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Managing Medical
13
Ofce Finances
Chapter Objectives
● Explain fee schedules and describe the main forms
of payment.
● Summarize the process of identifying and collecting
unpaid bills.
● Perform billing and collection procedures.
● Charge and payment entry.
● Perform accounts receivable procedures.
● Post adjustments.
● Process credit balance.
● Post NSF checks.
● Post collection agency payments.
● Process refunds.
● Describe how medical ofces use bank services.
● Prepare a bank deposit.
● Identify accounts payable functions and relate how
they are handled.
CAAHEP & ABHES Competencies
CAAHEP
● Dene common bookkeeping terms.
● Describe banking procedures commonly used in the
medical ofce.
● Identify precautions for accepting common types of
payments.
● Describe types of adjustments made to patient
accounts.
● Identify types of information required for patient
billing.
● Explain patient nancial obligations for ofce services.
● Perform accounts receivable procedures (posting of
charges, payments, and adjustments).
● Prepare a bank deposit.
● Obtain accurate patient billing information.
● Demonstrate professionalism when discussing
patient’s nancial obligations.
ABHES
● Demonstrate proper medical ofce billing and
collection procedures.
● Explain accounts payable and accounts receivable.
● Demonstrate ability to post charges, payments, and
adjustments.
● Explain payment procedures for credit balance,
nonsufcient funds, and refunds.
241
242 Section III Administrative Medical Assistant Skills
Chapter Terms
Accounting
Accounts payable
Accounts receivable
Adjustments
Aging schedule
Bookkeeping
Charges
Coinsurance
Collections
Copayment
Credit
Credit balance
Abbreviations
EOB
FICA
FIT
Case Study
Susan McNeil presented to the ofce for her visit.
She failed to inform Bella, the medical assistant, that
she had recently moved and had new insurance.
The ofce sent a bill to the insurance company on
le in Susan’s patient record for an ofce procedure
charge of $428. A week later, the insurance com-
FUTA
IRS
NSF
Cycle billing
Debit
Deductible
Dunning
Extension of credit
Fee schedule
RBRVS
RVU
UCR
pany informed the ofce that Susan was no longer
covered under this plan. The ofce then mails a bill
to the patient, only to have it returned a week later.
Since Bella failed to check if the information in the
system was correct, the ofce did not receive any
payments and the account is already 2 weeks old.
Invoice
Nonsufcient funds check
Packing slip
Posting
Restrictive endorsement
W-4
A medical ofce is a business with two main goals. One
is to provide patients the best possible medical care.
The other is to make money. These two goals go hand
in hand. A medical ofce must make money to keep
its door open. As a medical assistant, you will aid in
the nancial success of the ofce by insuring patient
accounts are current and correct. Therefore, you will
be responsible for maintaining patients’ accounts, collecting copayments and fees. Additionally, you may be
in charge of accounts payable, which includes ofce
expenses and payroll.
In this chapter, basic terminology and tasks to help
you understand how to manage your medical ofce
nances are presented.
C
O
G
When an ofce sets the fees that patients are charged,
several factors are considered. One of these factors is
the cost of running the ofce. A few ofce expenses to
consider include the following:
SETTING AND
COLLECTING FEES
Ofce or building rent
r
Utilities (heat, light, water, phone, etc.)
r
Employees’ wages
r
Equipment and supplies
r
Insurance, especially malpractice insurance
r
Additionally, the principles of RBRVS and UCR
guide how an ofce structures its fees. RBRVS stands
for “resource-based relative value scale.” This guideline,
used by Medicare to set its physician fee schedule, measures the relative value of a service in units (RVU). It
does so by comparing a service to other services, considering their level of difculty and the time required.
UCR stands for “usual, customary, and reasonable.”
The following items assist in determining the UCR fees:
Case Question
A
F
F
and procedure?
What should the medical assistant or
receptionist done initially when the
patient checked in for her appointment
Chapter 13 Managing Medical Ofce Finances 243
Usual—the average fee the physician has charged for
r
the service over a period of time.
Customary—the average fee that other physicians in
r
the same geographic area charge for the service.
Reasonable—the fee that meets the criteria of the
r
usual and customary fees.
Insurance companies utilize RBRVS and UCR to
r
determine what they will pay for each service.
Fee Schedules
A fee schedule is a list of charges for specic medical
procedures. Each practice should have a fee schedule;
this is important to insure that the charges are the same
amount for the same procedure for all individuals.
Remember that UCR uses the physician’s usual fee for
a service to determine payments. Suspicion of insurance
fraud is likely if you charge different amounts for the
same service, for example, more for patients with insurance and less for those without. In general, the best practice is to utilize one fee schedule and make adjustments
as required by insurance allowable fees or patient’s
nancial ability to pay.
Ethics
When creating the ofce fee schedule, it is of
extreme importance that everyone understands
that the fees are based on service level codes.
Service levels are determined by three key factors
(you will discuss these in more detail in another
chapter), and all elements of these factors must be
met to charge that level. Charging for higher levels
of service or procedures than performed is illegal
and unethical. Use care when entering information
into the patient account. Never enter charges for
procedures until they are completed.
the bill prior to them leaving the ofce. The second step
in successful collections is to have complete and correct
billing information. Be sure to scan the patient’s insurance card and check it at every visit to insure there are
no changes. Patients sometimes change insurance and
forget to inform the ofce. Additionally, you should scan
the patient or responsible party driver’s license and/or
take a photo for your les to insure that you are billing
for the correct patient.
Case Question
A
F
F
Consider the difference it would have made if
the following information had been obtained:
· A copy of the patient’s insurance card (front
and back)
· Conrmed and updated patient demographic
information
· Collection of the patient’s copayment at the
time of service. The copayment is the amount
the patient is responsible to pay with each
medical service.
Thinking back to the case study, what
steps could Bella have taken that would
have improved collections in this case.
Forms of Payment
A patient usually can pay for services in a medical ofce
in one of three ways:
Cash—Many patients will request a receipt to keep
r
for their own records.
Personal/Electronic check—If a new patient pays by
r
check (nonelectronic), get two forms of identication.
Credit/Debit card—This is the best way to be paid, even
r
though the credit card company charges the ofce a fee.
Discussing Fees in Advance
It’s a good idea to discuss fees before treatment begins.
Patients need to know in advance whether the ofce is
a preferred provider or participating provider with their
health plan.
When scheduling appointments, it is important to
inform patients of your ofce’s payment policy as well
as whether your ofce is a participating provider in
their health care plan. Setting clear exceptions from the
beginning will aid in the collection process. The rst step
of successful collections is to collect the payment at the
time of service.
lecting money to pay on an account. Many insurance
companies allow the ofce to view, online, a patient’s
policy including current out of pocket requirements. This
information is used to determine the patient’s portion of
Collections refer to the process of col-
Although banks and credit card companies charge
a fee (can be a percentage of the payment or at fee
based on type) for electronic checks, debit, and credit
payments, the benets normally outweigh this expense.
The insurance company payments make up the largest amount of money for services. For this reason, it’s
critical that you keep patients’ insurance information
up-to-date. Many ofces ask for a patient’s health insurance card at each visit. That way, any changes in insurance coverage are noted and recorded in the patient’s
account.
Adjusting Fees
Sometimes, you’ll have to make adjustments (subtraction
from the amount owed with no monetary exchange) to a
patient’s account. One type of adjustment is an insurance
244 Section III Administrative Medical Assistant Skills
allowable fee adjustment. This occurs when your ofce
contracts with an insurance company as a participating
provider. The insurance company will outline the allowed
amount and the difference will need to be adjusted.
Adjustments are subtracted from the balance, similar to a
payment, without the exchange of money or funds.
You will bill out the normal fee to the insurance
company, even if the ofce is required by the contract
to charge a lower fee. When the insurance payment is
received, it will include an explanation of benets (EOB).
Once the EOB is received, you’ll know how much the
Case Study
Bella was able to get the correct information from
Susan McNeil and led her insurance. The insur-
ance payment and explanation of benets (EOB)
was received today. Susan was charged $428.00,
and the EOB shows $212.00 as the allowable
fees. This means that $216.00 must be adjusted
off as nonallowable fees per the contract with the
insurance company (Charge $428.00 − Allowable
$212.00 = $216.00 Nonallowable). The insurance
insurance company allows for the services rendered. You
must then credit the patient’s account for the difference
between what the ofce charged and what the insurance
company allowed. Once the credit adjustment is made,
you can bill the patient if any unpaid balance remains
due. Additionally, the EOB will tell you how much you
can collect for the service, identied as
(contracted percentage owed by the insured/patient),
deductible (annual amount owed by the insured prior
to insurance payment), and copayment (amount owed
by the insured/patient at time of service).
paid 80% of the $212.00. Susan will owe the remaining amount as her coinsurance. The insurance payment 80% of $212.00 = $169.60. Susan will owe the
difference of $42.40 ($212 − $169.60 = $42.40). The
entry on her account will look like this:
coinsurance
Case Question
A
F
F
How much will the ofce bill Susan?
Patient Credit
Depending on the treatment provided, health care costs
can be very high. It’s not always easy for patients to
pay their bill—even a balance remaining after insurance has paid. Some ofces extend patients’
permission to pay later. Of course, this method results
in additional costs to the ofce along with the risk of
payments not being made. The following expenses are
involved:
Ofce supplies, including envelopes, the paper on
r
which the bills are printed, and printer ink
Employees’ wages for the time it takes to prepare and
r
mail monthly statements
Postage costs
r
Because of these expenses, some ofces charge patients
interest on their monthly accounts. Another popular
option is for the ofce to work with a credit company
that would issue credit to the patient. Thus, allowing
them to pay your bill and make payments (with interest)
credit, or
to an outside company. They allow patients to pay the
amount due over time on a monthly payment plan.
Monthly Billing
You should send all patients who have an unpaid balance
a bill each month. This applies to those whose insurance
plan didn’t cover all their charges, as well as to patients
who have made credit arrangements to pay over time.
Each patient’s bill should show all changes in the
account since the last bill. These changes might include
the following:
Charges for any new visits and treatments
r
Payments received from insurance plans
r
Payments received from the patient
r
Insurance discounts or other adjustments to the account
r
Extending Credit
Extension of credit is the practice of allowing a patient
to pay on their account balance based on an established
contractual agreement. State and federal laws control the
extension of credit. Here are some points to keep in mind:
Credit can’t be denied because of some one’s gen-
r
der, race or nationality, age, marital status, religion,
or source of income. In general, this means that if
you give one patient credit, you can’t refuse another
patient the same terms.
Chapter 13 Managing Medical Ofce Finances 245
If your ofce charges interest on monthly accounts, the
r
law requires that patients be given a truth-in-lending
statement. This notice tells patients the interest rate and
any other costs they incur if they pay their bill over time.
Different states have different laws about extending
r
credit. Some states have laws limiting the amount of
interest that can be charged.
If the patient has received credit and is making
monthly payments, the bill should show any interest
charged. It should show the amount of the next scheduled payment as well.
All bills should clearly show the total unpaid balance
that remains due. This allows the patient to pay more
than her scheduled monthly payment, if desired, or even
to pay off the balance in full.
When patient enters into a nancial agreement with
the ofce, it’s important that the details of that agreement
be put in writing. Figure 13-1 is an example of a contractual agreement for an extension of credit for a patient.
Bruce C. Collin, M.D.
305 Madison Avenue
Anderson, Indiana 46027
The patient’s signature of the agreement demon-
strates their understanding of the commitment.
Patient Education
Discussing nances can be uncomfortable for both
the medical assistant and the patient. First, provide
the patient with estimation of their cost (amount
remaining after insurance pays) for the procedure or service. Then, review the payment options
the ofce offers. Give a brief description of each
option initially, detailed information can be given
when the patient narrows the options down to suit
their needs. Informing your patients of costs and
options before procedures or services are delivered
allows the patient to weigh their options prior to
owing a large balance.
I agree to pay $____________ per week/month on my account balance of $_______________.
Payments are due by the _________ of each ____________ and will begin _______________.
Interest will/will not be charged on the outstanding balance (see Truth-in-Lending form below
for rate of interest).
I agree that if payments are not made in the full amount stated above or if payments are not
received on time, the entire account balance will be considered delinquent and will be due and
payable immediately.
I agree to be responsible for any reasonable collection costs or attorney fees incurred in
collecting a delinquent account.
This disclosure is in compliance with the Truth-in-Lending Act.
1. Cash Price (Medical and/or Surgical Fee) $
Less Cash Down Payment (Advance) $
2. Unpaid Balance of Cash Price $
3. Amount Financed $
4. FINANCE CHARGE $
5. Total of Payments (3 + 4) $
6. Deferred Payment Price (1 + 4) $
7. ANNUAL PERCENTAGE RATE %
(week/month) (date)
SignatureDate
AddressPatient’s Name
City, State, Zip CodeResponsible Party (if other than patient)
The “Total of Payments” shown above is payable to Bruce Collin, M.D. at the address shown
above in ___________ weekly/monthly installments of $______________, the first installment
being payable on this date ______________, and all subsequent installments are due on the
same day of each consecutive week/month until paid in full.
SignatureDate
Figure 13-1 Patient installment
agreement form. (Reprinted from
Kronenberger J, Ledbetter J. Lippincott
Williams & Wilkins’ Comprehensive
Medical Assisting. 5th ed. Philadelphia,
PA: Wolters Kluwer; 2016.)
246 Section III Administrative Medical Assistant Skills
Cycle Billing
Larger ofces have many bills they need to send each
month. So, they utilize a system known as
ing
. This system divides accounts alphabetically and
bills them at separate intervals during the month.
Here’s an example of a typical billing cycle for a large
ofce:
Patients whose last names begin with A to G billed on
r
the 1st of the month.
Those with last names beginning with H to N billed
r
on the 8th of the month.
Patients whose last names begin with O to S billed on
r
the 15th of the month.
Those with last names beginning with T to Z billed
r
on the 22nd of the month.
Some ofces might create their billing cycle by type
of insurance. Here’s an example of that type of billing
cycle:
Medicare and Medicaid patients—Billed on the 1st
r
of the month.
Those with Blue Cross—Billed on the 8th of the
r
month.
Patients with all other PPOs and HMOs—Billed on
r
the 15th of the month.
All self-pay patients—Billed on the 22nd of the
r
month.
Regardless of the type of billing system your ofce
uses, it is important to maintain your ofce-billing
schedule. The mailing of statements should not uctuate by more than 10 to 14 days to insure timely
payments.
cycle bill-
Managing Overdue Accounts
If a patient does not pay his balance or make monthly
payments as agreed, additional efforts are required to
collect the balance owed. This process can be costly and
time consuming. There are a number of federal laws that
regulate bill collection practices. These laws must be followed when collecting any overdue bills.
mation that’s very important to the nancial health of
the ofce. Accounts typically aged by 30, 60, 90, and
120 or more days past due. Generally, an account’s
“age” determines how you handle the account in the
collection process.
Figure 13-2 demonstrates the number of accounts
outstanding at the 60- and 90-day mark. The balance
should be small and easy to manage.
Collecting Unpaid Bills
The “age” of your ofce’s accounts receivable is utilized to measure its collection rate. This information
should be reviewed at least quarterly to track your
ofce collection percentage. Many ofces utilize Web
sites of insurance companies to calculate patients’
copayments, deductibles, and coinsurance allowing
them to collect fees at the time of service. Recall, the
rst step in the collection process is to collect at the
time of service, thus reducing the risk of aged accounts.
When tracking your ofce’s collection ratio, be sure to
use this information to develop and improve your collection practices.
The three most common methods for collecting past
due accounts are as follows:
Sending the patient an overdue notice
r
Phoning to remind the patient the account is
r
overdue
Inquiring at the patient’s next ofce visit
r
Additionally, your ofce computer system will likely
have a
you to set parameters with messages to be added onto
statements when printing. For example, you could
set a dunning message to post on accounts aged 45
to 60days with the message: “Your account with our
ofce is currently past due and requires your immediate action. Please pay your balance as soon as possible
to avoid further collection activity.” Another method is
to generate collection form letters to remind patients’
that their account is past due. Whatever you send, it’s
a good idea to have a statement like this one printed
somewhere on it:
dunning option. The dunning option allows
Aging Accounts
One of your duties as a medical assistant will be to track
patients’ accounts. You must monitor unpaid accounts
to limit the length of time they remain unpaid. This
process is known as “aging” the accounts. The “age”
of an account is determined by the date of the rst bill,
not by the date the service was provided. Here’s an
example: If a patient’s ofce visit occurs on January
5th and the rst bill is sent on February 1, the account
will not become past due until the next bill is sent on
March 1. Your computer software will keep track of
the
aging schedule. The aging schedule contains infor-
If you recently have sent your payment, please
disregard this notice. Please contact us at the
phone number above if you have any questions or
concerns.
This message will help prevent patients from becoming concerned or upset if they have just made their payment. If a patient fails to respond to written overdue
notices, you may have to phone the patient about his
account. Always ask the patient when the ofce can
expect to receive payment. Record the patient’s response
in his account le. If you don’t receive the payment as
promised, call the patient again.
Chapter 13 Managing Medical Ofce Finances 247
Aging of Accounts Receivable Report: April 30, 2016
Patient Name
Accounts 30 Days Past Due:
Doe, John C.
Graham, Paula R.
O'Toole, William Q.
Parker, Mary W.
Reeves, Chris A.
South, Cheryl C.
Yarkony, Ralph M.
Accounts 60 Days Past Due:
Forest, Patricia L.
Heany, Beverly O.
Thomas, Walter T.
Accounts 90 Days Past Due:
Glick, Rhonda K
Payne, Robert A.
Accounts 120 Days or More Past Due:
Baird, Jane C.
Wallace, Michael S.
Total Overdue Accounts Receivable
Account Number Due Date Amount
000-00-0000
000-00-0000
000-00-0000
000-00-0000
000-00-0000
000-00-0000
000-00-0000
000-00-0000
000-00-0000
000-00-0000
000-00-0000
000-00-0000
000-00-0000
000-00-0000
3/6/16
3/29/16
3/13/16
3/25/16
3/11/16
3/8/16
3/11/16
2/19/16
2/13/16
2/27/16
1/4/16
1/25/16
10/3/15
12/15/15
625.00
450.00
25.00
299.00
58.00
385.00
108.00
476.00
57.00
185.00
28.00
456.00
45.00
349.00
$3,546.00
Figure 13-2 Aging accounts. (Reprinted from Kronenberger J, Ledbetter J. Lippincott
Williams & Wilkins’ Comprehensive Medical Assisting. 5th ed. Philadelphia, PA: Wolters
Kluwer; 2016.)
Rules for Collecting Accounts by Phone
The Fair Debt Collection Practices Act is a federal law
that sets rules for collecting debts. Some general guidelines to follow when calling a patient about a past due
account include the following:
Not calling a patient at work.
r
Never discuss details of the call with anyone but the
r
responsible party. This includes saying that you are
calling regarding a payment.
Do not place calls before 8:00 .. or after 9:00 ..
r
Do not contact the patient at all if he has led for
r
bankruptcy.
Do not give the patient false or misleading informa-
r
tion or make threats about further action unless the
ofce intends to take it.
If the patient asks in writing that such calls stop, you must
r
do so. But you still can take legal action to collect the debt.
The failure to follow these rules could result in legal
action. Despite the fact the patient owes money to the
ofce if these rules are not followed he/she can le suit
against the ofce.
Collecting from a Patient’s Estate
Collecting a bill for treating a patient who later died
is a sensitive situation. It requires special skills and
approaches. Here are some guidelines to follow:
Don’t immediately contact the patient’s family about
r
the debt. They need time to grieve and accept the
death. Most ofces wait until at least a week after
the funeral.
At the proper time, call the next of kin listed in the
r
patient’s chart. Offer your sympathy. Then ask for
the name of the patient’s executor—the person who
is handling the patient’s affairs after death. This will
likely be a relative, a friend, or an attorney.
Contact the executor, introduce yourself, and explain
r
the reason for your call. Get the executor’s address
and send the executor the nal bill.
248 Section III Administrative Medical Assistant Skills
It’s important that the bill be sent promptly. If the
r
patient’s estate doesn’t have enough funds to cover
the patient’s debts, the court will decide the order in
which the debts will be paid.
Debt Collection Alternatives
Collecting unpaid debts is costly and time consuming
to any business. Many medical ofces nd it easier and
more effective to refer overdue accounts to collection
agencies. These are companies specializing in collecting debts. The physician or ofce manager will set the
guidelines to follow for sending an agent to a collection
agency. For either a set fee or a percentage of the debt,
a collection agency tries to collect the past-due amount.
Since the collection agencies report accounts in their
possession to the credit bureau, they may have more success than medical ofce employees. Another option that
ofces and collection agencies can use is small claims
court. It’s important to understand that even if your
ofce or collection agency wins the case, the burden of
collection still remains. Because of all the time, trouble,
and expense involved, some medical ofces don’t seriously pursue collection of small debts from patients.
If the ofce gives up trying to collect the money, it is
referred to as “writing off” the debt. You will learn how
to make this adjustment to the patient’s account later in
this chapter. The physician may wish to terminate the
physician–patient relationship if the ofce is forced to
write off the debt. Medical ofces have the ability to
report poor payment histories to credit bureaus as well.
C
O
G
Accounting is an organized system for keeping track of
a business’s nances. One accounting activity is book-
keeping
business’ nancial activities. Accounting and bookkeeping are both very important parts of a medical ofce’s
operations. In a large health care facility, a special
department may do the accounting and billing. Other
ofces might hire an outside rm to perform these tasks.
Many ofces handle the daily bookkeeping themselves.
For this reason, we’ll focus on bookkeeping practices in
this discussion.
nancial accounts:
r
r
will be centered on patient accounts. These records
ACCOUNTING AND
BOOKKEEPING
. This involves keeping an organized record of a
Bookkeeping involves maintaining three primary
Accounts receivable—Money owed to the ofce
from patient accounts.
Accounts payable—Money the ofce owes for oper-
ating expenses.
The daily nancial operations of your medical ofce
change each day based on new charges, payments, and
adjustments. Any time a patient receives service, a charge
is entered onto the account.
on the accounts’ receivable balance. Payments, made
by the patient or insurance, along with adjustments,
decrease the accounts’ receivable balance. Remember
that although adjustments are deducted from account
balance, no monetary value is gained. Accounting is
easier to understand if you remember that a
addition to what is owed, and a credit is a reduction to
what is owed.
Charges refer to an increase
debit is an
Entering Charges, Payments, and
Adjustments
The basic bookkeeping formula is Previous Balance
+ Charges − Payments − Debits = Current Balance.
Although your medical bookkeeping software will calculate this automatically, understanding the fundamental formula insures you know accounting basics. Care is
taken when entering charges into the system. Take time
to insure that you enter all services rendered. Ofces
can enter charges through entries into the EHR program or independently at the end of the visit using a
charge slip. At the time of service, copayments, coinsurance, and deductibles are collected and recorded. Many
ofces will collect copayments and deductibles prior
to the patient seeing the physician. Any payment made
should be entered immediately to avoid error and confusion. Additional payments received from insurance
companies or mailed in payments should also be entered
immediately. When posting insurance payments, be sure
that you record any necessary adjustments at the same
time. Your system automatically updates your patient
accounts each time an entry is entered. At the end of
the day, you can verify that all patients seen have been
assessed a charge. The amount entered for payments
must equal the amount of your deposit for that day.
After you have veried charge entries and payments, this
is called rectifying accounts, you will need to save and
post the day’s activity.
program saves activity for that day in the system for that
month and resets the daily balance for your next day. If
you fail to post the day’s activities, your balances for the
next day will be completely off as they will equal 2 days
of activity. Most systems will not reset the date if the
system information has not been posted.
Figure 13-3 demonstrates how the electronic entry of
charges, payments, and adjustments are entered into the
system at the time of service or receipt of payment.
Overpayments and Refunds
Overpayment of an account is more common than you
might think. It can happen easily when you are collecting some money from the patient as well as billing one
Posting daily activities means the
Chapter 13 Managing Medical Ofce Finances 249
Figure 13-3 Computerized billing screen. (Courtesy of Harris CareTracker™.)
or more insurance companies for the patient’s charges.
Sometimes, payments from the patient and his insurance
total more than the charge for the visit. This will show
on the patient’s ledger card as a
credit balance. A credit
balance is different from a balance due. A balance due
is what is owed on the account. A credit balance is an
overpayment. A credit balance is demonstrated by the
presence of brackets around the amount in the balance
column—for example, [$125.64]. Brackets are used in
accounting to show the opposite of a column’s normal
meaning. In this case, it means that the amount in the
balance due column is not what the patient owes, but
what the ofce owes the patient or insurance company
instead.
The ofce is legally and ethically required to return
insurance overpayments to the insurance company.
Overpayments, by a patient, are handled by mailing a
check back to the patient, typically within 30 days.
Credit Adjustments
The adjustments column on the ledger card and day
sheet is used to make adjustments to the patient’s
account that don’t involve charges or payments. There
are two basic types of adjustments—credit adjustments
and debit adjustments.
The most common reason for making a credit adjustment to an account involves insurance. Most medical
ofces are providers for one or more insurance plans.
This means the provider agrees to accept lower fees set by
the insurance company instead of the ofce’s normal fees.
Recall that you must charge every patient the same
fee for the same service based on the ofce fee schedule.
As previously discussed, this will result in the need for
an adjustment as the contract fee will most likely be less
than billed amount.
You’ll post the insurance payment then you must
write off the difference between the contracted fee and
the amount you charged. You do this by making a credit
adjustment for the difference.
Suppose, for example, your ofce charges $40 for an
ofce visit; however, the contracted insurance amount is
$35. You would post $40 in the charges column. Then,
when the insurance payment is received, you would
enter the payment and a $5 in the adjustment to arrive
at the agreed-on amount for this service (any remaining
balance would be billed to the patient).
Another time you would use a credit adjustment
would be if an account is being sent to collections. In
this situation, the entire account balance would need to
be adjusted, for example, if a patient’s account is delinquent $1,200 and is turned over to a collection agency,
you would enter a collection adjustment in the amount
of $1,200. This will bring the balance of the account to
zero.
Debit Adjustments
Unlike credit adjustments, debit adjustments add to or
increase the patient’s balance.
Let’s go back to the last example of a credit adjustment. Suppose the collection agency collects the $1,200
from the patient and sends in a check for that amount.
Remember that the patient’s balance has been adjusted
to 0. You must charge money to the account in order
to post the collection agency’s payment. Otherwise, the
account will have a credit balance of $1,200. Since these
are not new charges, you would not add the $1,200 in
the charges column. Instead, you will make a $1,200
debit adjustment in the adjustments column. Then, when
you post the collection agency’s check, the patient’s balance will be zero (0) again.
250 Section III Administrative Medical Assistant Skills
Here are two other examples of when you will need
to make a debit adjustment to a patient’s account:
You’ve already read that insurance overpayments
r
must be refunded to the insurance company. To eliminate the overpayment, you must debit the account.
Write the amount of the refund in brackets in the
adjustments column. Code this amount as a refund to
insurance carrier.
A patient’s check is returned by the bank marked
r
NSF. This stands for
the patient doesn’t have enough money in his account
for the bank to pay the check. Because the check
was no good, you have to put the charges back on
the account because the patient still owes them. The
amount of the check is entered as a debit adjustment,
meaning it would need to be in brackets, to apply the
balance back to the account. Most ofces also charge
the patient a fee for returned checks; this amount
is entered as a charge (as it will be a new charge,
over and above the amount of the original fee). You
would contact the patient to make them aware of the
returned check and fees owed to your ofce. Most
ofces would require that this amount be paid with
cash, credit, or debit card. NSF checks not cleared by
the patient within a reasonable time (usually 14 days)
are sent to collections or the prosecuting attorney’s
ofce, unless special arrangements have been made.
C
O
G
Several things are important in choosing a bank for the
ofce’s business account.
r
r
r
r
r
BANKING
Bank location—A nearby bank would be the most
convenient since deposits are made daily.
Monthly service fees—Some banks charge a monthly;
others, however, don’t charge any monthly fee if the
account’s balance doesn’t fall below a specic dollar
amount.
Returned check fees—Make sure you consider the
amount charged for NSF paid to your ofce.
Overdraft protection—This service guarantees that
the bank will pay the checks you write even if not
enough money is in the ofce’s account. Review the
terms and charges, including interest, that are associated with this type of protection.
Special services—Includes paying interest on checking
account.
nonsufcient funds. It means
or medical ofce and account number on the back of the
check. Most ofces have a stamp with this information
already on it. All you have to do is stamp the back of the
check in the place marked for endorsement. This type
of endorsement is referred to as a
ment
, as it restricts the depositing of this check only
to the account listed. When the day’s payments have
been received, posted, and processed, add all the checks,
credit card receipts, and cash received. This total should
match the total of the payments for the day. If it does,
you’re ready to prepare the deposit slip. You will need
to list each check individually on your deposit slip. You
will list the check number and amount of each check.
Cash will be recorded on the top of the deposit slip
and totaled. The total of cash and checks will be added
together for the amount of the deposit. Always verify
this amount against the payments received for the day.
The deposit can be mailed to the bank or dropped in
the bank’s secure night deposit box. But if the deposit
includes any cash, you should take it directly to a bank
teller. Always get a receipt from the teller for any deposits that contain cash.
All checks should be endorsed with a restrictive
endorsement. This endorsement clearly denes how the
check can be processed. Figure 13-4 is an example of an
endorsement on the back of a check.
ENDORSE HERE
restrictive endorse-
FOR DEPOSIT ONLY
WILLIAM BROWN, M.D.
#00-00000
DO NOT SIGN / WRITE / STAMP BELOW THIS LINE
FOR FINANCIAL INSTITUTION USAGE ONLY*
Deposit
The rst thing you should do when a check comes into
the ofce is check to be sure it is made out to your
ofce and lled in correctly. Next, you must endorse the
check. This involves writing the name of the physician
Figure 13-4 Check endorsement. (Reprinted from
Kronenberger J, Ledbetter J. Lippincott Williams & Wilkins’
Comprehensive Medical Assisting. 5th ed. Philadelphia,
PA: Wolters Kluwer; 2016.)