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Physical Therapy Billing and Payments: Keeping the Amounts in Sync

Physical Therapy Billing Payments

There is a lot going on in the physical therapy clinic from a billing and payments standpoint:

  • Patient visits are taking place. Claims/patient statements are being sent out.
  • EOBs/ERAs are coming back. Funds are being received in the bank account.
  • Copayments are being taken from patients daily.
  • Insurance/patient checks are arriving electronically or by mail on a separate schedule.

Does everything always add up?

Physical therapy payments are where the rubber meets the road. It does boil down to reimbursements:

  • The therapist provides a service and gets reimbursed for it.
  • Payments come in from one of two sources: the insurance payer or the patient.
  • Typically, patients dont owe anything until the insurance payer says they owe a balance.
  • The payer adjudicates the claim from the provider in due course of time.
  • Sends back a paper Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA).

The EOB/ERA would spell out how much the insurance is paying along with how much it is not paying. That would also be the point of receipt of the insurance payment. Electronic checks that goes straight to the bank or a regular check in the mail. The remainder of the balance could be passed to a secondary insurer or to the patient (possibly allocated to a copay already received) or even written off.

All of this sounds fairly simple but that is before you get into the details.

Collecting patient monies upfront: Avoiding trouble down the road

However, it is a good idea to not wait for the insurer to communicate the patient responsibility amount. This could even be a month out. The best practice would be to:

  • Estimate the patients benefits upfront, factoring in the patients deductible/copays etc.
  • Educate patients on what their benefits and charges are so that there are no surprises.
  • Collect the money before the EOB/ERA comes back with the exact patients balance.
  • At that time, the clinic would already have the funds available to allocate in their system.

Allocation is clearly an easier problem to take on compared with patient collections. Let us consider a potential scenario. The patient shows up for two months of services and then drops off. The insurer is backed up. When the EOB/ERA finally arrives, the practice is saddled with the responsibility of collecting what could be hundreds of dollars worth of patient statements from an inactive patient.

Having the right patient conversations and the right billing and payments processes in place would ensure a better patient experience and smoother cash flow for the clinic. As a side note, this is where the patient portal would help with ready access to payment information for the patient to consume.

Payments posting: Time for machines to step in

The next step would be to post the payments and allocate the amounts in the EMR/Practice Management System to specific services provided to the patient. Just to make sure we are on the same page, posting refers to the act of adding the payment into the system. Allocating would be the act of applying the posted payment to charges. Posting and allocation could be manual or automated. Let us get a bit deeper.

Here is a high level breakdown of the payments posting steps:

Manual EOB posting

  • Allocating payments to dates of service and charge line items by entering the payment amounts.
  • Allocating balances to the secondary payer/patient, writing it off, or leaving it in the system for claims follow up.
  • Posting the selected charges in the system with the possibility of editing the postings in the future.

Auto posting of ERAs

  • Importing the ERA electronic file into the system directly from an integrated clearing house or through a file upload.
  • Reviewing auto-postings and making any changes as needed, for example moving insurance write off amounts to follow up.
  • Posting all payments and transfers, creating the check in the software, and transferring all responsibility.
  • Posting patient payments received earlier for whom the ERA transferred responsibility to the patient.

Posting patient payments

(For charges not billed to insurance — over the counter goods, self-pay patients — or where the ERA/EOB transferred responsibility to the patient but no money was collected upfront).

  • Finding any patients that have money collected in the system that is not posted or allocated yet (we would want to avoid over billing them).
  • Creating a patient invoice or patient statement that is sent to patients spelling out what they owe.
  • Posting the check received from the patient in the system and allocating it to existing patient balances or to the patient statement that was sent out.

Tracking everything through reports

  • Reviewing and auditing the billing process to make sure nothing slipped through the cracks for partially posted and unposted payments.
  • Discovering any remaining balance payments that were not allocated to patient charges including ones the postings were started but not completed.

To be noted is that posting patient payments before there is a responsibility spelled out in the EOB/ERA could cause unnecessary headaches. We could end up double counting patient responsibility when the EOB/ERA comes back and adds patient amounts.

Reconciling payments with the bank: Getting everything to add up

The daily billing and payments process would reconcile what went into the bank account with what was posted in the EMR system. But issues could come up. Consider this scenario. The ERA was attached to a check that was processed via electronic funds transfer. The EMR posting got delayed because the biller was not in. Now the EMR would not be in sync with the bank account and would need to be specifically reconciled with the earlier funds transfer. Reports would help navigate this situation.

Clearly, there are several ways in which things could go wrong. We could end up dealing with money left on the table or worse. The reason could be inherent billing inefficiencies that could snowball into bigger problems down the road. How robust is your billing and payments process today?