Is your practice managing the collection of higher deductibles and copays appropriately? Skin-in-the-game insurance has become the norm for most employers. The average deductible for all employer-paid insurance in 2014 was $1,217, according to a report by the Kaiser Family Foundation. A third of all employees of smaller employers, those with 199 or fewer employees, paid deductibles of at least $2,000. In addition, co-pays are also increasing. This means, of course, that physician practices must work hard to collect more of their revenues at the time of service directly from the patient and that practices must manage that process carefully. Many patients now pay with credit cards, but many practices are also experiencing increased patient payments in the form of checks and cash, resulting in the need for practice managers to tighten up cash controls.
Now’s the time to review your practice’s written cash (checks and currency) handling policies.
- Follow the 4 Ws of cash accountability. Big picture, you’ll want to restrict access to cash to as few people as possible — and ensure that funds are traceable to specific cash handlers. Ask yourself these questions:
– Who has access to cash?
– Why do they have access to cash?
– Where is the cash?
– What has occurred from the transaction's beginning to end?
- Segregate duties. Cash handling duties should always be segregated. That simply means that the person recording receipts should not be the same person responsible for collecting or for depositing the cash and checks from patients. For an additional layer of segregation, make sure that a third person reconciles the daily receipts recorded in the billing system to the deposits of cash and checks recorded in the general ledger. Be sure to use processes that provide an audit trail so you can see everyone who handled the cash along the way.
- Checks received from patients should be stamped with a restrictive endorsement immediately upon receipt from the patient. The use of electronic check scanners provided by your bank for deposit of checks saves time, avoids errors, improves cash flow and improves internal controls. Paper checks must be shredded in a timely manner after reconciliation of the bank account has been completed at the end of each month.
- Watch the cash drawer. Payment patterns will dictate how much change you need for the cash drawer each morning (in general, $200 in small bills is a good starting point). Assign cash drawers to specific staffers during the day, and have at least one other employee count the cash at least once a day. Of course, don’t mingle cash payments with petty cash. And never borrow from the cash drawer (even $10 for lunch!) or others will, too.
- Reconcile promptly. Consider splitting morning and afternoon front desk collections and reconciliations at lunch breaks or when the afternoon shift begins.
- Close out correctly. At the end of the day, account for all patients, charges and receipts. Check that all patients scheduled for the day have had charges and payments posted to them. Code appointments as "cancelled" or "no-show" for patients who did not show up for their appointment and close them out. Finally, reconcile the receipt total with the day’s bank deposit.
- Deposit cash daily. The less cash you have on hand, the less exposure you have to theft or loss. Count cash in a non-public area not easily visible to others, and use a “buddy system” when funds are carried from one location to another. Finally, compare deposit receipts from the bank with your general ledger deposit records.
Establishing good cash handling procedures and internal controls is a vital defense against theft and fraud. Contact our office today for an in-depth review.