Robert C. Scroggins

, many medical practices today are better positioned to incorporate modern processes and procedures with which to manage their accounts receivables more effectively, particularly by improving collections from patients.

, practices can find stand-alone services that can facilitate patient payments via the Internet or telephone.

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	We have found with our clients that practices incorporating these payment options have been able to reduce their 

	The reason for this is simple: Accessing financial information and paying bills online is now commonplace, and in many respects an expectation of the customer-in this case, your patient.

	Since there are many ways to establish an online payment system, there is not much value in discussing the particulars of any one system, but rather focusing on how to effectively convince your patients to engage with the online process. In order to do this, specific protocols to communicate with each patient must be established when your staff has the opportunity to do so face-to-face.

	We find that many practices have not updated their financial policies and processes to communicate with patients regarding the availability and benefits of online payment options. Instead, the financial policy is often several years out of date and are from the time when options for payment were in person or through the mail.

	We recommend that practices use the following strategy to help achieve patient compliance with payment policies.

	Identify a specific individual or team in your practice who will be responsible for communicating with your patients about your practice’s financial policies.

	This may be employees at the front desk or in the billing department, or in a larger practice perhaps even a specific person whose jobs consists solely of discussing  financial arrangements with patients.

	If this task is not  assigned to anyone specifically, it becomes no one’s responsibility. The financial policy simply becomes another page or two given to patients when they arrive, posted on the wall and on your practices’s website.

	Given the amount of money at stake with high-deductible insurance coverage, a few minutes of face-to-face communication with each patient regarding how the practice handles the portion of charges that is the patient’s responsibility will go a long way.

	The discussion with each patient regarding the practice’s financial policies and procedures need not be lengthy. It is a good idea to determine in advance the realistic amount of time staff will be able to spend with each patient.

	By doing so, the conversation can focus on the most important aspects of what each patient needs to know.
	For example, if there is only time to spend a minute or so with each patient, the goal is twofold:

		highlight the most important information by circling or highlighting specific items in the policy, and

		develop rapport between your staff member and the patient. If the patient indicates a preference for making payments online, focusing on the method for doing so should be a priority.

Next: Creating a financial policy with patients

	The practice should determine and record the following information for each patient, to help direct the conversation:

		The patient’s referred method of communication (home phone, cell phone, e-mail), and

		the patient’s preferred method of payment.

	
	Note: The Health Insurance Privacy and Accountability Act and related privacy regulations must be followed. So long as appropriate patient authorizations are obtained and communications are handled properly, having a record of the best way to communicate with each patient will be helpful in building an efficient process going forward.

	The following information from the financial policy should be reviewed with each patient:




	A description of how the practice handles statements for the patient’s responsibility portion of care.
	For example, if statements are sent while insurance is pending prior to the patient’s responsibility being determined, or if statements are sent only after insurance is resolved.

	Basically, the patient needs to know (and the billing statements should  explain) whether the patient’s balance has been determined and should be paid upon receipt of the statement.

	This information should be provided in any case, but particularly when the patient has the option of making a payment online, because many patients will pay an invoice through an online system quicker than they will by check or credit card via ordinary mail. If it is unclear if a balance is due, the statement will most likely be put aside.




	The financial policy should include a sample of the statement the patient will receive.

	The sample statement should use highlighting and notations to direct the patient to the instructions for making payments online or by telephone.




	The practice representative who discusses the procedures with the patient should provide his or her business card and contact information as a means of developing rapport. The established rapport resulting from the face-to-face meeting will be helpful in the future if your staff finds it necessary to contact patients with delinquent balances.

	For example: “Hello Mrs. Jones, this is Amy from Dr. Smith’s office. I helped you understand the payment options at the time of your appointment. You indicated a preference to make your payments online. Hopefully, you have retained the instructions we went over or are able to determine how to make an online payment based on the instructions appearing on your most recent statement. If you need any assistance, please do not hesitate to call me. I enjoyed meeting you and am always here to help.”

	This kind of relationship-building will likely pay dividends going forward as your practice works with patients to ensure the best care and timely payment.

Articles

With the addition of EHRs and patient portals, many practices today are better positioned to incorporate modern processes and procedures to manage their accounts receivables more effectively, particularly by improving collections from patients.

Maximize patient collections using the web

Robert C. Scroggins, JD, CPA, CHBCProtecting against embezzlement comes down to eliminating opportunity. You cannot do much, if anything, to control another person’s motive or rationalization. However, motive and rationalization are the places where you look for a problem.

	If you ask either the Association of Certified Fraud Examiners or the auditing gurus with the American Institute of CPAs, they will tell you that embezzlement, theft, and fraud are most likely to occur when three conditions exist together:

		Incentive or pressure to steal (motivation).

		Rationalization of the potential theft.

		Opportunity or perceived opportunity to steal.

	The reasons and circumstances behind motive and rationalization will be different to some extent in every case, but paying attention to the behavior and habits of your staff and taking note of personal financial pressures will help you be cognizant of the potential for a problem.

	Also, keep in mind that long-term trusted employees account for just as many occurrences as new hires.

	Both financial pressure and greed share the stage when it comes to motive.

	Some of the more common situations involve snowballing personal expenses that become difficult or impossible to resolve, family members who impose significant financial demands (i.e. those demands may not be observed directly in your employee), lifestyle and luxury spending in excess of income, and other financially draining behaviors like gambling. In addition to direct observation of these warning signs, it is also important to pay attention to comments and conversations among your staff since they are likely more aware than you of what is occurring in each other’s lives outside of work.

	Rationalization follows motive. “I’m just going to borrow a little money and I’ll pay it back.” Or, “The doctor makes a lot more than I do so I need this money more than she does.” Theft is never justified so rationalization is necessary.

	Theft of office or clinical supplies or other tangible assets can certainly be a problem, but the most significant occurrences involve a misappropriation of cash, often in small amounts over a long period of time.

	Cash can be a target of theft when money is coming into the practice and money is going out.

	As our firm works with practices of all specialties throughout the Midwest we are often asked to help identify areas vulnerable to embezzlement. Many times we find that reasonably good attention has been given to either receivables or payables, but appropriate structure is lacking with one of those areas. This can be due to differing degrees of attention by one manager verses another. Or, a particular cash control process has broken down because of staff or systems changes, and a new cash control process was not re-established.

	More often than not, with respect to revenue, theft relates to copayments and deductibles and particularly cash receipts.

	With payables, a couple examples of common embezzlement schemes include personal charges placed on the practice credit card, fictitious vendors or duplicate payments to the same vendor (with one going into the account of the embezzler) covered up by an alteration of records, and completing transactions online where a “paper trail” is lacking.

Control systems are crucial to preventing theft

	In any well-run business maximum success depends on well-designed and followed systems and processes, and this is certainly true when it comes to the prevention of theft.

	Think about this too: If you don’t establish good controls to protect against embezzlement, you are doing a disservice to your employees who you’ve asked to handle your money. If there is ever a suspicion of theft and you don’t have good controls in place, it is much easier to jump to an incorrect conclusion that results in distrust and disharmony among your staff.

	Remember, well-established systems to protect against embezzlement are good for everyone.

	There are two key concepts to consider when constructing a system of good internal controls.

	Each process should be designed to involve a separation of duties, and should have a designated control person. Separation means a process that involves two different people in a way that causes them to verify each other’s work as a result of the process itself. A control person is someone removed from the cash handling process and consequently available to be in charge of verification.

	For example, one employee would be entirely responsible for the cash drawer, including daily balancing and taking the deposit to the bank. Another employee is the control person who will receive patient encounter forms and receipts but does not have access to the cash drawer and does not take deposits to the bank. If there is a third employee who takes the money to the bank, that means another step is added to make sure the deposit amount is confirmed.

	This separation of duties and control person approach should be applied to all activities vulnerable to theft. A full description of all possible controls would consume many pages, and each practice is different in size and organizational structure so good internal controls are not a one-size-fits-all proposition. But, hopefully the examples above convey the most important concepts and provides guidance in establishing systems and processes that will work well for your practice. Your practice management consultant or CPA can be very helpful in evaluating your current processes and assisting with changes to make your internal controls stronger and embezzlement less likely.

No foolproof theft protection plan exists

	Even with the very best controls in place, there is no way to absolutely protect or guarantee against embezzlement. (This is even true in banking environments.) But every practice needs to take steps to prepare for theft.

	Your employee handbook should make clear that embezzlement is grounds for immediate termination and prosecution. Also, you should carry a bonding policy to insure against it.

	We find that some doctors are reluctant or unwilling to prosecute an employee caught stealing. That discomfort subsides a bit when the staff has been forewarned (in the policy) and even more so when the prosecution effort can be turned over and handled by a third-party insurance carrier. 

Robert C. Scroggins, JD, CPA, CHBC, is a management consultant and principal with Clayton L. Scroggins Associates, Inc., in Cincinnati, Ohio. Send your practice management questions to 

Protecting against embezzlement comes down to eliminating opportunity. You cannot do much, if anything, to control another person’s motive or rationalization. However, motive and rationalization are the places where you look for a problem.

Theft in a medical practice: Why it happens and how to stop it

: How long are we required to keep explanations of benefits forms once the information is recorded into our computer system? Also, how long do we keep superbills and encounter forms after the information makes it to the computer for billing purposes?

  There are two primary record types that exist in a medical practice-medical records and financial records. The former should be retained as long as there is professional liability exposure and the latter as long as there is IRS audit exposure. Superbills, encounter forms, and EOBs are not considered primary records of either category and can be destroyed after they are input into the billing system. Therefore, retention should be based on the business needs of the practice. For example, if the originals may be of help when following up on denied claims, it may be worthwhile to retain them for a year or so. 

Superbills, encounter forms, and EOBs are not considered primary records and can be destroyed after they are input into the billing system.

Author | Robert C. Scroggins

Articles

Maximize patient collections using the web

Theft in a medical practice: Why it happens and how to stop it

Q&A: How long to keep explanation of benefits statements?