Billing Cycle

Bills (also commonly called statements) can be sent to patients every 2 weeks, monthly, or at any regular period, such as once every 3 months (quarterly). The time between bills is called the billing cycle. A bill sent out at the end of a cycle will show the balance owed at the beginning of the cycle, any payments made during the billing cycle, any new charges for new services that occurred during the billing cycle, and the balance due (total amount owed) at the end of the cycle.

Patient accounts are often divided into equal parts, usually alphabetically. Each week a different section of the accounts receivable is billed. For instance, on the first week of the month, patients with a last name beginning with the letters A to E may be billed; the second week, F to L; the third week, M to S; and the fourth week, T to Z. The same cycle is followed each month. Dividing the bills in this way makes more efficient use of staff time because billing is spread out over the month instead of being performed in only1 week of the month.

Billing Process

Bills can be produced manually using a word processing program and billing template, but in almost all medical offices they are produced using the medical office practice management program (Figure 47-1). If an outside billing service is used, the service can either send a paper record of all of the bills sent out at the end of each cycle or can transfer billing information from its computer to the office’s computer, linking the information into the patient’s financial record and the office’s bookkeeping software.

At regular intervals, patient financial accounts should be examined and the accounts that must be billed should be processed. Billing insurance companies and billing patients are both straightforward transactions. However, the medical assistant should be aware of some special situations. A patient may have been treated for a final illness just before dying. In this case, any charges will have to be billed to the patient’s estate. (Billing an estate is discussed in more detail at the end of this chapter.)

A patient may be a minor who sought treatment without his or her parent’s knowledge. When minors are brought to a physician by a parent or guardian for treatment, the parent or guardian acknowledges that he or she is the responsible party for financial purposes. However, if a minor is treated without the parent’s knowledge, the minor may be responsible for fees as well. Minors older than age 12 may give consent for certain kinds of treatment including treatment for sexually transmitted diseases (STDs), human immunodeficiency virus (HIV) testing, and treatment for drug or alcohol abuse. Because of confidentiality, the physician may not release information to the parent or guardian about the reason for the visit.

A patient may have a credit agreement with the practice, which allows the patient to pay bills off over time, along with interest on the balance due. This is important because in such situations, even though an outstanding balance may become old, it should not be considered delinquent and sent out of the office for collection (Procedure 47-1).

Putting It All Into Practice

My name is Christa Wilson, and I have been working in the office of three physicians for the past 5 years. There are three medical assistants, and we all assist the physicians during office hours, but I am responsible for most of the billing. We use cycle billing in our office. The first week of the month we send out statements for patients whose last names begin with the letters A-F, the second week G-L, and so on. By the end of the month, every patient with an outstanding balance has received a statement, and we begin again. I am also responsible for posting payments received in the mail. Every month, we run an aging report, and I analyze it to see which accounts are overdue. Our computer program lets us add written messages to the statements, but I add colored stickers for accounts that are older than 60 days because I think they are more likely to get the patient’s attention. If there is a balance due from a patient after 90 days, I always follow up with a telephone call. When I first started making these calls, I used to get very nervous, but I have gotten accustomed to it now. I always try to stay calm and keep my cool. I have found that in most cases, there is a financial problem that makes it difficult for the individual or family to keep up with its debts. I try to work with our patients so that they pay something each month and remind them not to “forget” about their copayments. Eventually we do collect most of the money that is owed to us, and we feel that part of the reason is that we stay on top of our billing. 

From time to time the office may encounter a problem either with a check it has written or with one that has been written to the office by a patient.

Insufficient Funds in a Patient Account

The bank may not honor a check deposited by the practice because a patient’s account has insufficient funds. If a check is returned marked NSF, do not hesitate to call the patient and tell him or her of the problem. This may be the first of many checks that are being returned, and it is important for the person to find out why he or she is writing checks against insufficient funds. The bank usually charges fees both to the individual who wrote the check and to the medical office that tried to deposit the check. The amount of the NSF check must be added back to the balance owed by the patient as a positive adjustment that increases the amount owed. The fee charged by the bank is also added to the patient’s balance, usually as a separate fee. As an example, assume that the patient paid a copayment of $20.00 at the time of the visit. The bank returned the check for insufficient funds and charged the medical office checking account a $15.00 fee. The medical assistant would charge the patient’s account $35.00 to cover both the amount of the returned check and the additional fee charged by the bank. Most offices have a sign posted in the waiting room notifying patients of the additional charge for each returned check (Procedure 47-2).

Procedure 47-2   Posting an NSF Check

Outcome

Post a check returned for NSF.

Equipment/Supplies

• Computer

• Patient accounts

• Returned check

• Day sheet (optional)

• Calculator

1. Procedural Step. When the NSF check has been received, locate the patient account in the computer database. If using a day sheet, label the first open line with the name of the patient whose check was returned and enter the old balance in the old balance column.

2. Procedural Step. Create a new billing for the patient and post the returned check using the code for NSF check or “adjustment—charge” and entering the amount of the check. If using a day sheet, write “NSF check returned by bank” and the check number in the professional service column. Place the amount of the check in the adjustment column in parentheses to indicate that the amount is a debit adjustment (i.e., added to the patient’s balance). Add the amount to the old balance and enter it in the new balance column.

    Principle. The amount of the returned check must be added to return the patient balance to the amount before the check was deducted.

3. Procedural Step. Post the amount charged by the bank as a charge using the code for a returned check fee. Record the total of the amount of the fee charged by the office for any returned check as a charge (fee). If recording on a day sheet, post the charge for the fee charged by the bank in the fee column. Add the amount to the old balance and record in the new balance column.

    Principle. The bank fee is a new charge to the patient’s account. Depending on office policy, the amount charged for the NSF check may be considered a fee or a debit adjustment.

4. Procedural Step. If using a computer program, be sure that the box indicating that insurance should be billed is not checked.

    Principle. Insurance is not responsible for the charge for a returned check.

5. Procedural Step. When totaling the columns of the day sheet at the end of the day, subtract any debit adjustment from the total of all credit adjustments.

6. Procedural Step. Notify the patient by telephone or letter that the check was returned and a fee has been charged. If sending a letter, enclose a patient statement with the letter showing the total amount of the returned check and the fee.

    Example: Darla Sissle’s check for $15.00 was returned by the bank marked NSF. The bank also charged a fee of $15.00.

Overpayments and Refunds

If the total of patient payments and insurance payments exceeds the allowed charge, it is called an overpayment. This might happen, for example, if a patient thought that he had not yet paid his annual deductible, when in fact he had. After all the payments have been posted, the balance on the account will be a negative number, or credit balance, indicating that the medical office owes money to the patient. Sometimes a small credit balance is left in place when a patient has a visit scheduled in the near future because new charges will be applied. Usually, however, the medical assistant will process a refund for the patient. The amount of the refund is posted to the patient’s account, bringing the account balance to zero. The medical assistant sends a letter and a check to the patient with a brief explanation about the overpayment (Procedures 47-3 and 47-4).

Procedure 47-3   Processing a Credit Balance

Outcome

Process a credit balance.

Equipment/Supplies

• Computer

• Patient accounts

• Payment check(s)

• Day sheet

• Office policy manual

• Calculator

1. Procedural Step. When a payment has been made, locate the patient account in the computer. If using a day sheet, enter the patient’s name on a new line and enter the previous balance in the old balance column.

    Principle. Both insurance payments and patient payments must be entered in the correct patient account.

2. Procedural Step. Compare the amount of the payment against the total amount owed.

    Principle. The total amount owed will be the balance due and charges for new services.

3. Procedural Step. Even if the payment is greater than the charges, post the payment to the computer system using the correct code (i.e., patient payment, check, insurance payment) and link to the visit for which the payment is made. If using a day sheet, post the payment on the line with the patient’s name in the payment column.

4. Procedural Step. If an overpayment has occurred, note that the account balance in the computer is preceded by a minus sign. This means that the medical office owes the patient money. On the day sheet, subtract the amount of the payment from the patient’s previous balance and record in the new balance column. Place a negative number in parentheses. When totaling the new balance column at the end of the day, subtract any negative number from the total instead of adding it.

    Principle. A negative balance is indicated in accounting by enclosing it in parentheses. Care must be taken when totaling columns on a day sheet to subtract a negative number from the total.

5. Procedural Step. Take steps to clear the balance from the system according to your office policy. If the patient has another appointment scheduled, the negative balance may be carried for a short time. In most cases, a refund should be issued promptly (see Procedure 47-4).

    Principle. Office policy guidelines indicate the proper management of a credit balance in a patient account.

Procedure 47-4   Processing a Refund

Outcome

Process a refund.

Equipment/Supplies

• Computer

• Patient accounts

• Payment check(s)

• Day sheet

• Office policy manual

• Calculator

1. Procedural Step. Locate the patient account in the computer. If using a day sheet, enter the patient’s name on a new line and enter the amount of the credit balance in the old balance column.

    Principle. All financial transactions must be entered in the correct patient account.

2. Procedural Step. Calculate the amount to be refunded (usually the amount of the negative balance).

3. Procedural Step. Create a new transaction for the patient in the computer account and choose “Refund” for the code. If using a day sheet, write “Refund for Overpayment” in the professional service column.

4. Procedural Step. Enter the amount of the refund in the “Amount” box of the transaction screen, and verify that the patient balance becomes zero. On the day sheet, record the amount of the refund in the adjustment column. Add this number to the patient’s old balance (a negative number) so that the new balance becomes zero, and enter zero in the new balance column.

    Example: The patient Edmund Hall paid $50.00 on his account followed by an insurance payment of $55.00, resulting in an overpayment of $15.00. A refund was issued for $15.00.

5. Procedural Step. Write a check for the refund amount including the date, amount in numbers, and amount in words on the line below. Leave the signature line blank.

    Principle. The medical assistant is generally not authorized to sign checks for the medical office.

6. Procedural Step. Record the check number, date, payee, and reason for the check on the check stub in the checkbook or in the check register.

7. Procedural Step. Subtract the amount of the check from the balance in the check register.

8. Procedural Step. Write a letter informing the patient of the refund, and prepare an envelope.

9. Procedural Step. Sign the letter and your title, or obtain the physician signature depending on office policy.

10. Procedural Step. Leave the check, letter, and envelope in the correct place to obtain an authorized signature on the check.

Only gold members can continue reading. Log In or Register to continue

Share this:

• Click to share on Twitter (Opens in new window)
• Click to share on Facebook (Opens in new window)

Related

Related posts:

1. Digestive System
2. Interacting with Patients
3. Written Communications
4. Specialty Examinations and Procedures: Colon Procedures, Male Reproductive Health, and Radiology and Diagnostic Imaging

Stay updated, free articles. Join our Telegram channel

Join