Chapter 20: Patient Collections and Financial Management
Establishing Procedures guidelines
- Be organized. Maintain the practice's bookkeeping and written procedures in a logical and organized way. - be consistent - use markers to avoid losing your place - write clearly -use straight columns Be consistent Be organized Double-check your work
Which of the following pieces of information must be given to a collection agency regarding a patient account?
- Full name of the patient and last known address - Occupation and business name and address - Name of spouse, if any - Total amount of the debt - Date of the last activity (payment or charge) on the account - Description of actions taken to collect the debt - Response(s) received to collection attempts Full name of the patient Total amount of the debt Last known address of the patient
Observing Professional Guidelines for Finance Charges and Late Charges
According to the AMA, it is appropriate to assess finance charges or late charges on past-due accounts if the patient is notified in advance. Advance notice may be given by posting a sign at the reception desk, giving the patient a pamphlet describing the patient's billing practices, and/or including a note on the statement.
Which of the following describes the money that a medical practice must pay to run the business?
Accounts payable
Which act governs the methods that can be used to collect unpaid debts?
Fair Debt Collection Practices Act of 1977
What can you ask a third party when you find the patient is no longer at that address?
For their new address or phone number.
Truth in Lending Act
Comes under Regulation Z of the Consumer Credit Protection Act.
Credit cannot be denied a person who has exercised rights under the
Consumer Credit Protection Act.
Consumer Credit Protection Act
Credit that cannot be denied because the patient recieves public assistance or has exercised rights under this act.
In step one of setting up a disbursement journal, you are required to have column headings for each check.
Date, payee's name, check number and check amount
When a check is returned due to NSF, what is the first action a medical assistant should take?
Deduct it from the office checking account
What should you always obtain when you make a deposit?
Deposit receipt
Which of the following is a written description of the agreed terms of payment?
Disclosure statement
What does the acronym EFT stand for?
Electronic funds transfer
How do payers and offices prefer to receive their insurance payments?
Electronically
Which act states that credit arrangements may not be denied based on a patient's sex, race, religion, national origin, marital status, or age?
Equal Credit Opportunity Act
What should be in the patient's financial file before it is turned over to the collection agency? Select all that apply.
Name of spouse, if applicable Any patient responses to calls Total amount of debt Employer name Last known phone number
What do most offices do to notify the patient, they have an immediate patient payment system?
Post a sign
What procedure needs to be followed before you can process a refund to the patient?
Processi a payment resulting in a credit
What is an administrative task that involves comparing the office financial records, the checkbook, or disbursements journal?
Reconciliation
Returned Checks
If a patient's check does not clear due to nonsufficient funds (NSF), you must adjust the account accordingly. NSF payments are first deducted by the office checking account. The patient's account is then updated with a negative payment for the amount of the check, adding that amount back to the patient balance. The patient also may be charged an office fee for the inconvienience of dealing with the NSF check. Any fees your office charges for NSF must be clearly stated and in plain view for patients to see. In addition, if the bank imposes a fee on the office, these bank fees also should be passed to the patient to recoup the loss for the practice and marked on the patient's ledger. Depending on office policy, the patient may now be seen on a cash-only basis by the practice.
Attatch the Superbill to the Patient Chart
Remove the superbill and attatch it to the patient chart so that it is ready for the provider to check off both the services provided and all the applicable diagnoses for the day's visit. After examining the patient, the provider checks off or fills in each serivce provided with its appropriate charge and all pertinent diagnoses on the superbill, indicates when the next appontment is needed, and gives the superbill to the patient to return to the front desk on the way out.
What is an advantage of electronic bookkeeping?
Saves time
Which of the following should include the guarantor's name, previous balances, an itemized list of services and charges, payments from the patient or insurance during the month, and the total balance due?
Statements
Which of the following is a law that sets a time limit on when a collection suit on a past-due account can legally be filed?
Statute of limitations
What does accounts receivable reflect on the practice?
Income
Accounts Receivable
Income or money owed to the business
What is the function of the "Balance Checkbook"?
It reconciles the monthly bank statement
Which of the following are benefits of having a patient pay the bill at the time of service?
It saves the cost of preparing and mailing statement. It brings income into the practice faster.
What happens if an error goes undetected at the first link of bookkeeping documentation?
It will be carried through all other links in the chain.
Which of the following types of practices use cycle billing?
Large practices
Managing Billing Cycles
Larger pracitces tend to spread the billing process out over the month in a process known as cycle billing. In cycle billing, the accounts are split into groups and statement mailing sates are staggered.
If you are depositing a money order, what should be notated on the deposit slip?
MO Money order
Insuring Accounts Recievable
To protect the practice from lost income because of nonpayment, the practice may buy accounts receivable insurance. Policies can pay when a large number of patients (or one large account or insurance plan) do not pay and the practice must absorb the lost income. Some policies also protect the practice in the event that its A/R records are destroyed and the individual records may no longer be available.
List all the reasons a deposit should be done as often as possible.
To reduce loss, theft, bounced checks, and inaccurate recordings
Which of the following comes under Regulation Z of the Consumer Credit Protection Act?
Truth in Lending Act
Which of the following are common collection problems?
Two common collection problems are patients who cannot pay (also called hardship cases) and the second is patients who have moved without leaving a forwarding address and therefore have not recieved a statement.
Which act protects telephone subscribers from unwanted telephone solicitations, commonly known as telemarketing?
Telephone Consumer Protection Act of 1991
Which of the following are benefits of accounts receivable insurance policies?
They can pay when a large number of patients do not. They can protect the practice's cash flow. They can protect the practice if its AR records are destroyed.
The Balance Checkbook
electronically reconciles the monthly bank statement. After you enter the appropriate date or dates, the computer screen displays all the checks and deposits that were logged into the register in the order they were posted.
When you select "Record Deposits" a message will prompt you to enter
info about each check to be deposited that day which usually includes the check writer's name, the ABA number, and the amount of the check.
Disbursements
is any payment the practice makes for goods or services. One of the most common disbursements include payments for eqiupment, dues, rent, taxes, salary, and utilities. No matter what type of disbursement you make on behalf of the practice, you must keep accurate records of the purchase and the payment.
The superbill should have an appropriate diagnosis for each procedure to support
medical necessity for the insurance carrier to allow for payment
Statement
patient bill
The person who writes the check is known as the
payer
Adding the fee of the agency should not be added to the patient's account as it is
the cost of doing business
A bank draft or order for payment is known as:
a check
Any payment the practice makes for goods or services is called
a disbursement
Some software programs _____________________ assign the next available check number to each new check you enter.
automatically
Skip
A patient who has moved without leaving a forwarding address and his bill is unpaid.
Hardship cases
A practitioner may decide to treat some patients without charge-or at a deep discount-simply because they cannot pay. These patients may be poor, uninsured, or elderly and on a limited income. They may be patients who have suffered a severe financial loss or family tragedy. Medical ethics require practitioners to provide care to individuals who need it, regardless of thieir ability to pay.
endorsement
A signature or stamp on the back of a check transferring ownership
What is attached to the patient chart for the provider to check off services provided which produce charges?
A superbill
What information is included in the "Display Checkbook"? Select all that apply.
The check number, date, payee, and amount
After posting the payments, the account balance will be a negative number, known as:
credit balance
The date of last activity on the account, the description of actions taken to collect the debt, and response received to collection attempts are pieces of information that must be given to the
credit collection agency.
The information on each patient's ledger card must match the
daily log.
List the advantages of using electronic banking.
- Electronic banking can improve productivity, cash flow, and accuracy - Can speed up many banking tasks
What information in a patient's financial file should be verified before turning it over to a collection agency?
- Full name of patient and the last known address - Occupation and business name and address - Name of spouse, of any - Total amount of the debt - Date of the last activity (payment or charge) on the account - Description of actions taken to collect the debt - Response(s) recieved to collection attempts - Patient's last known phone number
When completing a Truth in Lending Statement, which of the following should be included.
- Patient name and address - Price for service or procedure - Amount of down payment recieved - Unpaid balance - Amount financed - Finance charge (if applicable) - Total amount to be financed - Number of payments and the amount of each - Date payments are due, including final payment date
All statements should include the following information
- Practice name, address, and telephone number (usually preprinted on the statement or prepared by the computer program). - Patient's name and address - Guarantor's name (if different from the patient) - Balance (if any) from the previous month(s) - Itemized list of services and charges, by date, for the current month - Payment from the patient or insurer during the month - Total balance due
List the differences when using electronic banking compared to traditional methods.
- Rather than your recording each check in a paper checkbook and determining the new balance, the computer software calculates the new balance for you - Rather than your reconciling the office bank statement on paper, the computer software does it automatically - Rather than putting the checkbook and banking forms in a securely locked place at the end of the day, you use a computer password for security.
WIth computerized bookeeping, you save time because:
- The computer preforms repetitive tasks - The computer software automatically preforms mathematical calculations - Built-in tax tables are available that calculate tax liabilities for you
Which of the following are common banking tasks.
- Writing checks - accepting checks - endorsing checks - making deposits -reconciling bank statements -recordkeeping of bank accounts - balancing of individual accounts
Steps to process a patient refund
1. Calculate and determine the amount to be refunded 2. Record and check number and amount in the disbursements journal or checkbook and write a check to the patient for the amount to be refunded 3. Ask the proper person to sign the check 4. Post the refund as a negative payment to the patient's ledger card or account 5. Make a copy of the check, and mail the original to the patient.
Processing a payment resulting in a credit balance
1. Locate the patient's account in the computer, or pull the patient's ledger card for paper based systems. 2. Post the total amount of the payment recieved to the patient's account by writing or keying the remittance amount in the paid column. 3. Subtract the payment amount from the previous balance and insert the new balance in the balance column. 4. Review the account throroughly, checking to see if any more receipts are expected on the patient's account 5. If a credit balance is verified, adjust the credit balance off the patient's account by issuing a refund
List the steps to posting a non sufficient funds check, starting with step 1. Instructions
1. Locate the patient's account on the computer, or pull the ledger card for manual processes. (You must be sure that you have the correct patient (account) to record the NSF check. 2. Use your medical facility code for NSF check 3. In the paymemt adjustment column, place the amount of the check in parentheses to indicate that the amount is debited as an adjustment. 4. On the next line, also using today's date, enter the medical facility's code for the NSF charge allowed by the office.
Referring an Account to a Collection Agency and Posting the Payment from the Agency
1. Make sure all attempts have been made to collect the debt per office policy that have been documented, including the return receipt from the letter sent to the patient stating that the account would be turned over to the collection agency by a specific date. 2. Verify that the following info is in the patient's financial file to be turned over to the collection agency: - Last known phone number and address for the patient - Employer name and number - Name of spouse - Total amount of debt, with last payment amount and date - If there has been no payment, the last date service was provided - Description of office actions to collect a debt - Any patient response to those actions 3. Place a call to the agency, identifying yourself and the office, and explain you are calling to turn accounts over to it. 4. For each account to be turned over, supply the info listed in step 2 5. When a payment arrives from the agency, each account will be identified with the total amount of the debt collected 6. When posting the payment, post the actual amount of the payment sent to the office from the collection agency to the patient's account, not the full amount of the payment made by the patient. 7. Make an adjustment (write-off) on the patient's account in the amount kept by the agency as its fee 8. Subtract both the payment and the adjustment from the patient's balance.
List the three main groups that accounts payable fall into.
1. Payments for supplies, equipment, and practice-related products and services 2. Payroll which may be the largest of the accounts payable 3. Taxes owed to the federal, state, and local governments and agencies.
Before tracking, check your calculations by preforming a trial balance:
1. Total the check amount column 2. Calculate the total for each expense column 3. Add together all the expense column totals 4. If the amounts do not match, recheck every entry until you find the error 5. When the two amounts match (or balance), carry forward all column totals to the disbursements journal for the next month.
Steps to set up a disbursement journal
1. Write in or key column headings for the basic info for each check 2. Enter column headings for each type of business expense 3. Write in column headings for deposits and the account balance 4. Record the data from the completed check under the appropriate column headings 5. Subtract payments from the balance and add deposits
The medical assistant should strive for _________ accuracy in bookkeeping.
100%
Patients who are _____ or over are legally considered to be their own guarantor.
18
The first phone call to a patient should be made if payment has not been received after
30-45 days.
When accounts are under ________ days, they should be marked as "no action to be taken at this time."
31
Accepting Patient Payment
Computerized offices post the payments to the patient's account using the office billing software. Offices that use a manual, paper system often use the previously described write-it-once, or pegboard, system, which allows you to record the payment on the patient ledger card and produce a receipt for payment simultaneously.
Accepting a check for payment is called:
Endorsement
In Office Transactions
Immediate patient payment not only brings income into the practice faster but also saves the cost of preparing and mailing statements (patient bills) and collection of past-due accounts. Many offices past a small sign at the reception desk that states for example, "Payment is requested when services are rendered unless other arrangements are made in advance." As a medical assistant, you are responisble for these payments.
Balance Checkbook
Is an option that electronically reconciles the monthly bank statement. After you enter the appropriate date or dates, the computer screen displays all the checks and deposits that were logged into the register in the order they were posted. The next screen highlights each check or deposit that has not been seen on a previous bank statement. You are prompted to indicate whether that item apperars on the current statement, usually using Y (yes) and N (no). After the computer queries these items, it may ask you to enter any items that appear on the current bank statement but are not in the checkbook, such as service charges. Finally, a message on the screen prompts you to enter the current account balance from the bank statement. Then, the computer reconciles the bank statement. It will alert you if the system balance does not agree with the balance on the bank statement. If the balance does not agree, recheck the information you entered for possible errors or omissions, yet the balances still do agree, call the bank to determine if a bank error has been made.
What type of numbers are printed on the deposit slips?
MICR numbers
Which of the following systems uses a pegboard that allows you to record the payment on the patient's ledger card?
Manual paper system
Using the Superbill as a Statement
Many paper-based practices still use a superbill (encounter form), which lists the charges and procedure codes (CPT) for services rendered on that day, including appropriate diagnoses and codes (ICD). As a carbonless form, when the charges and any payments are entered on the superbill, an automatic receipt and first statement are generated at the same time, saving time and money. Some offices even give the patient a return envelope if there is a balance on the account to encourage prompt payment, as this is considered the first bill received by the patient.
What is a business checking account commonly used for?
Office expenses
The combination of insurance payments and patient payments exceeds the allowed charges, This is known as:
Overpayment
Which of the following should be included on a ledger card?
Patient name, patient address, patient home and work phone numbers, insurance carrier with policy number and guarantor info
Refunding an Overpayment (Credit Balance)
Periodically, the combination of insurance payments and patient payments exceeds the allowed charges. This is called an overpayment. Sometimes this happens when patients feel they have not met their annual deductible, they pay thier balance, and then the insurance carrier also makes a payment on the patient's behalf. After posting the payments, the account balance will be a negative number, which is called a credit balance. When this happens, the medical office owes the patient money. In some medical offices, if this amount is small, they leave it in place so that the next scheduled visit's new charges will be applied against this amount.
What are the different types of checking accounts a practitioner may have?
Personal, business, and interest-earning
Reconciling the Bank Statement
Reconciliation involves the comparing the office financial records, the checkbook or disburesements journal, with the bank records (statement) to ensure that they are consistent with each other and accurate. In most practices, this task is preformed once a month when the practice recieves the monthly checking account statement from the bank, either in the mail or electronically if the office utilizes the bank's electronicbanking services.
Attach the Superbill to the Patient Chart
Remove the superbill and attach it to the patient chart so that it is ready for the provider to check off both the services provided and all the applicable diagnoses for the day's visit. After examining the patient, the provider checks off or fills in each service provided with its appropriate charge and all pertinent diagnoses on the superbill, indicates when the next appointment is needed, and gives the superbill to the patient to return to the front desk on the way out.
What type of endorsement specifies how the check may be redeemed?
Restrictive endorsement
The provider will fill in what on the superbill?
Return visit Diagnosis Procedures provided
What might the software ask you to enter, that appear on the current bank statement, such as
Service charges
Pay Bills
The computer also should give you a chance to verify and correct this info before moving on to the next check or printing the checks. More and more programs, depending upon the bank the office uses, also allow for electronic bill pay. Recording these payments in the electronic (or paper) checkbook register is the same as when writing a check, exept instead of recording the check number, you will record the transaction number assigned by the bank as proof the payment has been sent. Some software programs automatically assign the next available check number to each new check you enter. To double-check that the computer-assigned check numbers match those on the actual checks, print a list of the checks you have entered and compare it with the checks before mailing them.
Payment Responsibility
The person with financial responsibility for the for the patient is known as the guarantor, the person who "guarantees" payment. In most cases, any patient who is 18 or over is legally considered to be their own guarantor.
Understanding Financial Summaries
The practitioner or practice manager may periodically analyze the practice's income and expenses. In the past, it was necessary to have an accountant to prepare financial summaries. But with more offices utilizing practice management software, creating these reports using the software package or templates is a relatively simple process once the procedure is understood. A medical assistant with a basic understanding of the info contained within financial summaries will be an asset in helping the practice to remain financially stable. Following are some of the records found in most financial statements.
age analysis
The process of classifying and reciewing past-due accounts by age from the first date of billing
Endorsing Checks
There are four principal types of endorsement: Blank endorsement- consists of the payee's signature Restrictive endorsement- specifies how the check may be redeemed Special endorsement- also called third-party endorsement, as the payee of the check signs it over to another person. Qualified endorsement- Attorneys, who may accept a check on behalf of their client but have no personal claim on the transaction, most often use qualified endorsements. In this case, the attorney might endorse the check "without recourse," which disclaims any future liability regarding this transaction.
The practice will adjust the remaining balance off the account if an account is found to be never collected, which is called a(n):
Uncollectable account
Which of the following types of patients will likely have the greatest challenges paying medical bills?
Uninsured Poor Elderly underinsured limtied income
What should you use to avoid losing your place when bookkeeping?
Use markers
Electronic Deposits
With the advent of electronic claims submission, many payers and offices prefer to recieve their insurance payments as well. Electronic funds transfers, or EFTs, may be set up between the office and many insurance carriers, greatly decreasing the amount of time it takes to recieve payment from the insurance carriers via US mail. Even smaller offices that still submit paper claims to insurance carriers may be able to recieve their insurance paymetns electronically. The office will receive notification from the insurance carrier of any payment (deposit) sent to the office checking account along with the explanation of benefits (EOB), also known as the remittance advice (RA), explaining which patient accounts the payment pertains to.
Recording Disbursements
You may record disbursements in a check register, in a disbursements journal, or on the bottom section of the daily log. If you use a disbursements journal, follow these steps to record disbursements: 1. When beginning a new journal page, give each column a heading to reflect the type of expense, such as utilities or rent. 2. For each check, fill in the date, payee's name, check number and check amount in the appropriate columns 3. Determine the expense category of the check 4. Record the check amount in the column for that type of business expense 5. If you must divide a check between two or more expense columns, record the total in the check amount column.
A statement of income and expense highlights the practice's profitability is called
a profit-and-loss statement. It shows the physician the practice's total income and then lists and subtracts all expenses
Open-book account
account that is left open to charges that are made on an intermittent basis
To protect a practice from lost income because of nonpayment, the practice may buy
accounts receivable insurance.
Check marks help keep your reconciling organized and should be placed on
each redeemed check recorded on the statement each receipt recorded on the statement. each deposit recorded in the checkbook
The Telephone Consumer Protection Act of 1991 prohibits autodialed calls to
emergency service providers, celluar and paging numbers, and patients' hospital rooms
In step seven of reconciling a bank statement, you should record the ______________ balance found in the office checkbook in the appropriate area of the reconciliation worksheet.
ending
Any ______ your office charges for NSF must be clearly stated and in plan in view for the patients to see.
fees
An easy-to-read report on the business transactions for a given period, such as a month, quarter, or a year, is called
finanical summary
Patients who cannot pay their bills are known as
hardship cases.
According to the AMA, it is acceptable to assess finance charges or late charges on past-due accounts if the patient is notified
in advance. Advance notice may be given by posting a sign at the reception desk, giving the patient a pamphlet describing the prectice's billing preactices, and/or including a note on the statement.
Give a copy of the signed agreement to the patient and keep a copy
in the patient's financial record for future reference
Advance notice of the addition of finance charges or late charges to a patient's past-due account may be given by
including a note on the statement. posting a sign at the reception desk. giving the patient a pamphlet describing the office's billing practices.
Sort dollar bills by denomination, from
largest to smallest
Patient financial records are considered
legal documents.
Doing an age analysis is an effort to collect outstanding accounts, because it becomes
more difficult to collect balances
What reminds you to add the payment to the balance, instead of subtracting it as you usually would do?
parentheses
To make the deposit, place the following into the deposit bag.
place the cash and checks in a deposit bag along with the computerized deposit slip and the bank's deposit slip. All cash All checks The deposit slips
After endorsing the check the medical assistant should
post the payment to the patient ledger card.
What does the checkbook display function allow you to review?
the electronic checkbook register
Computerized offices post payments to a patient's account using
the office billing software. Offices that use a manual, paper system often use the previously described write-it-once, or pegboard, system, which allows you to record the payment on the patient ledger card and produce a receipt for payment simultaneouly.
A copy of the superbill should be placed in or given to
the patient. the insurer. the practice records.
Watching for changes in recording disbursements is called
tracking which is important because it helps control expenses.
When writing a check electronically you will record the ________________ number, as proof of the payment sent.
transaction
Accounts that are not paid by patients and the office cannot collect on, are known as:
uncollectible
The goal of the Fair Debt Collection Practices Act of 1977 is to eliminate abusive, deceptive, or
unfair debt collection practices.