© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted...

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.


Chapter 20

Billing and Collections


Billing Procedures


Billing Procedures

• Timeliness and accuracy important

• Streamline billing process

• Billing efficiency report used to monitor efficiency


Credit and Collection Policies

• Well-defined policy related to patient billing and collecting

• Patient-information brochure

• Questions providers may want to address


Payment at Time of Service

• Inform patients when appointment made:– Whether provider has contract with their insurance

carrier– How payment made if insurance does not cover

procedures– Whether they can be billed for co-payments and

coinsurance– How payment made for services if they have no

insurance– Approximate cost of service if appropriate


Payment at Time of Service

• Increasingly accept debit and credit card payments

• Most insurance contracts require provider to bill insurance company before billing patient, except for co-payment

• Abide by each contract • Patients treated the same and charged

the same for services


Truth in Lending Act

• Clinic policy dictates if interest is charged

• Regulation Z of Consumer Protection Act of 1967

• Agreement must be in writing and must provide information on any finance charge

• Patient given original copy of disclosure statement


Components of a Complete Statement

• Statement should contain:– Patient’s name, address, insurance carrier and

identification number– Date and place of service– Description of service and fee for each service



• Statement should contain:– Procedure and diagnosis codes for insurance

processing – Provider’s signature and identification code or

National Provider Identifier (NPI)– Clinic name, address, telephone number, fax

number, Web site when applicable



• Computerized statements– Most commonly used for statements– Search patient database for outstanding balances

and print statements– Ages accounts– If insurance to be billed, claim automatically

uploaded electronically to third-party payers– Statements printed for patient


Monthly and Cycle Billing

• Monthly billing– Devote one or two days per month to billing and

mailing statements– Place in mail 25th of month– Time consuming


Monthly and Cycle Billing

• Cycle billing – Divide accounts alphabetically into groups– Each group billed at different time


Past-Due Accounts

• Inability to pay

• Negligence

• Unwillingness to pay

• Third-party payees

• Minors


Collection Process

• Establish how much owed and for how long

• Prompt and conducted in timely fashion


Collection Process

• Collection ratio– Divide total collections by net charges– Obtain ratio monthly, quarterly, yearly– Goal is 90% or better

• Accounts receivable ratio– Divide current accounts receivable balance by

average monthly gross charges– Goal is payment in less than 2 months


Aging Accounts

• Identifies how long account has been overdue

• Pegboard system– Color-coded strips may be attached to ledgers– Written code written on ledger card to indicate

when overdue notice was mailed


Aging Accounts

• Computerized aging– Key appropriate commands to age accounts– Can age accounts by several criteria – Generates accounts receivable report– Additional types of reports available


Collection Techniques

• Billing insurance carriers– Both telephone and written communications – Computer claim within 2 days or less – Electronic claims transmission (ECT)– Maintain up-to-date claims register or insurance-

pending report – Follow-up collection policy



• Telephone collections– Effective; patient may respond to call more than to

bill received in mail– Successful calls require tact and diplomacy– Work with patients to encourage and enable them

to pay fees they owe– Legal rules and ethical guidelines govern

telephone collections• Fair Debt Collection Practices Act (FDCPA)



• Collection letters– Sent to encourage patients to pay overdue

balances– Office policy will help determine when to send– Collection letters and notes kept separate from

patient’s chart


Use of an Outside Collection Agency

• Used for highly delinquent accounts

• Discretion advised

• Expense of collection may not justify fees to be collected


Use of an Outside Collection Agency

• Seek collection agency compatible with medical practice’s philosophy

• Follow instructions of collections agency

• Keep record of accounts given to agency


Use of Small Claims Court

• Handle cases that involve only limited amounts of debt

• If court finds in clinic’s favor, clinic still must collect money from defendant

• Account assigned to collection agency cannot be filed in small claims court


Special Collection Situations

• Bankruptcy– Statements may no longer be sent nor any

attempt be made to collect delinquent accounts– Chapter 7

• Proof-of-claim form of patient’s account filed

– Chapter 13 • Patients allowed to pay bills over time by court-

determined amount

– Unsecured medical debts are usually last to be paid



• Estates– Fee collection goes to executor of estate– Guidelines

• Show courtesy• Prepare itemized statement• Mail to executor of estate • Address statement to “Estate of (name of patient)”• Contact probate court for additional information



• Tracing “skips”– Check address– Call patient– Facility decides whether to pursue unpaid debt – Account can be turned over to collection agency


Statute of Limitations

• Defines period in which legal action may take place

• Defined by class into which account falls– Open book accounts– Written contracts– Single-entry accounts

• State-by-state limitations (http://www.creditinfocenter.com)


Maintain a Professional Attitude

• Collecting past-due accounts difficult and can be discouraging

• Quickly identify accounts that cannot be collected and write them off

• Keep any bias and emotions out of process


Maintain a Professional Attitude

• Rely only on information from aged account

• Strive for a “win-win” as much as possible

• Staff may need additional training and education

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