Patient Billing and Collections

1. 15 Patient Billing and Collections

2. 15-2 Learning Outcomes When you finish this chapter, you will be able to: 15.1 Discuss the ways practices explain their financial policies to patients. 15.2 Describe the purpose and content of patients’ statements and the procedures for working with them. 15.3 Compare individual patient billing and guarantor billing. 15.4 Discuss the responsibilities of a collections specialist, and describe other positions that are typically part of the billing and collections function.

3. 15-3 Learning Outcomes (Continued) When you finish this chapter, you will be able to: 15.5 Describe the processes and methods used to collect outstanding balances due to the medical practice. 15.6 Name the two federal laws that govern credit arrangements. 15.7 Discuss the tools that can be used to locate unresponsive or missing patients. 15.8 Describe the procedures for clearing uncollectible balances from the practice’s accounts receivable. 15.9 Explain the purpose of a retention schedule and the requirements for retaining patient information.

4. 15-4 Key Terms • bad debt • bankruptcy • collection agency • collections • collections specialist • credit bureaus • credit reporting • cycle billing • day sheet • embezzlement • Equal Credit Opportunity Act (ECOA) • Fair and Accurate Credit Transaction Act (FACTA) • Fair Credit Reporting Act (FCRA) • Fair Debt Collection Practices Act (FDCPA) of 1977 • guarantor billing • means test

5. 15-5 Key Terms (Continued) • patient aging report • patient refunds • patient statement • payment plan • prepayment plan • Red Flags rule • retention schedule • skip trace • Telephone Consumer Protection Act of 1991 • Truth in Lending Act • uncollectible accounts

6. 15-6 15.1 Patient Billing • Effective patient billing begins with sound financial policies and procedures • Medical practices use many methods to inform patients of their financial policies and procedures: • Payment policies are explained in brochures and on signs in the reception area as well as orally by registration staff • Patients are often asked to read and sign a statement that they understand and will comply with the payment policy

7. 15-7 15.2 Working with Patients’ Statements • The PMP uses information from an RA/EOB to update the patient ledger and the day sheet—report summarizing the business day’s charges and payments • These data are used to generate patient statements—printed bills that show services provided to a patient, total payments made, total charges, adjustments, and balance due • Patients may owe coinsurance, deductibles, and fees for noncovered services.

8. 15-8 15.2 Working with Patients’ Statements (Continued) • Patient statements are designed to be direct and easy to read, clearly stating: • General information about the practice • Cost breakdown of all services provided • Balances owed • Date of the statement and sometimes the due date for the payment • Accepted methods of payment (sometimes necessary)

9. 15-9 15.3 The Billing Cycle • Cycle billing—type of billing which divides patients with current balances into groups to even out monthly statement printing and mailing • Spreads out the workload • If the billing cycle is weekly, for example, the patient accounts are divided into four groups so that 25 percent of the bills go out each week

10. 15-10 15.3 The Billing Cycle (Continued) • Patient billing: • Each patient who has a balance receives a mailed patient statement • Guarantor billing—grouping patient billing under the insurance policyholder • Statements are grouped by guarantor and cover all patient accounts that are guaranteed by that individual • Produces fewer bills to track but can become unwieldy when family members have various health plans and/or secondary plans

11. 15-11 15.4 Organizing for Effective Collections • The term collections refers to all the activities related to patient accounts and follow-up • Large practices may have separate collections departments with these typical job functions: • Billing/collections manager—responsible for establishing office policies and enabling collections specialists to successfully perform their jobs • Bookkeeper—records funds coming into and going out of the practice • Collections specialist—staff member with training in proper collections techniques

12. 15-12 15.4 Organizing for Effective Collections (Continued) • Collections specialists: • Trained to work directly with the practice’s patients to resolve overdue bills • Study aging reports and follow up on patient accounts that are past due • Act ethically and professionally in contact with patients • Embezzlement—stealing of funds by an employee or contractor

13. 15-13 15.5 Collection Regulations and Procedures • Processes and methods used to collect outstanding balances: • Efforts to collect past-due balances are strictly regulated by law and by office policy • Both collection letters and phone calls are integral parts of the collections process • Collections specialists maintain a professional attitude while being straightforward; they must be prepared for difficult situations and ready to work out credit arrangements and payment plans

14. 15-14 15.5 Collection Regulations and Procedures (Continued) • Fair Debt Collection Practices Act of 1977 (FDCPA)—laws regulating collection practices • Telephone Consumer Protection Act of 1991—law regulating consumer collections to ensure fair and ethical treatment of debtors • Patient aging report—report grouping unpaid patients’ bills by the length of time they remain due • Divides information into categories based on each statement’s beginning date

15. 15-15 15.6 Credit Arrangements and PaymentPlans • Two federal laws govern payment arrangements: • Equal Credit Opportunity Act (ECOA)—law that prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because a person receives public assistance • Truth in Lending Act—law requiring disclosure of finance charges and late fees for payment plans

16. 15-16 15.6 Credit Arrangements and PaymentPlans (Continued) • Payment plan—patient’s agreement to pay medical bills according to a schedule • Practices have guidelines for appropriate time frames and minimum payment amounts for payment plans • Prepayment plan—payment before medical services are provided • May be used when patients are scheduled to have major, expensive procedures

17. 15-17 15.7 Collection Agencies and Credit Reporting • Practices use a variety of methods to collect funds from patients who have not paid: • Collection agency—outside firm hired to collect overdue accounts • Credit reporting—analysis of a person’s credit standing during the collections process • Credit bureaus—organizations that supply information about consumers’ credit history • Fair Credit Reporting Act (FCRA)—law requiring consumer reporting agencies to have reasonable and fair procedures • Fair and Accurate Credit Transaction Act (FACTA)—laws designed to protect the accuracy and privacy of credit reports

18. 15-18 15.7 Collection Agencies and Credit Reporting (Continued) • Skip trace—process of locating a patient who has an outstanding balance • Red Flags rule—law stating that health care entities must establish reasonable policies and procedures for implementing the identity theft guidelines

19. 15-19 15.8 Writing Off Uncollectible Accounts • Not all balances due to the practice will be paid • Practices must know when to write off an account • Uncollectible accounts—monies that cannot be collected and must be written off • Bad debt—account deemed uncollectible • Means test—process of fairly determining a patient’s ability to pay • Bankruptcy—declaration that a person is unable to pay his or her debts

20. 15-20 15.8 Writing Off Uncollectible Accounts (Continued) • Patient refunds—money that needs to be returned to patients when the practice has overcharged a patient for a service • Patients’ refunds or credit balances are handled differently than insurance overpayments, which must be refunded to the payer

21. 15-21 15.9 Record Retention • The retention of medical records follows office policy and is also regulated by law • Retention schedule—practice policy governing the handling and storage of patients’ medical records • Medical practices must be ready to answer patient requests for information and records, and to defend any claims that are questioned • Financial records are generally saved according to federal business records retention requirements