A hard job to keep track of invoices

Garry Chapman highlighted key medical billing and collection issues that independent practitioners need to get on top of to carry out the process smoothly and efficiently. Here, he covers the important operational aspects of the process

The practice should always aim to raise the invoice within 24 hours of the treatment being carried out.
There are many reasons for doing this and not least of these is making sure that the cash flow of the business runs smoothly. We are constantly surprised to see that this is not always the case and it is not uncommon to see a private practice run many weeks behind in raising the invoices.
Before sending the invoice out to the relevant payee company/patient, there should be a checking process that takes place to make sure the invoice contains all the relevant information and is correctly priced.
Once the invoice is sent, it is too late to change anything and this can either lead to losing money by undercharging or delays in payment if the invoice does not contain all the correct information, which can cause cash flow

Raising invoices to the private medical insurance (PMI) companies still needs to be done quickly so that there is the best chance of it being settled in full.
If there is a delay in sending the invoice, you run the risk of the policy benefit limits being exceeded by other consultants’ claims, which means that the amount becomes the liability of the patient. This creates more administration work and is harder to collect.
There is a big push by some of the PMIs to send invoices electronically.
While there is a major benefit to them in doing so, there is also a huge benefit to the practice, as it means the invoice should be assessed and paid quicker because there is less human involvement.

Raising the invoice directly to the patient should be the first priority of the practice, as this area is the biggest risk of bad debts.
In this area, I also include invoices raised for shortfalls caused by the terms of the insurance policy, such as patient excesses, benefit limits or co-shares.
There are times when a practice should also consider requesting payment in advance, particularly when seeing patients that do not reside in the UK.

When raising invoices to the embassies, it should always be accompanied with a letter of guarantee (LOG) which matches the invoice at all points: date of treatment, patient name, location and name of exact embassy.
Reconciliati on Another area which can cause problems within a practice is not reconciling the remittances correctly against the invoices raised.
Each PMI should send a remittance to the practice when it sends the money, which is typically done electronically direct to the practice bank account.
However, in practice, the remittance does not always arrive at the practice, so unless the practice is chasing the PMIs or reconciling the bank account on a regular basis, the invoices remain outstanding on the system that the practice operates.
This, in turn, can then lead to further problems, as the remittance that has been missed and not reconciled can have shortfalls identified on it which should have been sent to the patient and therefore have never been sent – which leads to more bad debts.
We know about the above problems because when we chase a backlog of outstanding invoices for a practice, we encounter these issues all the time.
The way to rectify this is to make sure that remittances are reconciled the same day that they are received and to chase the missing remittances from the insurers on a regular basis.
This will ensure that you keep on top of outstanding invoices and also know at the earliest opportunity if you have to invoice a shortfall to the patient.

This is an area which we find to be the one that gives most practices the biggest headache. The reason for this is that it is a very difficult area both within the insurance market as well as the self-pay sector.
There are not many practices that find it easy to deal with the patient on both a medical and financial level, as it can lead to many discomforts on both sides.
In our experience, every invoice potentially needs chasing, including invoices sent to the PMIs, because quite often the invoice either does not reach them or does not end up on their system.
The practice has to decide what process they are going to introduce and who is going to be responsible for carrying out that process.
Once the chasing process has started, it needs to be followed, otherwise the patient will think that you are not being serious, which will just lead to even more bad debt. The process should consist of contacting the patient as well as sending letters and all of this should be recorded so that you keep a log of any action taken.

Once all the avenues in the chasing process have been exhausted, a decision then needs to be taken by the practice whether to send the case to debt collectors in order for them to continue chasing the patient, with the potential of eventually taking legal action to collect the debt.
This decision will typically depend upon the patient, the circumstances involved in the treatment and the associated costs involved.
If the decision is taken not to send the patient to the debt collectors, then the practice should consider writing the amount off as bad debt. It is unlikely that the patient will choose to pay the outstanding amount for some random reason in the future.
Before taking this final action, the accountant should be consulted, as they would know the individual circumstance of the practice and be in the best position to offer the correct advice.

Once all of the above has been addressed, then the practice needs to be able to raise reports based on the financial aspects of the practice from both a business as well as a tax perspective.
HM Revenue and Customs (HMRC) takes the view that you are responsible for your own tax affairs and does not consider ignorance or negligence as any reasonable defence.
Unfortunately, HMRC looks upon the medical arena as being a prime area where the financial affairs are not as robust as they should be, which leads to a higher percentage of investigations compared to other areas of business.
From a business perspective, you should be running reports on invoices raised, payments received and outstanding invoices on a monthly basis to ensure that all financial aspects of your practice are in order.
If not, then you do not have the information in a timely manner in order to take any action that is required to keep your practice on track and avoid any cash flow issues and to minimise bad debts.

Most people underestimate the important area of medical billing and collection. I can assure you that it is not easy and it is getting harder and harder to do it internally.
If you decide to continue to carry out this process in-house, then I urge you to take action to ensure it is done correctly, otherwise it is something that you may regret later.
If you do not want to invest the time and effort to do this internally, then consider outsourcing this crucial area and let the professionals do it for you.

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