Frustrated with your cash flow?It is important to understand the financial responsibilities of both the patient and the patient's insurance carrier in order to effectively manage cash flow in a medical practice. A good analysis of the reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. process will often reveal why a practice is having difficulty with cash flow. For example, say your office bills an insurance company $1,000 for a procedure, and the Explanation of Benefits statement subsequently arrives with these calculations: * The contracted write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. is $760. * The "allowable amount paid," therefore, is $240. * The insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. is responsible for 80% of the allowable amount ($192), and the "patient responsibility" is 20% ($48). * However, if the deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). has not been met. the patient is actually responsible for the entire $240. You should keep close tabs on your office billing procedures. With regard to the example cited, has the patient paid the entire $240 or any portion of it? Was the patient billed? Did you lose an opportunity to collect an unpaid balance during a follow-up follow-up, n the process of monitoring the progress of a patient after a period of active treatment. follow-up subsequent. follow-up plan visit because you did hOt know that the patient had an outstanding balance? Did the account go to collections, or was the balance written off as uncollectable? How much were you actually compensated for the procedure? Physicians can take several steps to avoid potential cash flow problems: * Contact the payer and try to learn how much of a patient's deductible has been met and the allowable amount for the procedure. * Collect all amounts (copays, deductibles) prior to the procedure as described in the individual practice's office financial policy. * Try to collect all copays and deductibles at every office visit. (1) Reference (1.) Isenberg Isenberg was a County of mediæval Germany. It was a partition of the County of Altena, and was annexed to Limburg-Isenberg in 1242. Counts of Isenberg (1191 - 1242)
Dr. Isenberg is an otolaryngologist in private practice in Indianapolis; sisenberg@good4docs Short for documents or documentation. .com |
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