CHAPTER
15
Patient Billing and
Collections
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15-2
Learning Outcomes
When you finish this chapter, you will be able to:
15.1
15.2
15.3
15.4
Discuss the ways practices explain their financial
policies to patients.
Describe the purpose and content of patients’
statements and the procedures for working with
them.
Compare individual patient billing and guarantor
billing.
Discuss the responsibilities of a collections
specialist, and describe other positions that are
typically part of the billing and collections function.
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15-3
Learning Outcomes (Continued)
When you finish this chapter, you will be able to:
15.5
15.6
15.7
15.8
15.9
Describe the processes and methods used to collect
outstanding balances due to the medical practice.
Name the two federal laws that govern credit
arrangements.
Discuss the tools that can be used to locate
unresponsive or missing patients.
Describe the procedures for clearing uncollectible
balances from the practice’s accounts receivable.
Explain the purpose of a retention schedule and the
requirements for retaining patient information.
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms
•
•
•
•
•
•
•
•
•
•
bad debt
bankruptcy
collection agency
collections
collections specialist
credit bureaus
credit reporting
cycle billing
day sheet
embezzlement
15-4
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.2 Working with Patients’ Statements
15-7
• 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.
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.2 Working with Patients’ Statements
(Continued)
15-8
• 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)
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.3 The Billing Cycle
15-9
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.3 The Billing Cycle (Continued)
15-10
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.4 Organizing for Effective Collections
15-11
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.4 Organizing for Effective Collections
(Continued)
15-12
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.5 Collection Regulations and
Procedures
15-13
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.5 Collection Regulations and
Procedures (Continued)
15-14
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.6 Credit Arrangements and Payment
Plans
15-15
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.6 Credit Arrangements and Payment
Plans (Continued)
15-16
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.7 Collection Agencies and Credit
Reporting
15-17
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.7 Collection Agencies and Credit
Reporting (Continued)
15-18
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.8 Writing Off Uncollectible Accounts
15-19
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
15.8 Writing Off Uncollectible Accounts
(Continued)
15-20
• 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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
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
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.