# Collections

Contents

[7.1 Overview of Collections 7-2](#overview-of-collections)

[7.2 Legal Aspects of Collection 7-3](#legal-aspects-of-collection)

[7.2.1 Fair Debt Collection Practices Act of 1996
7-3](#fair-debt-collection-practices-act-of-1996)

[7.2.2 Debt Collection Improvement Act of 1996
7-4](#debt-collection-improvement-act-of-1996)

[7.2.3 Fair Credit Reporting Act 7-5](#fair-credit-reporting-act)

[7.2.4 Fair Credit Billing Act 7-6](#fair-credit-billing-act)

[7.2.5 Third Party Collection Program
7-6](#third-party-collection-program)

[7.3 Financial Responsibility 7-6](#financial-responsibility)

[7.4 Collection Process 7-8](#collection-process)

[7.4.1 Collecting Co-Pays, Deductibles
7-9](#collecting-co-pays-deductibles)

[7.4.2 Credit Card Helpful Hints 7-10](#credit-card-helpful-hints)

[7.4.3 Collection Guidelines for Non-Beneficiary Payments
7-11](#collection-guidelines-for-non-beneficiary-payments)

[7.4.4 Guidelines for Deceased Patient Collections
7-13](#guidelines-for-deceased-patient-collections)

[7.5 Collecting Insurance Reimbursements
7-13](#collecting-insurance-reimbursements)

[7.5.1 Guidelines for Claim Resubmissions
7-15](#guidelines-for-claim-resubmissions)

[7.6 Transworld Systems Debt Collection
7-15](#transworld-systems-debt-collection)

## Overview of Collections

IHS collection includes:

-   Collection of monies for either the total amount of the procedure or
    service, or the remaining deductible and coinsurance amount for
    treating non-beneficiary patients

-   Follow up with all insurance companies on any outstanding billed but
    not paid account

-   Follow up with insurers on incorrectly paid claims (less than the
    contractually agreed upon amount)

All collection is important to the survivability of each facility.
Regardless of the situation, IHS needs dedicated, trained staff either
in

-   Registration to collect and record monies received from
    non-beneficiaries, or

-   Account Reconciliation to follow up with insurance companies in a
    timely manner.

If all processes are completed at the facility *except* for collections,
the facility will not receive all of its intended reimbursement.

For more information on procedures for the collection and handling of
monies received, see the *Indian Health Manual*, Part 5, Chapter 1,
"Third Part Revenue Accounts Management and Internal Controls" (5-1.4),
which is available at this website:

<http://www.ihs.gov/PublicInfo/Publications/IHSManual/Part5/pt5chpt1/part5chapt1.htm#4>

The following sections provide information on processes, procedures, and
techniques for collecting from either the insurance company or from the
patient directly.

## Legal Aspects of Collection

### Fair Debt Collection Practices Act of 1996

The Fair Debt Collection Practices Act is a Federal law which regulates
the activities of those who regularly collect debts from others. The
reason for the law is that there was abundant evidence of the use of
abusive, deceptive, and unfair debt collection practices by many debt
collectors that contributed to personal bankruptcies, marital
instability, loss of jobs, and invasions of individual privacy. Many
states have adopted similar laws regulating the practices of debt
collectors.

While collectors employed by a facility are not covered by the Fair Debt
Collection Practices Act, the following provisions of the Act will help
avoid negative patient relations.

A debt collector --

-   May contact you by mail, in person, by telephone, or by telegram
    during "convenient hours" (commonly between 8AM and 9PM) and only
    once a day.

-   May not call a debtor repeatedly or let the phone ring with the
    intent to annoy.

-   May not contact you at work, if the collector knows or has reason to
    know that the employer forbids employees from being contacted by
    debt collectors at the workplace.

-   May not contact a debtor, if the debtor is represented by a lawyer
    (the debt collector must then contact the debtor's attorney).

-   May not continue to contact a debtor after the debtor has sent the
    debt collector a letter by mail within thirty days of the first
    contact, stating that he/she disputes all or part of the debt
    (however, the debt collector may begin collection activities again
    if she/he sends the debtor proof of the debt).

-   Must, within five days of the first contact, send the debtor a
    written notice stating the name of the creditor the debtor owes
    money to, the amount of money owed, what to do if the debtor
    believes he/she does not owe the money, and the name of the original
    creditor if different from the current creditor.

-   May not threaten violence against the debtor or his/her property,
    use obscene or profane language, repeatedly telephone the debtor to
    annoy or harass him/her, make the debtor accept collect telephone
    calls or pay for telegrams, or use false or misleading information
    in an effort to collect the "debt."

Additionally:

-   Contacting a debtor on a Sunday or any other day that the debtor
    recognizes as a Sabbath, could be considered harassment.

-   Repeated calls in one day could be considered harassment, even if a
    debtor has asked the collector to call back.

If a debt collector violates the law, it is the debtor's right to write
a letter concerning the activity to the nearest Federal Trade
Commission, and to file a federal or state lawsuit against the debt
collector for violation of the law, although there is usually a one-year
"statute of limitation."

### Debt Collection Improvement Act of 1996

The Debt Collection Improvement Act of 1996 (DCIA) fundamentally changed
the manner in which the Federal government is required to manage the
collection of its delinquent debts. The Act creates standards for
administrative collection, compromise, suspension, and termination of
Federal agency collections acts and is referred to as the proper agency
for litigation.

Congress has directed that the management of delinquent obligations is
to be centralized at the Treasury Department in order to increase the
efficiency of our collection efforts. The Administration strongly
supported this legislation and is fully committed to its successful
implementation.

This act was designed for the following purposes:

-   To maximize collections of delinquent debts owed to the Government
    by ensuring quick action to enforce recovery of debts and the use of
    all appropriate collection tools.

-   To minimize the costs of debt collection by consolidating related
    functions and activities and utilizing interagency teams.

-   To reduce losses arising from debt management activities by
    requiring proper screening of potential borrowers, aggressive
    monitoring of all accounts, and sharing of information within and
    among Federal agencies.

-   To ensure that the public is fully informed of the Federal
    Government's debt collection policies and that debtors are cognizant
    of their financial obligations to repay amounts owed to the Federal
    Government.

-   To ensure that debtors have all appropriate due process rights,
    including the ability to verify, challenge, and compromise claims;
    and access to administrative appeals procedures which are both
    reasonable and protect the interests of the United States.

-   To rely on the experience and expertise of private sector
    professionals to provide debt collection services to Federal
    agencies.

It is required of all Federal agencies to aggressively service and
collect delinquent debts, and to

-   Report all delinquent debts to credit bureaus.

-   Refer all eligible non-tax debts more than 180 days delinquent to
    the Department's Treasury Financial Management Services (FMS) for
    collection of FMS cross-servicing program.

-   Adopt rules and procedures authorizing the use of all available debt
    collection tools, including offset and administrative wage
    garnishment.

-   Ensure debtors are afforded due process as required by law,
    including the ability to seek verification and to dispute validity
    of the debt.

### Fair Credit Reporting Act

The Fair Credit Reporting Act is another law passed for consumer
protection. This act affects those who "issue or use reports on
consumers in connection with the approval of credit." It provides
protection of consumers' rights to privacy and limits the use of credit
reports.

Although health care patients are not usually refused credit based on a
credit report, your office may be affected by the Fair Credit Reporting
Act. If you refuse to grant credit based on a credit report, you must:

-   Tell the patient why credit has been refused.

-   Supply the name and address of the credit agency from which you got
    the credit report.

This gives the patient the opportunity to correct any errors or disputes
on the credit report.

### Fair Credit Billing Act

The Fair Credit Billing Act is another step in consumer protection and
should be followed by health care providers. This Act states:

-   Patients have 60 days from the date a statement is mailed to
    complain of an error.

-   The creditor (facility) must acknowledge this complaint within 30
    days of receiving it.

-   The error must be corrected or the accuracy of the statement
    explained to the customer within two complete billing cycles or a
    maximum of 90 days.

-   Creditors can be fined up to \$50 for each disputed transaction, if
    they do not follow these guidelines.

### Third Party Collection Program

The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA)
established the Third Party Collection Program. Under this program
Military Treatment facilities and Indian Health Service facilities are
authorized and obligated to bill health insurance carriers for the cost
of medical care furnished to all family members who are covered by
health insurance policies, such as group insurance, individual
insurance, and Medicare supplemental policies.

## Financial Responsibility

To protect the facility and to prevent future problems, the best thing
to do is to get a signature on a financial guaranty statement at the
time of service. Before making someone financially responsible, consider
the following:

-   Anyone signing the guaranty must be aware of the fact they are
    accepting financial responsibility.

-   Anyone signing the guaranty must be considered "competent" at the
    time they sign. Minors, mentally ill, or anyone under the influence
    of drugs or alcohol would not be considered competent.

With a guaranty statement properly signed and dated, the question of who
is responsible is eliminated.

**Who should sign the financial guaranty?**

An individual who accepts financial responsibility on behalf of the
patient.

Examples are:

-   **Mentally competent adult** -- Patients who are of legal age (18
    years old) or emancipated and are mentally competent.

-   **Mentally incompetent adult** -- If patients are over the legal
    age, but considered mentally incompetent, the financial guaranty
    should be signed by the patients' parents or legal guardian.

-   **Married patients** -- If services are for the wife, both husband
    and wife are responsible, so either one can sign or you can collect
    from either of them. If the services are for the husband, in some
    states you cannot hold the wife responsible for payment without her
    signature, so she should not be listed as guarantor if she did not
    sign the financial guaranty.

-   **Divorced or separated patient** -- The wife should always be
    listed as her own guarantor and the husband as his own.

-   **Minor children** -- Both parents are financially responsible for
    payment of their minor children's bills, so either parent can be
    listed as guarantor, and you may collect from either parent.

For non-beneficiaries, the financial guaranty signature shows who is
accepting financial responsibility for the patient's bill. Since
non-beneficiary patients accepting medical services at your facility are
financially responsible, balances may be collected without signature.
However, this does not mean a guarantor's signature is not important.

Often circumstances occur, preventing providers from getting the
necessary financial guaranty signature. Even if you do not have a
signature, non-beneficiary patients are still liable for payment under
the theory of implied-in-law contract or quasi-contract. If
non-beneficiaries receive services and do not pay for them, they would
benefit unjustly at the provider's expense. This is why, if
non-beneficiary patients accept medical services at your facility, it is
implied that they accept responsibility.

## Collection Process

There are five financial control points in the collection process:

**1. Before services are rendered**

Includes obtaining or verifying patient demographic and eligibility
information through telephone calls or online processes prior to the
scheduled appointment. Review payment requirements with
non-beneficiaries,

**2. During the registration process**

Includes obtaining and updating patient information and signatures on
required documents (AOB, MSP, etc.) by the Registration staff or Benefit
Coordinator.

**3. During the visit**

Includes completing the required charge tickets and documentation by the
nurse assistant, nurse practitioner, nurse. or provider during the
course of their conversations.

**4. At discharge**

Includes information obtained by and through the discharge process or by
the Appointment clerk.

**5. Collection follow-up**

This would include information obtained by Billing, Pharmacy, and/or
Collection staff.

The Registration staff plays a significant role in the first three
control points. By emphasizing the first three, the facility can easily
improve information gathering and full collection of accounts.

Information obtained from patients is the best way to get the required
data. While they are talking with the Registration staff or Benefit
Coordinator, patients are more willing to communicate because they are
in need of services and are more inclined to provide information and/or
to pay (non-beneficiaries) to be certain the services are received. Once
patients receive treatment, the urgency is gone, and the bill does not
seem that important anymore.

### Collecting Co-Pays, Deductibles

If the non-beneficiary patient has insurance and the facility plans on
filing the insurance, you need to collect the co-pay before the patient
leaves the office.

To make collections easier:

-   Put up a sign stating that all co-pays are expected at
    time-of-service unless other arrangements have been made. Visibility
    is important, as is keeping patients informed.

-   Don't underestimate patients. Most expect to pay their co-pay at the
    time of their visit, but if you don't ask for it, they won't pay.

-   The co-payment amount usually can be found on the insurance card or
    by calling the insurance company. It is better to take a minute to
    make the call than to simply assume no co-payment is required.

Even though there is no contractual obligation to collect coinsurance at
the time of service, doing so is a huge improvement in the overall
financial health of the facility. If the Registration or designated
Collection staff can be convinced to collect consistently, account
receivables will improve.

Reimbursement for the service or for co-payments should be in the form
of cash, check, credit card, cashier's check, money order, or traveler's
checks. Stamp all checks with the health care facility's endorsement and
the time of receipt.

*Do not accept*:

-   Two-party checks

-   Postdated checks

-   Multiple-party checks

-   Checks written in excess of the amount owed

### Credit Card Helpful Hints

Having patients use their credit cards to make payments is a proven way
to increase collections. Many patients may not have cash to pay their
bill in full, but usually, they do have credit cards available.

However, convincing patients to charge their bills can be a difficult
task. Registration staff may not know what to say; designated collectors
are afraid to offend patients; and others are overcome by patient
excuses and objections. To encourage paying for medical services with a
credit card,

-   **Put signs up** -- You need to have signs showing credit cards are
    accepted for payment of patients' bills. Post them where they are
    visible to patients.

-   **Put it on your statements for Non-Beneficiaries** -- Statements
    should make it clear that credit cards are accepted.

-   **"Sell" credit cards** -- Patients don't always pay attention to
    signs, statements, or policies, but Registration staff, Benefit
    coordinators, collectors, or others can remind the patients that
    credit cards are accepted.

-   **Convince them it's the right thing to do** -- Many patients don't
    want to put their medical bill on their credit card. You need to
    convince them that paying now is the right thing to do.

-   **Overcoming their excuses** -- Patients will offer many excuses for
    not paying by credit card. Be prepared to overcome these excuses.

-   **Get authorization at registration** -- Some patients are reluctant
    to pay at the time of service because they want to wait until their
    insurance pays. You can have these patients sign a credit card
    preauthorization form. This form gives you permission to charge the
    patient's balances to their credit card.

### Collection Guidelines for Non-Beneficiary Payments

*Collecting at time-of-service is a crucial practice many facilities use
inconsistently, if at all.*

Before the visit

When setting up an appointment for a non-beneficiary, it is always a
good idea to discuss the procedures that will be done immediately during
the visit, followed by the charges associated with the visit.
Non-beneficiary patients need to know about these charges and that
payment is expected at the time of service.

Prior to seeing the provider

An effective tool to determine whether a non-beneficiary has come in
prepared to pay is the check-in process itself. Non-beneficiaries are
required to check-in prior to seeing a provider. This is expected and
most patients do so without any prompting.

Always review the patient's insurance card for co-pay information and
collect any appropriate co-pays and deductibles at check-in. Add
verbiage on a Non-beneficiary payment policy form, and include the
customary standard return check fee.

At this point you will have an understanding of whether this patient
intends on paying.

After the visit

Even though the patient indicated at the time of check-in that he/she
would be able to pay for the visit, some patients, after seeing the
provider, will try to tell you that they cannot pay in full today. You
should ask them for other means of payment.

The following table shows some of the most frequent excuses and
appropriate responses.

  -----------------------------------------------------------------------
  The Excuse:                  The Response:
  ---------------------------- ------------------------------------------
  "I never had to pay at the   "I understand your concern. Paying at the
  time of service before with  time of service helps us to avoid
  my regular doctors."         additional administrative cost, which
                               saves you money. Plus, it lets you take
                               care of your payment now rather than worry
                               about a bill later. Would you like to pay
                               by cash, check, or credit Card?"

  "My insurance will pay."     "We verified your insurance coverage and
                               the representative noted a
                               deductible/copayment obligation that is
                               your responsibility. Would you like to pay
                               by cash, check, or credit card?"

  "I didn't bring my           "That's OK; we also accept cash and credit
  checkbook."                  cards."

  "Can I pay over time?"       "You can pay half now and the remaining
                               half in 30 days. How would you like to
                               handle your payment?"

  "I saw the doctor for only   "The visit is based on the care and
  five minutes. Why is the     counsel, not the time with the provider."
  bill so high?"               

  "You seem more worried about "I assure you we are concerned about your
  the bill than my care?"      care first. Payment for that care ensures
                               that we can continue to provide the
                               quality treatment you and other patients
                               expect."

  "Just send me the bill."     "I'm sorry; we can no longer delay
                               collecting payments."
  -----------------------------------------------------------------------

Of course, if the patient really did not bring any money, then you would
have to let him/her leave without paying. You cannot make a patient pay,
but you can make it difficult for them not to pay.

### Guidelines for Deceased Patient Collections

There are some legal implications to consider when collecting after a
patient has died. Here are some guidelines:

-   Check for all outstanding accounts for the patient. Note that the
    patient is deceased on all files. Change bill to read "Estate of
    John Do."

-   Find out the date the patient died. If it was recently, you may want
    to stop all normal collection steps. You should allow at least four
    weeks before resuming collection activity.

-   You can verify the death by checking the obituaries or contacting
    the registrar of deeds office. Be sure to obtain the next of kin, if
    you do not have this information already.

-   Contact the nearest relative or the county probate office to find
    out if there is an estate left and the name of the executor or
    attorney handling it. It is usually best to call the probate office
    instead of a relative because the relative may not honestly disclose
    estate information.

-   If the balance warrants and there are sufficient assets, file a
    claim on the pending estate. You do not need an attorney to do this.
    The executor or your county probate office can give you necessary
    forms and instructions. Many states have time limits for filing on
    estates.

-   If there is a surviving spouse, contact the spouse for payment.
    Husbands are responsible for payment of a deceased wife's bill. In a
    few states, a wife may not be legally responsible for payment, but
    many will pay out of honesty and loyalty.

## Collecting Insurance Reimbursements

Insurance companies are in the business of making and keeping money, and
if they can get you to give up your claim to their money out of
frustration, they\'re happy. Some insurance policies seem to lose half
of their initial claims and deny the other half, so don\'t be surprised
that you need to hassle them to pay you. But don\'t be discouraged,
either.

The process of following up with insurance companies is straightforward:

-   Contact them regarding the outstanding claim between 45-90 days,

-   Determine what is missing or why the claim has not been paid,

-   Send any additional information requested to include, if asked by
    the insurer, a duplicate copy of the claim, and

-   Document the entire conversation in the patient record.

In the event the insurance company does not respond in a timely manner
or is non-responsive, a detailed process needs to be followed.

-   The billing staff needs to call the insurance company to verify that
    the claims have been received. Ask specific, detailed questions. If
    the individual is not responding to the questions, request to speak
    with the supervisor. Document all telephone calls and include the
    date, time of the conversation, the name of the individual at the
    insurance office, and the resolution or outcome. This information
    will be supported in case the insurance company questions timely
    filing limitations.

-   If the claim is lost and the insurer has no record, resubmit a
    duplicate claim.

-   If the claim(s) has been received and is pending receipt of
    additional information, note exactly what is needed for the claim to
    be processed.

-   Additional information requested should be sent to the insurer in a
    timely manner.

-   If payment has not been made on the agreed upon date, follow-up with
    the insurer.

-   Follow-up when a message has been left and the insurance
    representatives has not returned a call.

-   Unpaid claims over 120 days should be forwarded to a collection
    service, such as Transworld Systems, for further collections.

-   Follow-up on inpatient accounts first -- these are usually the
    accounts with more services and cost.

-   Build a file on insurance companies. The file should include company
    name, address, phone number, names of individuals, and titles.

-   Involve the patient if you are unsuccessful with the insurers. This
    should be done as a last resort.

Continue to follow up with the insurance company until the claim has
been adjudicated.

### Guidelines for Claim Resubmissions

It is not a good idea to routinely send a duplicate claim form without
conducting a manual review of the claim. The insurance system will
reflect that they have two claims for the same date, which may appear to
be a duplicate.

To avoid confusion at the insurance company, all follow-up claims should
be identified as *resubmissions* or *tracers*.

## Transworld Systems Debt Collection 

Transworld Systems is in the business of profit recovery and has an
arrangement with IHS nationally to provide follow-up inquiries to
insurance companies for any facility in need of their service. With the
state laws in effect, insurance companies should pay claims within 30-45
days; however, their stipulation is when they receive all the
information needed from the provider or facility. This delay tactic
results in around 20% of the claims not being processed in a timely
manner.

Transworld is contracted to generate from one to a maximum of five
demands to the insurance carrier at a fixed flat fee per claim, for
those claims over 90 days old. In each communication the insurance
company is instructed to pay and communicate directly to the medical
facility. All monies, calls, and correspondence still pass through the
medical facility where the information regarding the claim is kept. In
addition, the Transworld process is integrated with the IHS RPMS system,
enabling them to obtain bills from the facility electronically.

Transworld's intent is to resolve from 60-to-95 percent of the claims in
the over 90-day category, enabling the medical facility to complete the
revenue cycle and concentrate their collection efforts with insurance
companies on claims less than 90 days old.

Since many insurers state in their policies and by-laws that they must
respond to third-party collection agencies or attorneys within a set
number of days, Transworld effectively utilizes these regulations to
their advantage. Many of their claims are reviewed more timely, at a
higher level, and if the insurer needs some specific information, they
will call or write stating exactly what is needed. The end result is
that the Collection department is working more productively, researching
and providing the information needed versus making follow-up collection
calls.

In summary, as a debt collection firm, Transworld rides on the
regulations stated in the Federal Fair Debt collection Practices Act
that "all portions of the claim shall be assumed valid unless disputed
within 30 days". The insurance companies do not want to be held
responsible for 100% of the claim, and secondly, the insurance company
must comply with the Federal law. Therefore, these outstanding claims
are handled and resolved within the 30-day timeframe.