Accounts Receivable

8


Accounts Receivable



KEY TERMS

















































































































Term Definition
Accepting Assignment The provider of service agrees or is willing to accept as payment the amount allowed/approved by an insurance company as the maximum amount that will be paid for the claim. After the patient has met the annual deductible, the insurance will pay a percentage of the approved/allowed amount and the patient will have a co-payment.
Accounts Payable Amounts owed by the practice to creditors for property, supplies, equipment, etc.
Accounts Receivable A/R. The total amount of money owed to the physician for professional services provided to a patient.
Adjustment The amount corrected on a patient ledger due to an error or the difference in the amount billed by a practice and the amount allowed by the insurance company for payment of a claim.
Aging Accounts Analysis of accounts receivable that indicate delinquency of 60, 90, to 120 days.
Appeal A request sent to an insurance company or other payer asking that a submitted claim be reconsidered for payment or processing.
Assignment Authorization by a policy holder to allow a third-party payer to pay benefits to a heath care provider.
Collection Ratio The relationship between the amount of money owed and the amount of money collected.
Conversion Factor The dollar amount determined by dividing the actual charge of a service or procedure by a relative value.
Co-payment The amount the insured has to pay toward the amount allowed by the insurance company for services.
Cycle Billing Breaking the account receivable amounts into portions for billing at a specific date of the month.
Deductible The amount the insured must pay before the insurance company will begin benefit payments.
Dun/Dunning A request or message to remind a patient that the account is over due or delinquent.
EOB Explanation of Benefits. Form accompanying an insurance remittance with a breakdown and explanation of payments for a claim. Also referred to as a remittance advisory (RA).
EOMB Explanation of Medicare Benefits. Form accompanying an insurance remittance with a breakdown and explanation of payments for a claim.
Fee Schedule An established price set by a medical practice for professional services.
Inquiry Checking or tracing a claim sent to an insurance company to determine payment or processing status.
Ledger Card A record to track patient charges, payments, adjustments, and balances due.
Limiting Charge Typically applies to Medicare reimbursement. This is the absolute maximum fee a physician may charge a Medicare patient when not accepting assignment on the claim. This fee is set by the Centers for Medicare & Medicaid Services (CMS).
Open Account Accounts that are subject to charges from time to time.
Posting A process of transferring account information from a journal to a ledger.
Professional Courtesy A discount or fee exception given to a patient at the discretion of the physician.
Profile A list of CPT codes used by a physician with a corresponding fee that is usually calculated and maintained by a third-party payer.
RBRVS Resource-Based Relative Value Scale. A system of assigning values to CPT codes developed for Medicare to determine reimbursement amounts for services.
Relative Value Unit (RVU) A method to calculate fees for services. A unit is translated into a dollar value using a conversion factor or dollar multiplier. The assigned value is generally based on three factors: physician work component, overhead practice expense, and malpractice insurance.
Review Process of looking over a claim to assess payment amounts.
Skip A patient who owes a balance on the account who has moved without a forwarding address.
Specificity Using ICD-9-CM codes to the highest degree of certainty. Using fourth and fifth digits, as appropriate, while avoiding over use of the unspecified codes.
Statement An itemized bill sent to the patient describing professional services provided. A request for payment.
Superbill A multipurpose billing form to track procedure and diagnosis codes during a patient encounter or visit.
Truth in Lending An agreement between the patient and the physician regarding monthly installments to pay a bill. A truth in lending statement must be signed when payments exceed a 4-month period.
TWIP Take What Insurance Pays.
UCR Usual, Customary, and Reasonable. The reimbursement method that establishes a maximum fee an insurance company will pay for services.
Utilization Review A process of assessing medical services to assure medical necessity and the appropriateness of treatment.
Withhold Incentive The percentage of payment held back for a risk account in the HMO program. Withhold arrangements are used to share potential losses or profits with providers of service.


Introduction


Because the reader has achieved a better understanding of insurance carriers, our focus will shift to accounts receivable.


Whether coders have a manual system or a computer, without a basic knowledge of insurance programs, one will not be able to properly credit accounts or collect money from patients.


In this segment, insurance profiles, explanations of benefits (EOB) (remittance advisory), and adjustments or write-offs will be examined.


The following is a quick review of the two types of accounting systems used in medical practices. Regardless of the system used by the practice, the system must accomplish a few basic functions to be effective in ensuring reimbursement.



Pegboard Systems


Although this is an outdated system for most practices, there are a few smaller practices that use this system to tract patient financials. This information is presented for several reasons: (1) it is still a viable system; and (2) this format is used in a later chapter to allow the student to manually tract billing and payment transactions. This type of system incorporates basic bookkeeping skills and requires manual labor to function properly. With this system, copies of the ledger serve as statements.


A pegboard system, also referred to as a “one-write system,” is a manual accounting system to track accounts receivable activity. This type of system requires superbills (Fig. 8-1), ledger cards or statements (Fig. 8-2), a day transaction sheet, a monthly journal form, and a special board to ensure the information is correctly entered on the forms.




Although this is a labor-intensive system, it may be less expensive than the investment of a computer system for a small practice or a practice just starting up. This system allows for account accuracy, centralized information, and quick review of charges.





Insurance Participation


The fundamental aspects of reimbursement consist of learning to read EOB forms and understanding participatory agreements. Perhaps the first issue to be examined is: What does it mean to participate in an insurance program?


The primary element related to this question is that the physician must accept as payment the amount allowed by the insurance company. In other words, the physician must write off the difference of the actual, submitted charge and the insurance carrier’s allowed amount.



The physician’s office must file all insurance claims to the carrier for any services rendered to the patient.


The physician must wait until the carrier makes payment before collecting monies from the patient. The one exception to this rule involves health maintenance organizations (HMOs) and preferred provider organizations (PPOs). With these programs, the patient will have a co-payment based on the individual insurance program. The co-payment amount is usually listed on the back of the insurance card. These co-payments must be collected at the time of the service.


The office is responsible for the timely filing of insurance claims based on carrier determination. Each carrier has a preset time limit during which a claim may be submitted to qualify for payment (e.g., 90 days, 12 months).


The office must write off any incentive pools or withhold amounts per contract agreements. An incentive withhold pool is usually a percentage of the allowed amount that is retained by the carrier to offset operational expenses. Physicians are prohibited from collecting this amount from the patient. However, if the carrier makes a profit during a given time, the carrier will reimburse a portion of the incentive withhold back to the physician.


The physician also agrees to abide by the rules for participation as determined by the insurance carriers. Some of these rules include:





Common Claim Errors


Errors in completing a claim form affect reimbursement because the claim may be denied for payment or payment may be reduced. Claims are denied for a variety of reasons. The following is a list of the more common reasons a claim may be denied for payment.









Collection Policies


The best policy is to collect from the patient at the time of service. However, based on participation agreements, this may not always be possible. In that event, there are a few basic rules or guidelines to follow.



One of the best result-oriented methods used by most practices is the policy of follow-up letters for delinquent accounts. Some general rules for sending letters are as follows:



If the office has time, incorporating phone calls into the collection process beginning with the 60th day of a delinquent account is sometimes effective. When using phone calls, one should follow up the call with a letter. Whatever course of action one tells the patient one plans to take regarding the account, make sure that action is taken. Otherwise, the office could be sued by the patient for harassment.



Collection Letters


Writing a collection letter is not always an easy task. However, there are some important points that should be part of every letter created. The letter should inform the patient of the following items:



An effective collection letter does not have to be harsh in nature. The intent is to advise the patient that payment is needed. The consequences of not paying the account should be explained.


The following pages illustrate some examples of collection letters. Each person or office has to develop the style most suited to the office and the personality of the physician for the letter to be effective.







Bad Debt Collection


Statute of Limitation


Stay updated, free articles. Join our Telegram channel

Dec 10, 2016 | Posted by in GENERAL SURGERY | Comments Off on Accounts Receivable

Full access? Get Clinical Tree

Get Clinical Tree app for offline access