for practice and patient

AMA Guidelines for credit card acceptance

-Don't set higher fees for patients who pay by credit card -Don't encourage patients to pay with credit cards -Don't advertise outside the office that the office accepts credit cards

Advantages of payment by credit card

-For the practice: provides prompt payment from the credit card company, increasing cash flow; reduces time and money spent preparing statements -For the patient: allows the bill to be paid in monthly installments rather than all at once

Letter of inquiry

-Friendly reminder that they need to pay -"We want to help" -Gives the patient options to pay

Information that must be supplied to a collection agency

-Full name of patient and last known address -Occupation and business name and address -Name of spouse, if any -Total amount of debt -Date of the last activity of the account (payment or charge) -Descriptions of actions taken to collect the debt -Response(s) received to previous collection attempts

Advantages of debit cards for the practice

-If there are insufficient funds, you'll know right away

FDCPA guidelines

-If you say that you'll turn a debt to a collection's agency on the 15th, you have to actually do it -Don't call patients before 8am or after 9pm, it's considered harassment -Don't make empty threats or use profane language -Don't discuss the debt with anyone who isn't responsible for the payment. -If the patient is represented by a lawyer, only speak with the lawyer unless given permission by the lawyer to talk to the patient. -Don't use deception or violence to get people to pay.

Benefits of electronic banking

-Improves productivity, cash flow, and accuracy -Speeds up many banking tasks, with the computer calculating balances for you

Patient ledger card

-Includes patient name, address, home & work phone numbers, health insurance info, social security number, employers name, guarantor name, and any special billing instructions -Includes information on the daily log and should be completed every day

Assisting patients after the provider has seen them

-Once the patient returns the superbill, record the date, procedure, charges, payments, new balance, and date/time of next appointment on the superbill & patient ledger -Record payments made on the superbill & patient ledger

Information needed to perform a credit check

-Patient information including name, address, telephone number, & social security number -Name, address, and phone number of the patient's employer

Hardship Cases

-Patients who are treated for free or at a deep discount. May be because they are poor, uninsured, underinsured, elderly, on limited income, have recently suffered a severe financial loss or family tragedy. -Medical ethics requires practitioners to treat people who need it, regardless of their ability to pay. -Should be undertaken carefully because if a patient receives a hardship case, another patient under the same circumstances must also be given a hardship case.

3 main groups of accounts payable

-Payments for supplies, equipment, rent, and practice-related products and services -Payroll -Taxes owed to federal, state, and local governments

All statements should include

-Practice name, address, and telephone number (these are usually preprinted) -Patient's name and address -Guarantor's name (if not the patient) -Balance from previous months (if any) -Itemized list of services and charges, by date, for the current month -Payments from the patient or insurer during the month -Total balance due -Using a non-white envelope can help patients remember to pay

Guidelines for creating a summary of charges/receipts/disbursements

-Record charges/receipts/disbursements from the daily log to the summary every business day -At the end of the month, total the columns on the monthly summary -Do the same at the end of the quarter and year

Assisting patients before the provider has seen them

-Record patient's name and previous balance on the superbill and patient ledger before they're seen -Remove the superbill and attach it to the patient's chart so that the provider can check off all services provided and applicable diagnoses

What to include in an age analysis

-The patient's name, balance due, date of charges, date of most recent payment, how long each part of the balance has been "waiting" on the A/R -Optional but helpful to add a column at the end for action the office has taken to attempt to collect this debt

TLA

-Truth in Lending Act -Requires creditors to provide applicants with accurate and complete credit costs and terms, clearly and obviously. -Requires practice and patient to discuss, sign, and retain copies of the disclosure statement

Responsibility for minors

-When a child's parents are married, either parent may consent to treatment and both parents are responsible, although usually only one is listed as the guarantor -Address bills to the guarantor to ensure payment -If you have legal proof of emancipation, send the bill directly to the minor. -Legal and financial arrangements are a divorced couple are private. Unless you have legal documentation stating otherwise, assume the parent bringing the child in has consent ability and financial responsibility. Make sure they both know that payment is due at the office visit.

Professional courtesy

-When a practitioner treats a patient free of charge or for just what the insurance will pay. -Can include other practitioners and their families, office staff members, other healthcare professionals, and clergy members. -If a Medicare or MCO patient recieves professional courtesy and the practitioner is contracted to take payment for copays/deductibles, the practitioner must collect copayment/deductible payment or it's insurance fraud.

Sending bills for care of elderly and disabled patients

-You need a written consent form from both the patient and the person paying for the patient in order to bill someone else than the patient directly -If the patient has been found to be incompetent, request proof of legal guardianship before billing the guardian.

Computerized bookkeeping saves time because

-the computer performs repetitive tasks -the computer automatically does calculations -built-in tax tables are available to calculate tax liabilities for you

After turning over the patient's debt to a collection agency, communication between the patient and office concerning their debt...

...must cease, and all inquiries must be deferred to the collections agency.

It's appropriate to assess finance charges or late charges on past-due accounts if

...the patient is notified in advance. This can be through a posted sign at the reception desk, giving the patient a pamphlet that describes the office billing practices, and/or including a note on the statement.

Cashier's Check

A bank check issued by a bank on bank paper and signed by a bank representative; usually purchased by individuals who do not have checking accounts.

Check

A bank draft or order written by a payer that directs the bank to pay a sum of money on demand to the payee.

Voucher Check

A business check with an attached stub, which is kept as a receipt. Stub has all the payer/payee information.

Money Order

A certificate of guaranteed payment, which may be purchased from a bank, a post office, or some convenience stores.

Third-Party Check

A check made out to one recipient and given in payment to another, as with one made out to a patient rather than the medical practice.

Traveler's Check

A check purchased and signed at a bank and later signed over to a payee.

Limited Check

A check that is void after a certain time limit; commonly used for payroll.

Daily Log

A chronological list of the charges to patients, the payments received from the patients each day, and any adjustments.

Credit Bureau

A company that provides information about the creditworthiness of a person seeking credit. Collects information about a person's payment history on credit cards, student loans, and similar accounts.

Reconciliation

A comparison of the office's financial records with bank records to ensure that they are consistent and accurate; usually done when the monthly checking account statement is received from the bank.

ABA number

A fraction appearing in the upper-right corner of all printed checks that identifies the geographic area and specific bank on which the check is drawn.

Write-it-once (pegboard) system

A manual bookkeeping system where the bookkeeping systems are the same as single/double entry systems, but the daily log has prepunched holes on one side of the log. Prepunched charge sheets (of NCR paper) are placed in designated areas on top of the day sheet, which has been placed on the pegboard. The patient ledger card is placed between the day sheet and the charge sheet and an entry is made; it appears on all three documents at the same time.

Skip

A patient who has moved without leaving a forwarding address and his bill is unpaid. Although you can't discuss the patient's debt with anyone but the guarantor, you can ask for the patient's new address or phone number. If the third party says they don't know their new address or phone number, don't call the 3rd party again unless you have reason to believe the 3rd party has learned their new address/phone number since the original inquiry. You can also ask the post office for a forwarding address. Keep the returned statement and label it "addressee unknown" or "no forwarding address" to provide evidence of reasonable effort to collect the debt.

Certified Check

A payer's check written and signed by the payer that is stamped "certified" by the bank. The bank has already drawn money from the payer's account to guarantee that the check will be paid.

Payer

A person who pays a bill or writes a check.

Payee

A person who receives a payment.

Counter Check

A special bank check that allows a depositor to draw funds from his own account only, as when he has forgotten his checkbook.

Statute of Limitations

A state law that sets a time limit on when a collection suit on a past-due account can legally be filed. Time limit depends on the type of account and state in which the debt occurred.

Cash flow statement

A statement that shows the cash on hand at the beginning of a period, the income and disbursements made during the period, and the new amount of cash on hand at the end of the period.

Double entry system

A system of accounting in which every transaction affects at least two accounts. Based on Assets = Capital + Liabilities

Cycle Billing

A system that sends invoices to groups of patients every few days, spreading the work of billing all patients over the month while billing each patient only once. Accounts are split into groups and statement mailing days are scattered through the month.

Truth in Lending Statements

A written description of the agreed terms of payment between the patient and medical practice when payment will be made in more than four installments.

Mutual agreement

AKA bilateral agreement. Patient and provider agree on co-determined payment plan (ex: patient will be billed the full amount owed each month and must make a minimum payment each month). If the practice doesn't assess finance charges & the # of payments is 4 or less, this agreement isn't covered by the TLA. If the practice assesses finances or the agreement includes more than 4 installments, it is covered by the TLA.

Single-entry account

An account that has only one charge, usually for a small amount, for a patient who does not come in regularly.

Open Book Account

An account that is left open to charges made occasionally as needed. Most of a provider's long-standing patients have this. Uses the last payment due or date of the last charge for each illness as the start date to determine the time limit for each specific debt.

Written Contract Account

An agreement between the physician and patient stating that the patient will pay a bill in more than four installments. Practitioner and patient sign a written agreement about treatments and payments.

Credit

An extension of time to pay for services, which are provided on trust.

Using an independent billing service

Billing service may bill insurance, copy ledger cards, produce computer generated statements using the practice's business office (to then be mailed to patients).