CHAPTER © 2013 The McGraw-Hill Companies, Inc. All rights reserved. 10 Collections in the Medical Office

CHAPTER

© 2013 The McGraw-Hill Companies, Inc. All rights reserved.

10Collections in the

Medical Office


Learning Outcomes

When you finish this chapter, you will be able to:10.1 Explain the importance of prompt follow-up on

insurance claims.10.2 Summarize the importance of a financial policy in

a medical office.10.3 Identify the laws that regulate collections from

patients.10.4 Demonstrate how to post a payment from a

collection agency.10.5 Discuss the process of writing off uncollectible

accounts.10.6 Explain how to use a patient aging report to

identify past-due accounts.

10-2


Learning Outcomes (continued)

When you finish this chapter, you will be able to:10.7 Demonstrate how to add an account to the

collection list.10.8 Demonstrate how to create a collection letter.10.9 Demonstrate how to create a collection tracer

report.

10-3


Key Terms

• collection agency• collection list• collection tracer report• payment plan• prompt payment laws • Tickler• timely filing• uncollectible accounts• write-off

10-4


10.1 Following Up On Insurance Claims 10-5

• Receiving prompt payment for services is a critical factor in determining the financial success of a medical practice.

• Prompt payment laws are state laws that mandate a time period within which clean claims must be paid; if they are not, financial penalties are levied against the payer.

• Timely filing is the requirement that claims must be submitted to payers within a specific number of days from the date of service.


10.2 The Importance of a Financial Policy 10-6

• The collection process begins with a clear financial policy and effective communications with patients about their financial responsibilities.

• Most patients pay their bills, but every practice has some patients who do not. Patients’ reasons for not paying include:– Lack of insurance.– Lack of financial resources.– Significant medical costs.– Consumer-directed health plans with high out-of-

pocket costs.– Lack of understanding that payment is their

responsibility.


10.2 The Importance of a FinancialPolicy (continued)

10-7

• It is important to have a written financial policy that spells out patients' responsibilities.

• Financial policies should tell patients how the practice handles:– Collecting copayments and past-due balances.– Setting up financial arrangements for unpaid balances.– Providing care for patients with low incomes.– Collecting payments for services not covered by

insurance.– Collecting prepayments for services.– Accepted different methods of payment.


10.3 Laws Governing Patient Collections 10-8

• Patient collections are consumer collections and are regulated by federal and state laws.

• Collections from insurance carriers are considered business collections.

• The Fair Debt Collection Practices Act of 1977 and the Telephone Consumer Protection Act of 1991 regulate debt collections, forbidding unfair practices.


10.3 Laws Governing Patient Collections(continued)

10-9

General guidelines forbidding unfair practices include the following:– No calls before 8 A.M. or after 9 P.M.– No threats or profane language– Respect for patient privacy– No deception or violence


10.3 Laws Governing Patient Collections(continued)

10-10

A payment plan is an agreement between a patient and a practice in which the patient agrees to make regular monthly payments over a specified period of time.– The Truth in Lending Act applies if the practice adds

finance charges and the payments are made in more than four installments.


10.4 Working with Collection Agencies 10-11

• A collection agency is an outside firm hired to collect on delinquent accounts.– The practice no longer contacts the patient if the

account is turned over to a collection agency.– Collection agencies are often paid on the basis of the

amount of money they collect.• When payment is received from a collection

agency, it must be posted to the patient’s account.– The agency provides a statement that shows which

patient accounts have paid and the amounts of the payments.


10.4 Working with Collection Agencies (continued)

10-12

Transaction Entry dialog box after collections payment is entered


10.5 Writing Off Uncollectible Accounts 10-13

• When all collection attempts are exhausted, the collection process is ended.

• An uncollectable account is an account that does not respond to collection efforts and is written off the practice’s expected accounts receivable.

• A write off is a balance that has been removed from a patient’s account.


10.5 Writing Off Uncollectible Accounts (continued)

10-14

Transaction Entry dialog box after write-off is entered


10.6 Using a Patient Aging Report for Collections

10-15

An aging report shows the patient’s chart number and name, and the amount of unpaid charges in each of these categories:– Current: Up to 30 days– Past: 31 to 60 days– Past: 61 to 90 days– Past: 91 to 120 days– Past: More than 121 days


10.6 Using a Patient Aging Report for Collections (continued)

10-16

Sample patient aging report


10.7 Adding an Account to theCollection List

10-17

• Overdue accounts are added to a collection list.• The Collection List is designed to track

activities that need to be completed as part of the collection process.– Ticklers or collection reminders are displayed as

collection list items.• A tickler is a reminder to follow-up on an

account that is entered on the collection list.


10.7 Adding an Account to theCollection List (continued)

10-18

The Collection List dialog box displays ticklers that have been entered into the database.



10-19

Additional information available in the Patient field of the Collection List dialog box



10-20

Tickler Item dialog box

Tickler tab Office Notes tab


10.8 Creating Collection Letters 10-21

• Before collection letters can be sent in Medisoft:– A patient-responsible tickler item for the patient’s account

must be entered in the collection list.– A collection letter report must be created.

• This report is generated when the Patient Collection Letters option is selected on the Collection Reports submenu of the Reports menu.

• When an account is added to the collection list, the current balance for the tickler is determined. Once recorded in the tickler, it is not updated when new transactions are entered in the program.


10.8 Creating Collection Letters (continued)

10-22

• Patient Collection Letters selected on the Collection Reports submenu


10.8 Creating Collection Letters(continued)

10-23

The Patient Collection Report lists patients with overdue accounts to whom statements have been mailed.



10-24

• After printing collection letters, an account alert appears in the Transaction Entry, Quick Ledger, and Appointment Entry windows.

• There are three account alert abbreviations:– RB – remainder balance– DP – delinquent on payment plan– IC – in collections



10-25

Transaction Entry dialog box with account alert message displayed


10.9 Creating a Collection Tracer Report 10-26

• A collection tracer report is a tool for keeping track of collection letters that were sent.

• The report lists:– Tickler item number– Responsible party– Chart number– Account balance– Date collection letter was sent– Reasons the account is in collections

• Created via the Collection Tracer Report feature on the Reports menu


10.9 Creating a Collection Tracer Report(continued)

10-27

Collection Tracer Report

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CHAPTER © 2013 The McGraw-Hill Companies, Inc. All rights reserved. 10 Collections in the Medical Office