FINANCIAL MANAGEMENT IN DENTAL OFFICE.pdf

Financial Management in the Dental Office Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Learning Objectives ˜ ˜ ˜ ˜ Pronounce, define, and spell the Key Terms. Demonstr...

Financial Management in the Dental Office Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Learning Objectives ˜ ˜ ˜ ˜ Pronounce, define, and spell the Key Terms. Demonstrate how to make financial arrangements with a patient. Describe the function of computerized practice management systems and manual bookkeeping systems. Describe the importance and management of collections in the dental office. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Introduction ˜ The business assistant has the responsibility of maintaining complete, accurate, and up-todate: Ø Ø Ø Financial records for billing and collection procedures Financial planning Declarations of money earned to federal and state agencies Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Financial Management ˜ Accounting Ø ˜ The means or process of recording, classifying, and summarizing a financial transaction Bookkeeping Ø The recording of the accounting process Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Gathering and Presenting Financial Information ˜ Registration form Ø ˜ Credit report Ø ˜ Financial profile Fee presentation Ø ˜ Address, telephone numbers, place of employment, responsible party, insurance Necessary fees Financial arrangements Ø Contract Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Accounts Receivable The accounts-receivable system is used to manage all money owed to the practice for professional services. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Types of Accounts-Receivable Systems ˜ Pegboard accounting Ø ˜ In this manual bookkeeping system, all entries are completed on the daily journal page, ledger card, and carbonized receipt. Computerized accounting Ø Data are entered into a computer program and used to maintain account histories and practice records. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Fig. 63-2 Manual pegboard system. (From Finkbeiner B: Practice management for the dental team, St Louis, 2006, Mosby.) Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Fig. 63-3 Computerized accounts-receivable management system. (Courtesy of Eaglesoft, a division of Patterson Companies, Inc.) Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Format for Accounts Receivable ˜ Charge slips Ø ˜ Daily journal page Ø ˜ Used to transmit financial information between the treatment area and the business office Record of all transactions for the patients seen each day, including the name of each patient, charges, payments, and adjustments to the account Walkout statement Ø Similar to a receipt but shows the current account balance Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Fig. 63-4 A computerized statement. A printout of this provides a walk-out statement for the patient. (From Finkbeiner B: Practice management for the dental team, St Louis, 2006, Mosby.) Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Patient Account Records ˜ Responsible party Ø The person who agrees to be responsible for payment of the account is known as the guarantor: • Adult • Family • Child Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Types of Payment ˜ Payment Ø ˜ Payment in full, statements, divided payments, and dental insurance Methods of payment Ø Ø Ø Ø Cash Check Credit card Insurance Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Professional Courtesy and Discounts The dentist extends professional courtesy in the form of a discount to professional colleagues or members of their or their staff’s families. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Daily Proof of Posting ˜ End of each day Ø Ø Listings on the daily journal page are compared with the appointment book to be certain that all patient visits have been entered. The total for receipts must match the amount of money received. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Bank Deposits ˜ Deposit slip Ø An itemized listing of the cash and checks taken to the bank to be credited to the practice’s account • The slip must bear the practice name, address, and account number. • The slip must be legible. • Cash is listed together. • Checks are listed together. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Fig. 63-6 Deposit slip. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Collections ˜ Accounts-receivable report Ø ˜ This report shows the total balance due on each account, plus an analysis on the age of the account. Management of collection efforts Ø All collection efforts must be handled tactfully. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Fair Debt Collection Practice Act ˜ It is illegal to: Ø Ø Ø Ø Telephone the debtor at inconvenient hours Threaten violence or use obscene language Use false pretenses to get information Contact the debtor’s employer, except to verify employment or residence Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Collection Follow-Through ˜ Timetable Ø Ø Ø 30 days: A statement including financial arrangements is sent. 60 days: A second statement is sent, accompanied by kind printed collection message or a telephone call. 75 days: Another telephone call is made and an amiable collection letter is sent. (Cont’d) Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Collection Follow-Through (Cont’d) ˜ ˜ ˜ 90 days: A third statement is sent with a stronger collection letter noting that the account will be turned over to a collection agency for action. 105 days: A telephone call is made, stating, “Unless account is paid by a specified date, account will be turned over to a collection agency for action/” 120 days: The account is turned over to a collection agency. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Collection Telephone Calls ˜ When placing a collection call: Ø Ø Speak only to the person responsible for the account. Never leave a message that could be misunderstood or reveal confidential information or might be considered damaging. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Accounts-Payable Management ˜ ˜ Money that is owed by the practice Expenses Ø Overhead that is the actual cost of doing business Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Dental-Office Overhead ˜ Fixed overhead Ø ˜ Business expenses that continue at all times; rent or mortgage, utilities, insurance, and salaries Variable overhead Ø Expenses such as dental and business supplies, independent contractor fees, laboratory fees, and equipment-repair fees Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Income ˜ Gross income Ø ˜ Total of all professional income received Net income Ø Gross income minus all practice-related expenses Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Disbursements ˜ Packing slip Ø ˜ Invoice Ø ˜ Itemized listing of the goods shipped that is enclosed with a delivery Bill to be paid Statement Ø A summary of all charges, payments, credits, and debits for the month Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Payment on Accounts ˜ Monthly disbursements Ø ˜ Cash on Delivery (C.O.D.) Ø ˜ Payment is sent to suppliers/ Payment is due at the time of delivery/ Petty cash Ø This is for small expenses/ Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Learning Objectives ˜ ˜ ˜ Describe check writing. Explain the purpose of business summaries. Identify common payroll withholding taxes and discuss the financial responsibility of the employer. (Cont’d) Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Learning Objectives (Cont’d) ˜ ˜ ˜ Discuss the purpose of dental insurance. Identify the parties involved with dental insurance. Identify the types of prepaid dental insurance. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Writing Checks ˜ Check terminology Ø Ø Ø Ø Check: a draft, or an order, on a specific bank account for payment Payee: the person named on the check as the intended recipient Maker: the one from whose account the amount of the check will be withdrawn Check register: a record of all checks issued and deposits made to the account Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Nonsufficient Funds ˜ A check will be returned to the payee marked NSF if there is not enough money in an account to cover the check. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Payroll ˜ ˜ ˜ Complete and accurate employee records must be kept at all times. A separate payroll sheet should be maintained for each employee. This sheet must have the employee’s full name, Social Security number, address, and number of exemptions claimed. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Payroll Deductions ˜ Income-tax withholding Ø ˜ Federal Insurance Contributions Act, or FICA Ø ˜ ˜ ˜ State and federal Commonly known as Social Security Health- or life-insurance coverage Personal savings plan Pretax retirement plan Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Monthly Payroll Calculations Gross Income – Deductions Net Pay Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Dental Insurance ˜ ˜ A plan that assists a patient financially with the cost of dental care. A person can obtain dental insurance in two ways: Ø Ø From the patient’s employer or from the spouse’s employer as a benefit through a group plan. As an individual plan. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Parties Involved in Dental Insurance ˜ Patient/subscriber Ø ˜ Group Ø ˜ The union or employment organization that has negotiated dental insurance as part of its benefits package Carrier Ø ˜ The person receiving the treatment The insurance company that pays the claims and collects the premiums Provider Ø The dentist who renders treatment to the patient Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Types of Prepaid Dental Programs ˜ Usual, customary, and reasonable Ø Ø Ø Usual: the fee that the dentist charges for a given service Customary: Fee within the range of the fees charged for the same service by dentists with similar training and experience within the same geographic area Reasonable: Fee justified by special circumstances necessitating extensive or complex treatment (Cont’d) Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Types of Prepaid Dental Programs (Cont’d) ˜ Schedule of benefits Ø Ø This is a list of fixed specified amounts that the carrier will pay toward the cost of covered services. The patient is responsible for the difference between what the carrier will pay and what the dentist actually charges. (Cont’d) Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Types of Prepaid Dental Programs (Cont’d) ˜ Fixed fee Ø Ø This is an established fixed fee for any treatment received by the patient. The dentist must accept the amount paid by the carrier as payment in full and may not bill the patient for the difference. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Alternative Payment Plans ˜ ˜ ˜ ˜ ˜ Capitation programs Direct-reimbursement plans Individual practice associations Preferred-provider organizations Managed care Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Learning Objectives ˜ ˜ ˜ ˜ Define managed care. Discuss and define basic dental terminology. Explain dual coverage. Identify dental procedures and coding. (Cont’d) Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Learning Objectives (Cont’d) ˜ ˜ ˜ Detail claims-form processing. Describe the procedure and purpose of claimforms follow-up. Identify insurance fraud. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Determining Benefits ˜ ˜ Benefits booklet Limitations Ø ˜ Dual coverage Ø ˜ ˜ ˜ Least expensive alternative treatment Primary and secondary coverage Birthday rule Coordination of benefits Nonduplication of benefits Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Fig. 63-11 American Dental Association standard claim form. (Courtesy of the American Dental Association.) Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Electronic Claim ˜ ˜ Software data are downloaded to generate and submit claims from the practice's computer to the carrier’s computer. Advantages Ø Ø Ø Speed of claim submission and payment Reduction in paperwork Fewer errors Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Claim-Form Processing ˜ ˜ ˜ ˜ It may be necessary to file a predetermination for planned treatment. All charges are entered into the patient's account history or ledger. A claim for payment is submitted to the insurance company. Financial arrangements made with the patient for payment of his or her portion of the fee. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Tracking Claims in Process ˜ ˜ ˜ ˜ Claims that have been submitted for predetermination but have not yet been returned. Claims that have been submitted for payment but have not yet been paid. Charges for claims that have been generated but have not yet been submitted. Claims that have been returned for any reason and have not yet been resubmitted. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Handling Overpayments ˜ ˜ ˜ Credit the check from the carrier to the patient’s account. Write a check from the practice to the patient to refund the amount of the overpayment. Make an entry on the account ledger. Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved. Insurance Fraud ˜ ˜ ˜ Billing for services not provided Changing fees on a claim form Disregarding the copayment or deductible Copyright © 2009, 2006 by Saunders, an imprint of Elsevier Inc. All rights reserved.