Finance Charges & Sending a Patient to Collection
By Lynn Ballard, CMC, CMIS, CMOM

Is it ethical for a medical practice to assess an interest or finance charge on delinquent patient accounts? This is a question that I hear frequently at Practice Management Institute programs.

The only way that a medical practice can survive is by putting money on the books by providing the medical service with follow-up on the accounts receivable collection. Many times the patient will have payment assistance from an insurance company, and will then have a remaining patient balance for which they will be responsible.

According to the American Medical Association (AMA) policy, E-6.08 Interest Charges and Finance Charges, the application of such interest and finance charges are appropriate and allowed under specific guidelines. All state and federal laws and must be followed in regard to billing practices, i.e., informing the patient of the additional charges and the percentage, etc. It should be noted however that the AMA does discourage what they call "harsh" collection policies. It is also encouraged to use "compassion and discretion" in hardship cases. Medicare even allows for writing off of unpaid balances in financial hardship cases. See Medicare guidelines for specific instruction.

Per the AMA, it is at the physician's discretion whether to charge interest on unpaid medical balances. The specific amount of the finance charge or billing fee must be reasonable. The patient or guarantor must be made aware of the office billing guidelines in regard to a reasonable finance or interest charge. This information must be provided prior to the services or the charges being made on the patient account.

This can be accomplished in several ways such as a practice brochure, or financial policy agreement given to patients. The physician may even choose to post a sign in the reception area.

It is suggested within the AMA's policy that the physician review all accounting/collection policies and never allow a patient account to go to collection without physician knowledge. A review of the patient's chart should also be accomplished for risk management purposes.

Hopefully, physicians will become more aware of their outstanding accounts receivable and allow for assertive collection practices when accounts become delinquent. I also suggest that the physician decide that it is appropriate to refer the patient balance to a collection agency. It would be appropriate to notify the patient one last time, via phone and/or mail (one letter certified and one regular mail) providing a specific deadline date and time to have the full payment into the office, cash, certified check or money order. Instruct that failure to do so will result in the account being turned over to collection and the patient will be fired from the practice.

At that deadline, with no payment it would be necessary follow through and turn the account over to the collection agency as well as fire the patient from the practice. Failure to do so would be considered harassment of the patient.

Financial Management Basics
By Lynn Ballard, CMC, CMIS, CMOM

It goes without saying that physicians plan on building a successful practice in order to secure their financial future as well as the future of the medical office staff. In each practice there must be a total team effort in order for that to initially happen as well as to maintain the success.

The practice must focus not only on the quality of care provided but also building quality relationships with patients and referral sources. It is not just a "field of dreams" where you open the door, they come, and you will be successful.

You must evaluate services provided, the fees attached, and the reimbursement allowed by the carriers. Reimbursement from managed care and other carriers must keep pace with inflation in order for the practice to stay successful. This means you must know how much it actually cost you to provide services. If it cost $75.00 to provide a service and you only receive $65.00 from the insurance company it doesn't take a genius to see you won't stay in business long. Unfortunately, this happens all too often, and it may be happening to you. Unnecessary overhead will deplete the incoming cash flow very quickly if there are no checks and balances on spending.

Practice fees and individual contract reimbursement must be based not only on expenses, but also patient and payer mix as well as the volume of services. Only with yearly contract fee evaluation will the practice be able to make financial and other practice related decisions as to which managed care plans you wish to continue to participate with.

As new techniques and services are introduced into the practice, it will be necessary to have a firm grasp on this financial data. Questions you should ask include: how many of these services will you do a month, how much will you charge for the service and will the insurance carriers reimburse a reasonable amount for it. If the insurance will not cover it, will the patients pay? In most cases your decision-making and reimbursement will only be successful if you put sufficient focus on those and other key elements.

Every practice needs to identify a set of long-term goals. Where should the practice be in one, five and 10 years? This will be the plan and blueprint for the practice to follow for future success. It is recommended that increased focus be placed on office and financial management. Continuing oversight on day-to-day operations in these areas can provide notice of problems as they occur. This will allow for resolution and observation of trends both on a positive and negative side as well as opportunities for change. All of which are necessary to be a successful medical practice.

2005 Medical Practice Coding and Compliance Summit Scheduled for November 10 and 11 in Las Vegas

Want to earn all your yearly CEU requirements over a two-day period in a fun environment?

Then you won't want to miss this year's Medical Practice Coding and Compliance Summit in Las Vegas. PMI will present this event in conjunction with another group out of Atlanta known as The CMC Group, L.L.C. (not affiliated with the CMC credential).

The conference will bring together experts from across the country to provide you with a convenient way to stay on top of today's coding, billing, compliance and office management issues.

PMI is in the process of gathering experts and cutting-edge topics for you. A full array of practice management, compliance, reimbursement and coding sessions will be provided. Choose to attend sessions that are specific to your area of training, or branch out to get a taste of different subjects important to the practice.

The Medical Practice Coding and Compliance Summit will be held at the Imperial Palace Hotel and Casino. Receive a specially discounted room rate at The Imperial Palace when mentioning The 2005 Medical Coding and Compliance Summit. A limited number of rooms have been blocked for our conference so make your reservations early. You can pre-register for the conference and save $100 off your registration fee by completing and mailing the registration form provided on the accompanying page to PMI. Participants at the conference will have the opportunity to renew certification through December 31, 2006.

If you have not yet received an email about the upcoming conference, you will need to log into our Web site and update your email address.

Go to www.pmiMD.com, click on "Certificate Verification" on the left hand column. Enter your Certification ID# if known, then choose "Edit profile." You will be asked to enter your password, which you would have received in your certification award letter. If you don't have your Certification ID# or password handy, click "Number unknown, click here." Type your information in the required fields (highlighted in red). In the comments area, type your current email address. PMI will update your record and notify you via email to confirm the update.

For more details, and to register online, visit www.pmiMD.com and click on the 2005 Medical Practice Coding and Compliance Summit link. There you can print out a complete brochure or request for a copy to be mailed to you.

Certified Medical Coder Accolades featured in this month's edition of Family Practice Management magazine

The March 2005 edition of Family Practice Management magazine featured an outstanding profile of our certified professionals at work in the article entitled, "The Value of a Coding Education."

The article, written by physicians and key staff from Asheville's Mountain Area Health Education Center Family Health Center, showed how a Certified Medical Coder was able to save the practice thousands of dollars conducting chart audits and reimbursement analyses. John Rowe, MD, MAHEC clinical director and one of the five authors of the article, said that he and his colleagues found this training to be highly cost-effective for them.

"Compared to our coding level in 2000, this would result in an annual increase in charges of $457,590 for those 26,448 established patient visits, or $65,370 per physician equivalent," the authors said.

Family Practice Management magazine is published by the American Academy of Family Physicians and has a national monthly distribution that reaches more than 106,000 physicians and medical professionals.

"It's no surprise that PMI-certified professionals are highly competent and valuable to their employers," said Lynn Ballard, VP of Professional Services for Practice Management Institute.

"What is exciting is that the article clearly demonstrated how the PMI-certified coder consistently identified and corrected chart errors, dramatically increasing their revenue and overall coding accuracy."

PMI's Certified Medical Coder program is recommended for experienced coders. Students who complete the 5-week program are eligible to sit for the CMC exam. Current rules and techniques for outpatient diagnostic and procedural coding are taught; and participants are required to code to the highest degree of specificity.

"We found that training a staff member to be a coding specialist has been very cost effective, has increased our revenue and has improved our Medicare compliance," said the authors of the article.

PMI has certified more than 5,000 coding and reimbursement professionals across the country. In today's complex reimbursement environment, these certifications are in high demand. The programs are presented in leading health systems, hospitals, medical societies and colleges across the country. If you or a colleague is interested in learning more about the Certified Medical Coder, Certified Medical Insurance Specialist, or Certified Medical Office Manager programs offered by PMI, please visit www.pmiMD.com and click on "certification."

Coding Q&A

By Lynn Ballard, CMC, CMIS, CMOM

Q. What is the appropriate code to use for scar tissue injection? R.A.

A. Many coders inappropriately utilize code 90782 for the injection into scar band tissue. The correct code to use however would be 11900 - 11901. According to the Coders' Desk Reference for Procedures, the provider injects the medication or steroid into or under the skin lesions. If you have seven or fewer lesions use code 11900 and 11901 for more than seven lesions.

A lesion, in this case, describes healed skin lesions with post laceration and post-surgical scar bands. It does not include injection of anesthetic for surgical intervention. You will also code and bill separately for the medication injected. If appropriate use a Level II HCPCS code or the generic 99070 CPT code. You would then provide a description of the medication on the claim form in block 19 on a paper claim and the equivalent on the electronic version.

(Note: The Coders' Desk Reference is available through Practice Management Institute, 1-800-259-5562. It provides a layman description for all CPT codes with the exception of Anesthesia and E&M codes. It does include Path & Lab as well as Radiology.)