Corporate Compliance

* What is the best way to handle a patient's credit balances?
* Is it a compliance issue when physicians order tests for their spouse or family members?
* Pay-per-view article: Tips for auditing inpatient bad debt

Compliance Monitor, February 27, 2003

What is the best way to handle a patient's credit balances?

Q: Can you give some advice on the best way to handle a patient's credit balances? We want to notify a patient that she has a balance, but we're having trouble locating her.

A: Finding the time and resources to manage your organization's credit balance accounts is difficult, especially since the work associated with refund processing does not produce revenue. However, refund processing must be an active part of the business office function.

You are required by law to refund Medicare and Medicaid overpayments. Also, some managed care contracts specify that you must process refunds for overpayments within a specific time period.

Healthcare providers are also subject to abandoned property laws, which are pertinent in determining patient refunds. For example, if you cannot locate a patient within a certain number of years, you are generally required—under abandoned property laws—to turn over the patient's credit balances to the state. Each state has different requirements for how much time should pass before this must happen, so check your state laws. Several states require that patients have at least $25 due back in refunds before these balances must be transferred. Once these funds are turned over, the state will attempt to locate the patient and disburse the money.

In some cases, refund processing costs may exceed the amount of the actual repayment. Your organization must determine this threshold based on its costs, and then work accordingly. Once you establish this threshold, notify patients in their registration documentation to avoid confusion. Remember, the Medicare and Medicaid programs require that all overpayments are due, regardless of the dollar amount.

It is also essential that each organization develop a process to address credit balance accounts. It makes good accounting sense to track these accounts to determine net accounts receivable. How you handle individual cases depends on your organization, so devise and document a policy that works for you. But all organizations, in an effort to minimize accumulating credit balances, should use an approach that includes efficient and dependable data entry, along with timely follow-up.

This question was answered by Michael A. Greene, CPC, a senior consultant with Pershing Yoakley & Associates, a health care consulting practice in Knoxville, TN.

Pay-Per-View article

Tips for auditing inpatient bad debt

Last year, the Office of Inspector General (OIG) released report after report on its audits of inpatient bad debt across the country. The scrutiny continues this year as part of the agency's nationwide audit of inpatient bad debt.

Go to "Tips for auditing inpatient bad debt" for the rest of this article. The cost is $10. Subscribers to the online version of Health Care Auditing Strategies have free access to this article. Subscribers to the print edition can find it in their February issues.

A $30 steal!

You can read this article—and much more—in the entire February issue of Health Care Auditing Strategies. Your cost: Four stories for only $30! You'll learn how to validate your compliance program's effectiveness through auditing, and how your managed care organization should comply with state prompt-pay regulations. Choose between a PDF and HTML version for just $30. Online subscribers have free access to this issue; print newsletter subscribers can find it in their mailboxes.

Is it a compliance issue when physicians order tests for their spouse or family members?

Q: One of our physicians orders tests for his spouse and other family members. Is this a compliance issue?

A: It may be both a compliance issue and an ethical one. According to the AMA's ethical opinion (E-8.19), "physicians generally should not treat themselves or members of their immediate families." The AMA was concerned about professional objectivity, the effect on the physician's medical judgment, the patient's possible discomfort in disclosing sensitive information, and other issues. There are, however, exceptions for medical emergencies and medically necessary tests in remote areas where another physician is not available. According to the AMA opinion, "it is not appropriate [except in emergencies] for physicians to write prescriptions for controlled substances for themselves or immediate family members."

Compliance issues would arise if the patient was a Medicare beneficiary. Medicare does not cover charges for services provided to a patient who is an immediate relative of the physician or a member of the physician's household. (See 42 C.F.R. § 411.12.)

This question was answered by Stuart Showalter, JD, MFS, director of compliance for Orlando Regional Healthcare System.

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