professional fees, billing, and collecting

Copyright © 2011, 2007, 2004 by Saunders, an imprint of Elsevier Inc. All rights reserved. 1

Professional Fees, Billing, Professional Fees, Billing, and Collectingand Collecting

Chapter 22


IntroductionIntroduction

The practice of medicine is a business as well as The practice of medicine is a business as well as a profession, and it is reasonable for the physician a profession, and it is reasonable for the physician to expect to make a profit. to expect to make a profit.

The medical assistant must often explain The medical assistant must often explain professional fees to patients and collect the fees professional fees to patients and collect the fees charged for examinations and treatments.charged for examinations and treatments.


This chapter will examine:This chapter will examine:

Values considered when determining feesValues considered when determining fees Usual, customary, and reasonable feesUsual, customary, and reasonable fees Value of estimates for patient treatmentValue of estimates for patient treatment Basic bookkeeping computationsBasic bookkeeping computations Differences between bookkeeping and accountingDifferences between bookkeeping and accounting Manual and computerized bookkeeping systemsManual and computerized bookkeeping systems Billing and payment optionsBilling and payment options Preparing patient accountsPreparing patient accounts


This chapter will examine:This chapter will examine:

AdjustmentsAdjustments Laws that apply to billing and collectingLaws that apply to billing and collecting Collecting outstanding accountsCollecting outstanding accounts


How Fees Are DeterminedHow Fees Are Determined

Physicians have three commodities to sell:Physicians have three commodities to sell: TimeTime JudgmentJudgment ServicesServices

Physicians must place a value on each of their Physicians must place a value on each of their services. This is called services. This is called fee-for-service.fee-for-service.


Impact of Managed CareImpact of Managed Care

Over the past few decades, managed care has Over the past few decades, managed care has grown substantially.grown substantially.

One of the goals of managed care is to prevent One of the goals of managed care is to prevent health problems before they start.health problems before they start.


Prevailing Rate in the CommunityPrevailing Rate in the Community

The prevailing rate in the community must be The prevailing rate in the community must be taken into consideration when fees are set.taken into consideration when fees are set.

Different communities have different living Different communities have different living scales.scales.

Fees that are too low can be just as detrimental Fees that are too low can be just as detrimental as fees that are too high.as fees that are too high.


Usual, Customary, Usual, Customary, and Reasonable Feesand Reasonable Fees

Usual: The usual fee for a given service is the fee that Usual: The usual fee for a given service is the fee that the physician most frequently charges for the service. the physician most frequently charges for the service. Customary: A range of the usual fees charged for the Customary: A range of the usual fees charged for the same service by physicians with similar background same service by physicians with similar background and training. and training. Reasonable: Services or procedures that are Reasonable: Services or procedures that are particularly difficult or complicated, requiring particularly difficult or complicated, requiring extraordinary time and effort.extraordinary time and effort.

Abbreviated: UCRAbbreviated: UCR


Fee-Setting by Third-Party PayorsFee-Setting by Third-Party Payors

Third-party payors may provide the physician Third-party payors may provide the physician with a schedule of predetermined fees that the with a schedule of predetermined fees that the payor will approve for payment.payor will approve for payment.

Some require preapproval or precertifications Some require preapproval or precertifications before services are rendered.before services are rendered.


Physician’s Fee ProfilePhysician’s Fee Profile

A compilation and average of fees charged by A compilation and average of fees charged by the physician over an extended period, usually the physician over an extended period, usually a year.a year.

Fiscal agents or fiscal intermediaries keep Fiscal agents or fiscal intermediaries keep continuous records of the UCR feescontinuous records of the UCR fees

Fee profiles are used to determine third-party Fee profiles are used to determine third-party liability for services.liability for services.


Insurance AllowanceInsurance Allowance

The insurance allowance is the amount of the The insurance allowance is the amount of the reimbursement that the insurance company allows reimbursement that the insurance company allows to be paid for a certain treatment or procedure.to be paid for a certain treatment or procedure.


Problems with Discounting Fees Problems with Discounting Fees before Reimbursementbefore Reimbursement

The lower fee will alter the physician’s fee The lower fee will alter the physician’s fee profile.profile.

If it becomes necessary to bring suit for If it becomes necessary to bring suit for payment of the fee, only the reduced fee can be payment of the fee, only the reduced fee can be recovered.recovered.

If the insurance allowance is paid on the basis If the insurance allowance is paid on the basis of a certain percentage of the physician’s fee of a certain percentage of the physician’s fee and a lower fee is charged, the insurance and a lower fee is charged, the insurance allowance will be correspondingly lower.allowance will be correspondingly lower.


Problems with Discounting Fees Problems with Discounting Fees before Reimbursementbefore Reimbursement

If the physician does this with many patients, If the physician does this with many patients, the insurance company will assume that the the insurance company will assume that the reduced fee is the usual fee, and reduced fee is the usual fee, and reimbursements will be lowered.reimbursements will be lowered.

This process is considered fraud in some cases.This process is considered fraud in some cases.


Explaining Costs to PatientsExplaining Costs to Patients

Patients may be hesitant Patients may be hesitant to bring up costs of to bring up costs of medical services.medical services.

Do not wait for the Do not wait for the patient to bring up the patient to bring up the subject.subject.

The physician or The physician or medical assistant must medical assistant must bring up the subject of bring up the subject of payment and costs.payment and costs.


Advance Discussion of FeesAdvance Discussion of Fees

Advance discussion of fees helps the patient Advance discussion of fees helps the patient plan ahead for medical expenditures.plan ahead for medical expenditures.

Give the patient accurate estimates of the cost Give the patient accurate estimates of the cost of treatment.of treatment.

Do not hesitate to explain to the patient how a Do not hesitate to explain to the patient how a fee is established.fee is established.


Explanation of Additional CostsExplanation of Additional Costs

Explanation should extend beyond the physician’s Explanation should extend beyond the physician’s own charges.own charges.

Explain fees such as:Explain fees such as: costs of operationcosts of operation anesthesiologist chargesanesthesiologist charges radiology chargesradiology charges hospital billshospital bills


Fee EstimatesFee Estimates

Prepare estimate slips in duplicate so that the Prepare estimate slips in duplicate so that the patient can have a copy. patient can have a copy.

Estimates:Estimates: Help to avoid forgetting that a fee was quotedHelp to avoid forgetting that a fee was quoted May help to avoid later misquoting of the feeMay help to avoid later misquoting of the fee Help to simplify collections by preventingHelp to simplify collections by preventing misunderstandings about charges misunderstandings about charges


Guarantor’s Ultimate Responsibility: Guarantor’s Ultimate Responsibility: The BillThe Bill

The guarantor is ultimately responsible for the The guarantor is ultimately responsible for the entireentire bill, regardless of whether insurance pays bill, regardless of whether insurance pays on the bill or not.on the bill or not.


Insurance PoliciesInsurance Policies

Insurance policies are contracts between the Insurance policies are contracts between the patients and their insurance companies. It is not patients and their insurance companies. It is not the responsibility of the office staff to ensure the responsibility of the office staff to ensure payment.payment.


Why the Staff Should Help the Patient Why the Staff Should Help the Patient with Insurance Concernswith Insurance Concerns

The staff is almost always more knowledgeable The staff is almost always more knowledgeable about insurance than the patient.about insurance than the patient.

By helping the patient collect from insurance, By helping the patient collect from insurance, the medical assistant helps to ensure that the the medical assistant helps to ensure that the physician will be paid.physician will be paid.

The medical assistant will gain knowledge about The medical assistant will gain knowledge about the insurance industry by helping the patient at the insurance industry by helping the patient at every opportunity. every opportunity.


Reference NotebookReference Notebook

Keep a reference notebook with information Keep a reference notebook with information about third-party payors for guidance and about third-party payors for guidance and suggestions. suggestions.

Always be sure to secure guarantors in writing.Always be sure to secure guarantors in writing.


Encounter FormsEncounter Forms

Slips attached to charts while patients are in the Slips attached to charts while patients are in the office.office.

Used for billing purposes.Used for billing purposes. Physicians mark charges for the day and Physicians mark charges for the day and

indicate a diagnosis.indicate a diagnosis. Form has a section to note follow-up Form has a section to note follow-up

appointments.appointments.


Encounter FormsEncounter Forms

Also known as:Also known as: SuperbillsSuperbills Charge slipsCharge slips Multipurpose billing formsMultipurpose billing forms


Transactions and AccountsTransactions and Accounts

Business transactionBusiness transaction Occurrence of an event or of a condition that Occurrence of an event or of a condition that

must be recordedmust be recordedAccountAccount Patient’s financial recordPatient’s financial recordAccounts receivable ledgerAccounts receivable ledger All patient accounts togetherAll patient accounts together


Account Card ColumnsAccount Card Columns

DebitDebit Used for entering charges and is sometimes Used for entering charges and is sometimes

called the called the charge columncharge columnCreditCredit Used for entering payments received and is Used for entering payments received and is

sometimes headed “paid”sometimes headed “paid”BalanceBalance Used for recording the difference between the Used for recording the difference between the

debit and credit columnsdebit and credit columns


Adjustment ColumnAdjustment Column

An adjustment column is available in some An adjustment column is available in some systemssystems

Used for entering write-offs, disallowances by Used for entering write-offs, disallowances by insurance companies, and other adjustmentsinsurance companies, and other adjustments


PostingPosting

Posting is the transfer of information from one Posting is the transfer of information from one record to another.record to another.


Types of BalancesTypes of Balances

Account balanceAccount balance Charges exceed payments on the accountCharges exceed payments on the account Also called a Also called a debit balancedebit balance

Credit balanceCredit balance Exists when payments exceed chargesExists when payments exceed charges


More DefinitionsMore Definitions

ReceiptsReceipts Cash and checks taken in for payment for Cash and checks taken in for payment for

professional services renderedprofessional services renderedReceivablesReceivables Charges for which payment has not yet been Charges for which payment has not yet been

receivedreceivedDisbursementsDisbursements Cash paid outCash paid outPayablesPayables Amounts owed to others but not yet paidAmounts owed to others but not yet paid


Account CardsAccount Cards

Account cards should contain the following Account cards should contain the following information:information: Name and address of guarantorName and address of guarantor Insurance identificationInsurance identification Social security numberSocial security number Home and business telephone numbersHome and business telephone numbers Name of employerName of employer Special instructions for billingSpecial instructions for billing


Posting MethodsPosting Methods

Computer postingComputer posting: Patient’s name, date, : Patient’s name, date, diagnosis, and procedures are posted when the diagnosis, and procedures are posted when the patient leaves the office. The database retrieves patient leaves the office. The database retrieves charges and posts them onto a computerized charges and posts them onto a computerized record and the accounts receivable ledger.record and the accounts receivable ledger.

Manual postingManual posting: All charges and payments for : All charges and payments for professional services are posted to the ledger professional services are posted to the ledger daily. A separate account card or page is daily. A separate account card or page is prepared for each patient at the time of the prepared for each patient at the time of the first visit.first visit.


Pegboard SystemsPegboard Systems

Also called “write-it-once” systemsAlso called “write-it-once” systems Named for the lightweight board that has a row Named for the lightweight board that has a row

of pegs along one side, which holds paper of pegs along one side, which holds paper formsforms


Write-It-Once SystemWrite-It-Once System

System generates all necessary financial records System generates all necessary financial records for each transaction with one writing:for each transaction with one writing: Encounter formsEncounter forms ReceiptsReceipts Ledger cardsLedger cards Journal entriesJournal entries Often, a statement and bank deposit slipOften, a statement and bank deposit slip


Entering and Posting TransactionsEntering and Posting Transactions

Enter the transaction.Enter the transaction. Post the patient’s payment.Post the patient’s payment. Give the patient a receipt for payment.Give the patient a receipt for payment. Make certain numbers are entered correctly.Make certain numbers are entered correctly. Avoid transposing numbers.Avoid transposing numbers.


Posting Other Payments and ChargesPosting Other Payments and Charges

Post payments received in the mail from Post payments received in the mail from patients and insurance companies.patients and insurance companies.

Payments made by mail do not usually Payments made by mail do not usually require a receipt unless asked for specifically.require a receipt unless asked for specifically.


Example of Transaction EntriesExample of Transaction Entries

The office visit charge for a new patient is The office visit charge for a new patient is $250.00$250.00

The patient pays the copay of $30.00The patient pays the copay of $30.00 The patient owes $220.00The patient owes $220.00 Insurance pays $218.00Insurance pays $218.00 If contracted with the managed care to do so, If contracted with the managed care to do so,

$2.00 is written off and posted in the $2.00 is written off and posted in the adjustment columnadjustment column

The patient balance is zeroThe patient balance is zero


Example of Transaction EntriesExample of Transaction Entries

The office visit charge is $110.00The office visit charge is $110.00 The patient already owes $500.00The patient already owes $500.00 The patient pays today’s copay of $20.00The patient pays today’s copay of $20.00 The balance is $590.00The balance is $590.00 Managed care pays $500.00Managed care pays $500.00 The patient owes $90.00The patient owes $90.00


RememberRemember

Managed care agreements, federal regulations, Managed care agreements, federal regulations, and other guidelines will dictate what can and and other guidelines will dictate what can and cannot be adjusted on a patient’s account.cannot be adjusted on a patient’s account.


Special Bookkeeping EntriesSpecial Bookkeeping Entries

Adjustments Adjustments Credit balancesCredit balances RefundsRefunds Insufficient funds checksInsufficient funds checks


Balancing Accounts Receivable Balancing Accounts Receivable and Accounts Receivable Controland Accounts Receivable Control

The accounts receivable control is a daily The accounts receivable control is a daily summary of what remains unpaid on the summary of what remains unpaid on the accounts.accounts.

Most offices complete an end-of-the-day Most offices complete an end-of-the-day summary, end-of-the-month summary, and summary, end-of-the-month summary, and year-to-date summary.year-to-date summary.


Payment for Medical ServicesPayment for Medical Services

Payment is accomplished in four ways:Payment is accomplished in four ways: Payment at time of servicePayment at time of service Billing after making payment arrangementsBilling after making payment arrangements Insurance or other third-party billingInsurance or other third-party billing Billing and collection assistanceBilling and collection assistance


Payment at Time of ServicePayment at Time of Service

Most patients pay their copay at the time of Most patients pay their copay at the time of service.service.

Encourage time-of-service collection.Encourage time-of-service collection. Some offices insist that the copay be paid Some offices insist that the copay be paid

prior to the patient seeing the physician.prior to the patient seeing the physician.


Billing after Making Payment Billing after Making Payment ArrangementsArrangements

Billing might be done for patients who require Billing might be done for patients who require surgery or who incur large fees at one time.surgery or who incur large fees at one time.

Explain professional fees to the patient.Explain professional fees to the patient. Make reasonable payment arrangements.Make reasonable payment arrangements. Follow office policies and procedures.Follow office policies and procedures. Follow up on patient payments when Follow up on patient payments when

necessary.necessary.


Credit and Debit CardsCredit and Debit Cards

Credit and debit cards are often used to pay Credit and debit cards are often used to pay for medical services.for medical services.

Some offices offer information on outside Some offices offer information on outside credit services that are available to help credit services that are available to help patients pay medical costs.patients pay medical costs.


Billing and Collection LawsBilling and Collection Laws

Truth-in-Lending ActTruth-in-Lending Act Fair Debt Collection Practices Act Fair Debt Collection Practices Act


Insurance or Other Third-Party BillingInsurance or Other Third-Party Billing

Insurance billing is a courtesy to patients.Insurance billing is a courtesy to patients. Work with patients to obtain the maximum Work with patients to obtain the maximum

reimbursement possible.reimbursement possible.


Billing ProceduresBilling Procedures

Computer-generated statementsComputer-generated statements Encounter formsEncounter forms Photocopied statementsPhotocopied statements Online billing statementsOnline billing statements


Itemizing the First StatementItemizing the First Statement

Most computer-generated programs will Most computer-generated programs will automatically itemize the first statement.automatically itemize the first statement.

Patients should carefully review itemized Patients should carefully review itemized statements to make certain that each charge is statements to make certain that each charge is correct.correct.


Time and Frequency of BillingTime and Frequency of Billing

Once-a-month billingOnce-a-month billing Cycle billingCycle billing


Collection ProceduresCollection Procedures

Most patients truly want to pay their bills.Most patients truly want to pay their bills. Some may need temporary assistance by Some may need temporary assistance by

using a payment plan.using a payment plan. Work out a payment plan with patients.Work out a payment plan with patients. Expect the patient to make promised Expect the patient to make promised

payments.payments.


Care for Those Who Cannot PayCare for Those Who Cannot Pay

Some patients may be medically indigent.Some patients may be medically indigent. Know which local, state, and national Know which local, state, and national

organizations may be able to provide organizations may be able to provide assistance to patients.assistance to patients.

In rare cases, a physician may provide care In rare cases, a physician may provide care during a patient’s temporary hardship.during a patient’s temporary hardship.

Know the pitfalls of fee adjustments.Know the pitfalls of fee adjustments.


Professional CourtesyProfessional Courtesy

Less used today because of managed care Less used today because of managed care agreements.agreements.

Follow office policy and the direction of the Follow office policy and the direction of the physician in professional courtesy cases.physician in professional courtesy cases.


Billing MinorsBilling Minors

Minors are not responsible for bills unless Minors are not responsible for bills unless they are emancipated.they are emancipated.

Bill the parents of a minor.Bill the parents of a minor. Financial agreements between separated or Financial agreements between separated or

divorced parents are not enforced by the divorced parents are not enforced by the physician’s office.physician’s office.


Account Aging CategoriesAccount Aging Categories

0-30 days0-30 days 30-60 days30-60 days 60-90 days60-90 days 90-120 days90-120 days


Collection TechniquesCollection Techniques

Telephone callsTelephone calls Collection letters or remindersCollection letters or reminders Personal interviewsPersonal interviews


Special Collection SituationsSpecial Collection Situations

SkipsSkips Address change of serviceAddress change of service Claims against estatesClaims against estates


Using Outside Collection AssistanceUsing Outside Collection Assistance

When all efforts have been exhausted, ask:When all efforts have been exhausted, ask: Should the facility sue for payment?Should the facility sue for payment? Should the account be sent to a collection Should the account be sent to a collection

agency?agency? Should the account be written off as a bad Should the account be written off as a bad

debt?debt?


Working with the Collection AgencyWorking with the Collection Agency

Provide information needed to contact the Provide information needed to contact the patient.patient.

Notify the agency if additional information is Notify the agency if additional information is obtained that affects the patient’s finances.obtained that affects the patient’s finances.

Mark the patient’s account so that it is easily Mark the patient’s account so that it is easily identifiable as a collection agency account.identifiable as a collection agency account.

Follow office policies and procedures for Follow office policies and procedures for handling subsequent patient payments.handling subsequent patient payments.


Litigation is in order when…Litigation is in order when…

The patient can afford to pay without hardship.The patient can afford to pay without hardship. The physician can produce office records that The physician can produce office records that

support the bill.support the bill. The physician can justify the amount of the bill The physician can justify the amount of the bill

by comparing it with fee practices in the by comparing it with fee practices in the community.community.



The patient’s general condition after treatment The patient’s general condition after treatment is satisfactory.is satisfactory.

The persuasive powers of an ethical collection The persuasive powers of an ethical collection agency have been exhausted.agency have been exhausted.

The patient can be given ample warning of the The patient can be given ample warning of the physician’s intent to sue.physician’s intent to sue.



The defendant is legally liable for the services The defendant is legally liable for the services rendered to the patient. rendered to the patient.

The statute of limitations has ruled out any The statute of limitations has ruled out any possible malpractice action.possible malpractice action.

The physician is not indignant or in a negative The physician is not indignant or in a negative frame of mind.frame of mind.


Summary of ScenarioSummary of Scenario

Be professional when dealing with all Be professional when dealing with all patients.patients.

Work with patients in collecting account Work with patients in collecting account balances.balances.

Remember that businesses operate to make Remember that businesses operate to make a profit or earn money.a profit or earn money.

Be a flexible employee.Be a flexible employee.


Closing CommentsClosing Comments

Billing and collecting are critical duties in the Billing and collecting are critical duties in the physician’s office.physician’s office.

Maintain a positive attitude.Maintain a positive attitude. Patients may not be at their best when Patients may not be at their best when

discussing payments.discussing payments. Most patients want to pay their accounts.Most patients want to pay their accounts.

professional fees, billing, and collecting

Documents