Practice Management Final Exam

How are a physician’s fee determined?
1. Managed Care contracts
2. Prevailing rate in community
3. Usual, customary, reasonable
4. Third party payers
Managed Care contracts
prepaid health care, also HMO/PPO
Prevailing rate in community
Same specialty, service, and geographic area
Usual
Usual fee for service
Customary
Range of fees in any given community
Reasonable
When a physician has to more than he usually does, he charges more.
Third Party payors
Insurance companies/Gov’t. (Meidicare)
What are patients charged for?
1. Judgement/Knowledge
2. Treatment/Services
3. Time
What does the term fee-for-service mean?
Physician charges a fee for providing a service.
What is a fee schedule?
Compilation of pre-established fee allowances for given services or procedures.
Fixing Fees is legal. T/F
False
What is a physician’s fee profile?
A list of normal fees (charges) for services that a fiscal intermediary has and monitors the physician for consistancy.
What is a fiscal agent? (intermediary) Govt. plans only.
An entity that handles the paperwork for Government sponsored Health Care plans
Is it legal for a physician to have more than one fee schedule?
Yes
What is a collection ratio?
The average time period for which receivables are outstanding. The average number of days it takes a company to collect unpaid invoices.
And what does it reveal?
The effectiveness of a collections program.
What does the term guarantor mean?
The person responsible for paying the bill.
What is the purpose of discussing fees with patients in advance?
So that the patient can prepare for the payment of fees.
What percent of patients will pay? Will not?
96% will; 4% will not
What are the three forms of payments that a pt. may use to pay their bill?
1. Cash
2. Check
3. Credit Card
How are the largest proportions of fees paid?
Third party payors
What is meant when you adjust a fee?
Payment required is less than what is normally charged for the particular service. (Must be reflected on pt. account)
What is meant by the term professional courtesy?
When a physician elects to reduce, adjust, or eliminate fee.
What is the problem with extending professional courtesy?
1. Reduction in revenues
2. illegal in some cases
3. Some pt. may take advantage of the physician
What are some pitfalls of fee adjustments?
It can change the fee profile
What is meant by the term write-off?
To write off a fee for various reasons and remove it from accounts receivable.
Why is it a good idea to have a written credit policy?
So everyone in office knows the policy and can offer patients the same information. It aids in the collection of revenue.
What issues should be included in the credit policy?
1. Pay now policy-Pt. must be informed via letter
2. Established pt. need to be informed of credit/billing changes in writing.
What laws affect the extension of credit to a patient?
1. Regualtion Z of the Truth-in-Lending Act
2. Fair Debt Collection Act
Regulation Z of the Truth-In-Lending Act
Governs anyone who charges interest or agrees to more than 4 payments for a given service, even if no interest is charged. Must include disclosure form, completed, signed, one copy for pat, and one for office.
How long must it be kept on file?
2. years after the pt. has made the last payment.
Fair Debt Collections Act
federal law that states how and when a collector can attempt to collect a debt.
Delinquent accounts?
1. continuing care implies extension of credit
2. Physician may refer pt. elsewhere for care
Why is it a good idea to itemize the first statement?
1. cuts down telephone calls to office
2. A courtesy to the pt.
3. Less time needed to explain charges
4. Pt. will have a better understanding of charges
5. F/U on delinquent accounts made easier.
How much do the experts estimate that the extension of credit costs a medical practice per pt. per month?
$8.00 per month, per patient
What is the rationale of always collecting the co-payment at the time of service?
To eliminate the need for sending out a bill for such a small amount of revenue.
If a patient tells you that they have forgotten their checkbook, how should you respond?
1. We accept credit cards
2. We accept cash
3. ATM across hall
4. here is a copy of the bill, with a SASE; we should get it in a few days. (Tickler File)
What are the more common rules concerning telephone debt collection?
Be polite, professional and helpful.
How should you collect a debt from the estate of a patient who has died?
After the appropriate amount of time has passed, contact the executor of the estate, introduce yourself, and obtain the executor’s address, so you can send the final bill.
What is meant by the term billing cycle?
Bills are sent out at a given time each month.
If your office bills every account at the same time of month, what is the rationale for making sure that the bill is received at the pt. home no later than the 25th of the month?
Some people pay their bills one time a month on the 1st.
What are the four way that payment for medical services can be accomplished?
1. Pt. pays in full at time of visit
2. Internal Billing-when extending credit to pt is necessary
3. Internal Insurance-Billing of 3rd party
4. Outside Billing-assistance from collection agency/service
What is meant by aging accounts?
Helps to flag unpaid bills. Optimal time for collection is 30-60 days from day of first billing.
What does aging accounts measure?
The practices’ ability to collects its fees.
What are the three most common ways of collecting an overdue account?
1. Sending an overdue notice to the pt.
2. Telephoning the pt. to let him or her know the account is overdue
3. Informing the pt. at their next office visit.
What if a pt. has an overdue account and wants to schedule an appointment?
Schedule the appt., then speak with the physician privately. (Physician must care for pt. until relationship is terminated)
What are the two most common collection alternatives that a practice may utilize to collect delinquent accounts?
1. Collection Agencies
2. Small Claims court
Why have advance discussions of fees with patient?
1. Pay now-reduce costs to consumer
2. No bills in mail
3. Encourage use of credit card
4. Pt. can avoid collection agency/bad credit rating
5. Good relations are maintained with physician.
Accounting
The recording and preparing of financial statements for a business. Making reports for determinations.
Bookkeeping
An organized and accurate record-keeping system of financial transcations for a business.
What are the cardinal rules of bookkeeping?
1. Always use black ink; NO pencil
2. Never erase or white-out errors. Draw a single line through, change information, intitial change.
3. Always double-check each entry
What are some of the different kinds of financial records?
1. Daily Journal
2. Disbursement Journal
3. Balance Sheets
What is a petty cash fund?
Cash fund kept in the office specifically for small purchases.
How is accounting for petty cash accomplished?
A voucher with an attached receipt should always be placed in the petty cash box.
What must the voucher always contain?
Explanation and signiture
How is petty cash fund replenished?
Once a month, a check is written in the amount owed to total the vouchers. Cashed and put back in petty cash box. Vouchers are taken out and filed.
What is a single-entry bookkeeping system comprised of ?
General journal-entry made in one place.
What is a double-entry bookkeeping system comprised of?
1. Post in accounts receivable journal
2. Post in general journal
What is the accounting equation?
Assets=liabilities + equity
Assets
what the medical practice is worth minus its liabilities.
What is a write-it-once system?
(AKA pegboard) Uses a board with pegs going down the left side. Pegs hold day sheet and carbon paper is used to create a permanent copy of transactions. (Check goes over register and leaves and imprint)
What does the term posting mean?
Transferring information from one account to another.
What are accounts receivable?
Amounts due from others
What is accounts payable?
Amounts owed to others
What is the procedure for paying accounts payable?
Accounts payable are paid at specific times of the month.
What items would you need in order to post charges and/or payments using the pegboard system?
1. Calculator
2. Current day sheet w/ yesterday’s previous balance
3. Carbon
4. All ledger cards with transactions on day sheet
5. Pencil
6. Pen
7. Receipt
Name two ways to use outside assistance to collect delinquent debt.
1. Collection agencies
2. Small claims court
What are the ways you handle Collection Agencies?
MA cannot contact the pt. or send out any more bills, once the account has been turned over to a collection agency.
What are the ways you handle Small Claims Court?
Physician must be willing to pursue case. A filing fee is required-usually 40-60 dollars. Max amount that can be collected is $5,000.
How has the advent of the Internet changed booking?
Electronic transfer of funds. Payment of bills electronically.
What are the advantages of using checks?
1. provides a permanent reliable record of what was spent.
2. Provides a tax record
3. Conveinence
What are the different types of checks and what would be the use of each one?
1. Bank Draft
2. Cashier’s Check: pay cash to bank to get it.
3. Certified Check: one of your own checks.
4. Limited Check: lists time limitations
5. Money Order: Used to pay bills
6. Traveler’s Check: Requires 2 signatures.
7. Voucher Check: one part check, other part detailed information
8. Counter Check: Used to on the counter at banks in order to pay them.
What cautions should you take when accepting a money order?
A money order can have no more than two endorsements.
What is the Federal Reserve?
1. Influences money and credit conditions in the U.S.
2. Supervises and regulates banking.
3. Maintains the stability of the financial system
4. Provides certain financial services.
What does the ABA number on a check represent? How is it printed?
The Bank’s address. As a fraction.
First, Second, and Third part of ABA number?
First #s: identity/location of the Federal Reserve Bank
Second #s: District
Third #s: Bank branch address.
What is Magnetic Ink Character Recognition (MICR)?
Used to read the characters so that the checks can be sorted
What are the different types of bank accounts?
1. Checking
2. Savings
3. Money Markets
What consideration should be made in establishing a bill-paying system?
The needs of a practice and its billing system may vary according to the size of the practice.
What is a procedure for writing a check?
Fill out check stub first
How should corrections be made on a check?
Draw a line through mistake, or void check. Should be noted on stub of any corrections.
What are some special problems that can arise with checks?
1. May be fraudulent
2. My be erroneous 3rd party check
3. May be drawn from a closed account
4. May be drawn for account with insufficient funds
What precautions should be taken in accepting a check?
1. Check date, signature, correct amount
2. Require ID
3. Check for correct address
4. Must be written for correct amount only.
5. Include a current phone number
What should be done if a check is received with “payment in full” written on it?
Do not accept it. Inform office manager.
What is an endorsement on a check?
The signature of the payee on the back of the check.
What are the four different types of endorsements?
1. Blank-payee signs name only
2. Special-endorse under 1st endorsement
3. Restrictive-“For Deposit Only”
4. Qualified-disclaim liability for further endorser.
What is the rationale for depositing checks promptly?
1. Reduces oppotunity for the pt. to stop payment.
2. Can run into NSF
3. May have time restrictions on check
4. Courtesy to payor
What is the procedure for preparing a bank deposit? (List the following)
1. Current Date
2. ABA#
3. Currency
4. Coin
What is a bank statement?
A monthly statement to account holders on which are listed transactions since the last closing date.
What is the procedure for reconciling the bank statement?
SEE NOTES
What is bonding? Who in the medical office should be bonded?
Legal obligation to pay specific funds; the physician may require MA to be bonded.
Form 940
Employers Federal Unemployment Tax Return (FUTA)
Must be filed on or before:
January 31st following the close of the calendar year for which the tax is due.
Form 1040 S:
Declaration of Estimated Tax for an individual (used to file the estimated tax for a physician who is practicing as an individual)
Form SS-4:
Form used by employers to apply for their federal tax number.
Form SS-5:
Form used by individuals to apply for a social security number.
Form W-2 Wage and Tax Statement
The employer is required to furnish 2 copies of this form to each employee from whom income tax of social security tax has been withheld or from whom income would have been withheld if the employee claimed no more than one withholding allowance.
Form W-3 Transmittal of Income and Tax Statements:
Employers file this form to transmit wage and income tax withheld statements (Forms W-2) to the Social Security Administration who will furnish the tax information to the IRS.
Federal Employer’s Tax Guide:
Used to determine the amount of federal income tac to be withheld.
Employer’s Quarterly Federal Tax Return:
Employers who are subject to income tax withholding are required to file on or before that last day of the first month after the end of the quarter.
Federal Unemployment Tax Act (FUTA):
1998 rate was 6.2% of the first $7000 paid to an employee during the calendar year.
I a physician is practicing as an individual is he/she subject to withholding tax?
Yes
What is a quarterly return?
The IRS allows businesses to make payments every three months only if they have less than $2500 in quarterly employment taxes.
What was the previous rule?
If the business had less than $1000 in quarterly employment taxes, they could make payments every three months.
What form must be filed to make quarterly payments?
Form 941
What is an annual return?
A Federal Tax return form submitted annually to the IRS
What are the state unemployment taxes.
Taxes that pay for unemployment Insurance.
What is state disability insurance?
Program that provides partial wage replacement for workers who are unable to work due to illness, injury, pregnancy.
What is the procedure for establishing and maintaining a supply inventory and ordering system?
1. Set up system of regularly scheduled inventory checks
2. Check supply cabinets for outdates medicine, test strips, etc.
3. Check equipment to see if it is in good working order, and that supplies for the equipment are well stocked.
What is a purchase order?
Written authorization for a supplier to ship products at a specified price.
When paying an invoice, what information should be on the stub?
1. Date
2. Check Number
3. Amount you paid