Billing and Collections



Billing and Collections



Key Terms












































LEARNING OBJECTIVES PROCEDURES
1. Describe the process of billing and collections. Process patient bills.
2. Describe problems that can occur when patients pay by check. Post a “non-sufficient funds” check.
3. Explain how to adjust patient accounts for an overpayment and process a refund. Process a credit balance.
Process a refund.
4. Develop a collection system.  
5. Identify past due accounts and the actions needed. Create and examine an accounts receivable aging record.
6. Describe the information to include in a collection letter. Write a collection letter.
7. Identify legal requirements that affect collections for the medical office.  
8. Describe special circumstances affecting collections in the medical office. Post a collection agency payment.


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Introduction to Billing


If patients have insurance, a bill is not usually sent to the patient until after the insurance company has paid its portion of the bill. If the patient is covered by a managed care policy, the copayment is usually collected at the time of the visit, and a bill may not be necessary. Often, however, the patient has a deductible and/or coinsurance, and a bill must be sent to the patient.


If a patient visit will not be covered by insurance, most physicians’ offices request that payment be made at the time a medical service is provided. Medical offices usually also accept payment by credit card, which makes payment at the time of service possible and convenient for many patients. However, a number of patients still need to make arrangements to pay for their medical services over a period of time. In this case, the office must establish an account for the patient and send periodic bills. These bills are usually generated by computer software. Each bill is then placed in a window envelope and sent to the patient. Even if the patient’s account is being paid by capitation, a billing record is usually kept for that patient, showing the amount of charges and payments.


The billing for physician offices that are affiliated with a hospital or large health group is usually done from a central location, and office employees are responsible only for posting charges. Patients and insurance companies make payments to the central office. Other offices may contract with an outside billing service. The medical assistant should understand the billing process, however, because efficient billing maximizes revenue for the medical practice.



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.


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Figure 47-1 A sample patient bill.

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).



imageProcedure 47-1   Processing Patient Bills



Outcome


Process patient bills.



Equipment/Supplies





1. Procedural Step. Locate patient accounts in the computer database.


2. Procedural Step. Identify patient accounts with an outstanding balance for which insurance payments have been made.


    Principle. Patients are usually not billed until insurance payments have been received.


3. Procedural Step. Create one or more patient bills manually using a statement template and word processing program, or compile outstanding bills using the computer program and view using Print Preview. Check all bills for completeness and accuracy.


    Principle. All bills must have the patient’s name and address, previous activity for the account, and the amount due from the patient.


4. Procedural Step. Print patient statements using the office patient statement form. The statement form may be printed with the bills from the computer program, or statement forms may be loaded in the printer.


5. Procedural Step. Make sure that statements have printed correctly.


6. Procedural Step. Fold statements so that the practice and the patient names and addresses will be visible through the windows in the envelopes.


    Principle. The practice purchases window envelopes with the windows positioned so that the return address of the practice shows through the upper window and the patient name and address show through the lower window.


7. Procedural Step. Insert statements in envelopes. Be sure that the names and addresses are visible.


8. Procedural Step. Place postage on envelopes and mail statements.



Putting It All Into Practice


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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. image



Billing Problems


Problems with Checks


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 the Office Account

It is illegal to write a check for more than the amount of money in a bank account. However, this occasionally happens because of an arithmetic error in calculating the balance while writing checks or because of failure to reconcile a bank statement. If the office’s account accidentally becomes overdrawn, the bank may refuse to honor any check written after the account is overdrawn. In this case the check will be returned to the person or company that deposited it marked NSF (“non-sufficient funds”) in the payer’s account to cover the check. A check written on an account without adequate funds to cover it is called an overdraft.


It is a good practice to have overdraft protection for any office checking account. Although this protection may never be needed, it will prevent a check from bouncing in the event that the person who pays the bills in the medical office writes a check against an account without adequate funds to cover the check. In that case, funds will automatically be transferred from another office account, such as a savings account, and the bank will charge a small fee.




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





Equipment/Supplies





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.


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The NSF check and bank fee are posted to the patient’s account.


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





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





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.


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Verify that the patient’s account balance becomes zero.

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Apr 16, 2017 | Posted by in NURSING | Comments Off on Billing and Collections

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