5.27.11 Issue #481 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter
 


Nancy Caudill
Senior Consultant
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Do YOU Owe Your Patients Money?
By Nancy Caudill, Senior Consultant McKenzie Management

Part of a practice owner or administrator’s job is reviewing the Credit Balance Report monthly to make sure patients are not owed refunds. However, as consultants we find that there is often a lack of understanding when it comes to the information relative to your Accounts Receivables (money that patients or insurance companies owe you).

How is an Account Balance Created?
When you and/or your hygienist or other service provider in your practice provides a dental service or a product is sold, a fee or charge is created and posted to the patient’s ledger in the practice software. This charge “increases” the patient’s account and creates an account balance. Should the patient not pay any or only a portion of the total charge that was placed in their account, the patient now has a debit balance. As an example:

Mrs. Jones is seen in your practice for a 2-surface tooth-colored filling and she purchases a tube of toothpaste. A fee of $275 is posted for the filling and also a fee of $15 for the toothpaste. She pays for the toothpaste in full and pays an estimated “patient portion” of $100 for her filling, in hopes that her dental insurance will cover the balance.

2-surface tooth-colored filling: $275
TP, Toothpaste: $15
OTCCK, OTC Patient Payment: $100
Balance: $190

At this point, if an Aging Report is generated, Mrs. Jones’s name will appear, illustrating a current balance of $190.

Determining the OTC Payment Amount
A well-trained Financial or Schedule Coordinator understands the importance of “collecting at the time of service.” A general rule of thumb, for a family dental practice that is accepting the assignment of benefit and has about 50% of their practice comprised of patients with dental insurance, is that 45% of the net production each day should be OTC. OTC means “over the counter” or “at the time of service” - opposed to payments that are taken in the mail.

There are various ways of determining what the patient’s OTC amount is when insurance is involved.  As an example:

  • A “guestimate” based on a percentage, such as 20% for restorative, 50% for crowns, partials, etc. and 100% for preventative
  • A “guestimate” based on reviewing the contracted fees for a PPO and then applying the percentage to the contracted fee (assuming that you are posting the practice fees to the ledger)
  • Reviewing the patient’s ledger to see what the insurance paid previously for a similar procedure
  • Using an automated software program that illustrates the allowable by the insurance plan

With any of the above applications, it is all still a “guess” on how much the insurance company will reimburse the practice for the service provided.

Next…
The insurance claim is generated and remitted electronically to the clearinghouse, and then sent on to the insurance company for payment. The payment arrives anywhere from a few days to several weeks from the submission date, depending on the plan.
Now Mrs. Jones’s ledger has a payment posted in the amount of $225.

2-surface tooth-colored filling: $275
TP, Toothpaste: $15
OTCCK, OTC Patient Payment: $100
Balance: $190

INSPMT, Insurance Payment: $225
Credit Balance: $ -35

As a result of the insurance payment paying more than what was anticipated, there is a credit balance on her account. Now what happens? The “wrong” answer is…this credit balance sits on the patient’s account until either the patient has additional work done or until the patient realizes that they “overpaid” and calls the office and requests a refund.

Good Customer Service
A practice that is providing top-notch customer service stays on top of the credit balances in the practice. How? The Financial Coordinator generates an Aging Report weekly or monthly for only the accounts with credit balances. Each is reviewed for accuracy and unless there is some indication that the patient requested not to receive a refund check, a copy of the patient’s ledger from the past $0 balance is printed so you, as the Accounts Payable Coordinator, can confirm that the credit balance is due and a check is then issued to the patient/account holder for the amount of the credit, along with a “thank you” note:

“Mrs. Jones, find enclosed a reimbursement in the amount of $35. We are happy to report that your insurance plan submitted more than anticipated toward your recent dental treatment. As a result, we are pleased to be sending you the difference.
Thank you for being a valued patient in our practice. We look forward to seeing you again soon to assist you in maintaining healthy gums and teeth.”

Requirements of Your State Board
Many, if not all, state boards have made provisions for dental practitioners regarding the management of patients’ credit balances. Contact your state board to confirm that you are complying with their regulations.

More importantly, when a patient pays you in good faith, provide the customer service that they deserve and refund their credit. It is much more fun to send a patient a check opposed to a statement, and they will think so too!

If you would like more information on how McKenzie's Consulting Coaching Programs can help you IMPLEMENT proven strategies, email info@mckenziemgmt.com.

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