Guide for Preparing a Purchase Order For Medical Assistants

Purchase order forms are available from office supply companies or can be ordered from a printer and
customized to the needs of the ambulatory care setting.
       
    · Purchase order number. A preprinted number that is used on invoices and statements from the supplier and on the check used to pay the invoice. It is also important for tracking the status of the order.    
       
    · Bill to address. Generally used when items are to be shipped to an address different from the address where the supplier will send the bill for goods or services.    
       
    · Ship to address. When items are to be sent by supplier; this must always be completed.    
       
    · Vendor information. Name and address of supplier where purchase order is to be sent.    
       
    · Req. By. States which individual or department has requested the item(s).    
       
    · Buyer. States the individual in the office who is authorized to issue a purchase order.    
       
    · Terms. Agreement between buyer and seller as to when payment is due.    
       
    · QTY. Quantity of item being ordered (number of units).    
       
    · Item. Vendor's catalogue part or item number.    
       
    · Units. How the item is soldindividually (ea.), by the box, case, or dozen. Many suppliers will not split units (i.e., sell less than a full case).    
       
    · Description. Brief description of item (helps as a cross-check for vendor in the event that an item number is entered incorrectly).    
       
    · Unit Price. How much one unit (ea., box, case, dozen) costs.    
       
    · Total. Cost of one unit multiplied by the number of units being ordered.    
       
    · Subtotal. Sum of the "Total" column.    
       
    · Tax. Sales tax required by the state.    
       
    · Freight. How much the customer must pay to have the order delivered (not always applicable).    
       
    · Bal. Due. The sum of the subtotal, tax, and freight chargesthis is how much the office will be billed.    

Verifying Goods Received    
       
Proper purchasing procedure does not stop with the completion and mailing of the purchase order. When goods are received, it is necessary to verify that the correct items and quantities were shipped by the vendor. As each item is unpacked, the item number and quantity received are checked against the office copy of the purchase order. If any discrepancies are noted between what has been received and what was ordered, they should be indicated on the office copy of the purchase order and the vendor should be contacted immediately and arrangements made to ship any missing items or provide return procedures for any incorrect or overshipped items.    
       
Preparing the Invoice for Payment    
       
When an invoice is received from the vendor (it may be included in the shipment or mailed later), it is necessary to confirm that charges are correct for the items ordered and the shipment received.     The invoice should be compared to the original purchase order to verify quantities, unit prices, and other charges. If there are discrepancies, contact the vendor's accounts receivable department to have the errors corrected before you send payment. Once the invoice and purchase order are reconciled, the purchase order number is noted on the invoice (if not already printed there by the vendor) and the invoice is marked as "OK to pay." The invoice is then forwarded to the accounts payable department in the office for payment.

Accepting Checks Guidelines

Accepting Checks    
       
When accepting checks from patients and other individuals, take a few minutes to inspect the check for this may eliminate checks returned from the bank for various reasons.    
       
· Inspect the check for correct date, amount, and signature.    
       
·  Do not accept a third-party check (a check written to the patient from another person or company) unless it is from the insurance carrier.    
       
· If a deposited check is returned from the bank marked "insufficient funds," adjust the check account balance accordingly. Follow office procedure for notifying the patient that the check was returned.    
       
Lost or Stolen Checks    
In the event that a check is missing and is thought to be lost or stolen, report this to your bank immediately. In some cases, you may be advised to stop payment to prevent unauthorized cashing of the check. In other situations, the bank may place a warning on the account, advising bank representatives to be especially careful about checking signatures to detect any attempt at a forged signature.    
       
Writing and Recording Checks
       
Part of daily financial practices includes writing checks to pay bills (accounts payable), refunds of overpayment, and replenishment of petty cash. It is important that checks be typed or written legibly to avoid bank errors. Checks should be dated and must include the name of the payee and the amount of payment entered both in figures and in words. It is also advisable to complete the "memo" line on the check indicating what the check is for or, in some cases, an account number for reference purposes. In addition, business checking accounts need to make reference to the disbursement of the funds. Disbursement accounts are numbered accounts that break all expenditures into categories (i.e., salaries, rent, supplies) in the general ledger. At the end of the year, the accounts in this ledger will provide the figures for all tax-deductible expense. When the accountant completes the tax form for the practice, the information from the disbursement accounts is then easily transferred to the tax forms. Before preparing the actual check, complete the check stub, which is the only record of payments made from the account. The stub should include the same information entered on the check as well as the disbursement account name or number for the accountant. Remember, it is critical for tax purposes that each check stub contain disbursement information so the bookkeeper can post the information to the correct accounts in the general ledger. When the checks have been prepared, verify that the check amounts agree with the amounts written on the stubs, then subtract those amounts from the checkbook balance.
       
Rules for Writing Checks    
       
Follow these few rules to assure that checks are properly written and recorded.    
       
· Check that the numerical and written amounts agree.    
   
· Check that everything is spelled correctly.    
   
· Determine that the check has been signed by an individual with signature privileges.    
       
· Follow office procedure for having the physician or office manager approve all expenditures and/or sign all outgoing checks.    
       
· Check that it is payable to the correct payee and that the current date is used.    
       
Reconciling a Bank Statement    
       
Each month the bank will send a statement for the checking account (Figure 17-10). The statement will show the account balance according to the bank's records, a listing of all checks that have cleared the bank, deposits received by the bank, and any service charges deducted from the account. It is necessary to reconcile the entries in the checkbook against this statement to be sure there are no errors either in the checkbook or in the bank's records.    
         
Purchasing Supplies and Equipment    
       
It is important to ensure proper control over purchasing of supplies and equipment for several reasons:    
       
1. To avoid purchase of unnecessary items    
   
2. To avoid duplication of items purchased    
       
3. To prevent employees from ordering items for personal use    
       
4. To provide a system for payment of only those items properly ordered and received    
       
In order to accomplish these things, the first rule of purchasing should be that: nothing is ordered or paid for without a purchase order or purchase order

number. A copy of the purchase order is sent to the supplier and a copy is retained by the office for verification of shipment and payment of invoice.

Accounting Terms For Medical Assistants

Types of Accounts    
       
Checking and savings accounts are the two primary types of accounts.    
       
Checking Accounts    

The checking account is the primary account type the medical assistant will use in the ambulatory care setting. Stated simply, a checking account allows the depositor to write checks against money placed in the account. Today, there are many variations on checking accounts; in the event that the medical assistant is responsible for establishing a new account, it is worthwhile to investigate features of different checking accounts both within the same bank and at competing banks.    
       
Some features that may differ include:    
       
    · Interest paid    
       
    · Monthly fees    
       
    · Per check fees    
       
    · Automated teller machine (ATM) access and fees    
       
    · Initial deposit and balance requirements    
       
    · Fees for checks    
       
    · Special services extended free of charge such as notary, cashier's checks, traveler's checks, balance reconciliation, and services designed expressly for small businesses.    
       
When selecting an account, do not only choose the account with the lowest fees. Also consider convenience, the relationship possible with a given bank, number of bank locations, and other factors.    
       
Savings Accounts    
       
Savings accounts were initially distinguished from checking accounts because they paid interest on the money deposited. However, many checking accounts also pay interest now as well. In either case, the interest is usually minimal on accounts that give immediate access to the deposit. Some money market savings accounts pay a higher rate of interest, although they require a higher initial deposit and maintenance of a higher balance, usually around $2500. Access to the account is limited; often the depositor is permitted to write three checks a month on the account. Savings accounts are useful when money is not needed on demand or when putting monies aside for long-term goals.    
       
Types of Checks    
       
For the most part, the ambulatory care setting will use a standard business check. However, for special     purposes, it is useful to understand the other check types available:    
       
    · A cashier's check is often used when a check must be guaranteed for the amount in which it is written. Because a cashier's check is the bank's own check drawn against the bank's accounts, the recipient has the assurance that the check will clear. Cashier's checks are obtained at the bank by paying the bank representative cash or sometimes a personal check for the amount of the cashier's check.    
       
    · A certified check is the depositor's own check which the bank has "certified" with a date and signature to indicate that the check is good for the amount in which it is written.    
       
    · Money orders are available from banks and the United States Postal Service. They are purchased with cash and are used in ways similar to cashier's checks.    
       
    · A voucher check is a type of check with a stub attached to it which can be used to indicate invoice dates, services provided, and so on. Many payroll checks are written on voucher checks; the voucher check is also frequently used in the ambulatory care setting for accounts payable.    
       
    ·Traveler's checks are available in most banks and are convenient and safer to use than cash when traveling. They are written in specific denominations ($10, $20, $50) and require a signature when purchased and when used.    
       
Deposits    

Deposits are usually made daily since they serve as another proof of posting and because it is unwise to leave large sums of money in the office overnight. The office should have a rubber endorsement stamp from the bank to imprint on the back of all checks before depositing. Be sure all checks are stamped before making the deposit slip. Because the endorsement transfers rights to whoever holds the check, it is important to take certain precautions. A blank endorsement consists of a signature only (whether in pen or with a stamp) and presents a danger in that, if the check is lost or stolen, someone else could endorse the check below the signature and cash it. A restrictive endorsement should be used on all checks received in the ambulatory care setting. Restrictive endorsements include the signature as well as the words "for deposit only" or "pay to the order of (include the name of bank)." This restricts the use of the check should it be lost or stolen.    
       
Most business accounts use a deposit slip similar to the one in Figure 17-8. They are always filled out in duplicate one copy to accompany the deposit, one to     be retained for office records. As shown, these deposit slips are longer than those generally used for personal accounts and have room for more entries and more information. If your day sheet has a built-in duplicate deposit slip, it will have been completed during posting.

Computerized Systems Of bookkeeping and Office Works For Medical Assistants

With increasing numbers of medical facilities turning to computers for word processing, patient records, and bookkeeping, there is an ever-increasing number of medical practice software packages on the market. These ready-made systems are available for both single or dual physician offices and large group practices. Often, a consultant is hired to design a customized program, though this is far more expensive than purchasing mass-produced software. When selecting and using any computer bookkeeping software:    
       
· Be sure the system will meet not only current needs but future needs as well (some packages can be expanded to grow with the practice)
· The hardware (computer system) must be powerful enough to run the program.    
       
· To use the automated system, it is necessary to understand the workings of the manual procedures on which the computerized accounting is based.    
       
Computerized Patient Accounts  
A software management program offers many advantages in managing patient accounts. The program automatically creates a charge slip at the time of each patient's visit and calculates the charges after the physician's examination (Figure 17-6). The management program also creates and updates the ledger card, adds new names to the list of patients and to the daily log, and transfers data to produce insurance forms, statements, a list of checks received each day, and deposit slips. In addition, the program automatically ages accounts at each billing cycle and creates billing statements. As a result, when patient accounts are computerized, practice collections usually increase.    
       
Computerized Patient Ledger       
The computerized patient ledger contains personal information about each patient, including the name, address, and telephone number, the person responsible for payment, and all insurance carriers. The ledger also lists all previous office visits and the procedures, procedure codes, charges, payments, and adjustments for each visit. Most account management software can be customized to meet the special needs of the individual ambulatory care setting.    
       
As information is entered from the charge slips, the computer automatically updates the ledger by adding a description of each procedure and procedure code and each diagnosis and diagnosis code (see Chapter 18 for coding information). It automatically posts the charges and calculates the balance after credits and adjustments are entered.    
       
The ledger may be viewed on the computer screen or printed out at any time. If a patient calls with a question regarding an account, the medical assistant can call up the ledger on the screen by entering the patient's name. When a correction is needed, it can be made on the screen and stored (Figure 17-7).    
       
As useful and efficient as a computerized bookkeeping system can be, it is important to recognize that an inadequate manual system will not get better once computerized. Also, it takes far more time than predicted to move to a computerized system, train personnel, and enter patient data. A manual and computer system may need to run concurrently for several months.    
       
Banking Procedures
Understanding banking accounts and services, making deposits, writing checks, and reconciling accounts are all a part of daily financial practices. While many banking services are similar from one bank to another, it is a good idea for the medical assistant in charge of maintaining daily accounts to investigate the banking resources of the local community. In an effort to secure new business, many banks compete for customers by offering special services that can be of utility to the ambulatory care setting.

Ledger Cards For Medical Assistants

It is, of course, necessary to maintain a record of services provided and charges and payments for each individual seen in the office or hospital. This is accomplished by creating a separate ledger for each patient household. In order to easily keep track of patient accounts there should be a responsible party for each family whose name and address will appear in the mailing window at the top of the ledger card (Figure 17- 3). Services or payments for any other members of the family seen in the office or hospital will be entered on the same ledger and the patient's first name (or coded number) will be written in the space provided (reference space columns). If the office is doing insurance billing or receiving insurance payments, it is extremely important that charges and credits be applied to the correct family member so never omit this step when making entries.    

The columns on the front of the ledger card will show the date of activity, name of patient, a clear description of type of activity, amount of charge or credit, adjustments (if any), and the family's total balance due.    
       
The back of the ledger card in Figure 17-3 includes all pertinent patient and insurance information needed for collection purposes.    
       
The ledger is placed under the charge slip or receipt, directly on the day sheet, and aligned prior to posting. Never post any patient entry without the patient's ledger in place. This prevents recording information on the day sheet and thus omitting it inadvertently from the patient's ledger.

Charge Slips and Receipts    
       
The charge slip (or superbill) shown in Figures 17-1 and 17-4 is a three-part form that:    
       
1. Provides patients with a record of account activity for the day    
       
2. May eliminate the need for separate insurance forms    
       
3. Provides the office with a copy of that day's services, which will be filed in the individual's chart    
       
Charge slips can be ordered to fit the practice. Information on the charge slip includes not only the amount of the day's transaction, but procedure codes and diagnosis codes that satisfy the requirements for most insurance companies to reimburse the patient or physician. When the slips are ordered, the office will indicate the most common services provided, which will be printed on the form with the applicable procedure codes (and some blank lines for infrequently used procedures). After seeing the patient, the physician places a check mark beside the services rendered. In addition, there is an area for the diagnosis code to be filled in by the physician at the same time. The charge slip is printed with the name, address, and telephone number of the practice.    
       
Unlike charge slips, the receipt forms (Figures 17-1 and 17-5) used for payments on account are not customized other than to have the name, address, and telephone number of the practice preprinted. The receipt form is only used when someone makes a payment on account and no services are rendered that day. There is only one copy of this form, which is given to the patient after the payment is recorded. Like many charge slips, the receipt form may include a space to write in the date of the patient's next appointment. It is not necessary to keep any other record of the transaction, since it is entered on the day sheet and ledger card at the time the receipt is filled out using the write-it-once procedures.    

Day Sheets For Medical Assistants

The day sheet is used to list or post each day's charges, payments, credits, and adjustments: the daily financial transactions. This is an important part of the overall bookkeeping process, so legibility and absolute accuracy are critical. At the close of each business day, the day sheet will be balanced to provide a complete picture of all patient financial activity for that day. Those balances carried over from day to day will provide the accumulated data needed for month-end closing.    
       
The day sheet consists of five sections (Figure 17-2), the first three of which are used when posting transactions and the last two of which are for balancing, proof of posting, accounts receivable control, and accounts receivable proof.    
       
· Section 1 is where individual transactions are posted, using the ledger card and charge slips, or receipt forms. The information here includes the date, patient name, description of transaction or service, charges, credits, and previous and current balances. This is the write-it-once portion of the day sheet.    
       
· Section 2 is the deposit portion (some companies make this part detachable to be used as an actual deposit slip). If a transaction includes a payment, the payment amount will be listed under the appropriate right-hand column showing method of payment after the ledger portion is posted.    
       
* Section 3 is for business analysis. These columns might be used for recording payments or charges to be credited to different physicians or they are often used as a breakdown for types of service (i.e., office examination, hospital visit, surgery, and so on). The use of this area will vary from practice to practice.    
       
· Section 4 is where transactions are totaled and balanced at the end of the day.

· Section 5 is used to verify the daily balances and to balance and track cumulative accounts receivable figures. The total accounts receivable figure shows how much is owed to the practice by all patients to date, allowing the physician or administrator to see the total outstanding balance at a glance without having to add hundreds of individual balances.

Good Working Habits For managing the day-to-day finances

In managing the day-to-day finances of the ambulatory care setting always observe two guidelines:    
       
1. Always work with care and accuracy; it is extremely easy to transpose numbers (i.e., writing 23 instead of 32) or make other posting errors. A moment of carelessness can result in hours spent trying to find the mistake.    
       
2. The work must be kept current or it may become an overwhelming chore.    
       
Also, develop these habits:    
       
· Form your numerals and letters carefully with good penmanship.    
       
· Use a consistent ink color.    
       
· Align your columns.    

· Be careful when carrying decimal points.    
       
· Double-check your math.    
   
· If a mistake is found, neatly cross out the incorrect figure and write the correct figure above it.    
   
The Pegboard System    
       
A complete pegboard or write-it-once system consists of day sheets, ledger cards, charge slips, and receipt forms. The forms are designed to work together to simplify the task and to avoid costly and embarrassing mistakes in patient accounts. All forms will have matching columns that align and are held in place on the pegboard when the system is in use (Figure 17-1). The forms are generally carboned or on NCR© paper (no carbon required) which permits entering of charges, credits or adjustments, or posting, onto the day sheet, charge slip, or receipt and the patient's ledger card simultaneously. Some major advantages of the pegboard system include:    
       
* The system is efficient and time saving by only having to enter information once, it is impossible to enter incorrect information on one of the forms due to copying errors or errors of omission. (This can also be a major disadvantage when an error made and entered appears on all forms.)
* The day sheet provides complete and up-to-date information about accounts receivable status at a glance.    
* A pegboard system is relatively inexpensive.    

Several companies produce pegboard systems, all with slight variations. Though the information and method of use are the same, it is not usually possible to "mix and match" forms from different companies since even a slight difference in column width or location will make the forms incompatible.

Determining Patient Fees

In today's managed care climate, ambulatory care settings have many different arrangements with insurance carriers and with their patients. Often, the office or urgent care center will have a contract with HMO-type insurance carriers in which they agree to a specific fee for certain procedures. In this instance, the physicians of the center are usually known as participating providers. In some plans, the patient pays what is known as a copay amount for each visit. In other situations, the patient is liable for a certain percentage of the fee. This is usually known as coinsurance. Ambulatory care centers may also accept Medicare and Medicaid patients, usually for a predetermined fee.    

The situations for payment are numerous and varied, and in this unit will examine them in greater detail. Of critical importance at the onset of the patient relationship, however, is that both patient and physician have an understanding of their fiscal responsibility to each other. The patient must also be made aware of any fees imposed for missed appointments, telephone consultation, and other charges the patient may not anticipate. It is not unethical to charge for these, but it is not recommended without prior notification to the patient.    

Usual, Reasonable, and Customary Fees    
A fee schedule often used by Medicare and some insurance carriers is referred to as usual, reasonable, and customary fees. Usual refers to the fee typically charged by a physician for certain procedures; reasonable refers to the midrange of fees charged for this procedure; and customary is based on the average charge for a specific procedure by all physicians practicing the same specialty in a defined geographic region.   

Discussion of Fees    
The manner in which billing and a discussion of fees is addressed will vary depending on the type of medical facility, the needs of the practice, and the professional services rendered. Years ago, personnel     in medical facilities would typically ask patients at the end of their visits if they would like to pay then or be billed later. It is now customary and in some offices mandatory to request payment at the time of service. Today, the fee for the visit is simply stated, and if a person does not have cash or a check, the option of credit card payment is often provided. If a patient is a member of an HMO, and the ambulatory care setting is a member of that HMO, then the patient is typically responsible only for any established copay amount.

Inherent to the total billing process is the necessity of initially establishing a fee schedule and informing patients of charges and exactly what portion of the bill they are expected to pay. Ideally, the patient should be told the approximate cost of the procedures at the start of treatment. Charges for some daily routine visits may be submitted to the insurance carrier, and the office may not know what portion is covered until information is received from the carrier. The facility may accept numerous insurance plans and participation in these plans determines the amount that the patient owes. Many misunderstandings will be prevented and subsequent collection of delinquent accounts expedited when the office staff is well informed about insurance reimbursement and carefully explains fees to the patients.

Adjustment of Fees    
If another physician or health professional is provided a service through the office, professional courtesy may be extended. This may mean providing a service free of charge, or at a discount of 2 to 50 percent, as determined by office policy, when treating a physician or an allied health professional. If the physician or other professional has health insurance, the office may choose to use it to cover the service. In certain cases, the physician in charge of the office may prefer to extend total professional courtesy. However, in today's health care climate, it is rare for an office to totally refuse to accept insurance payments. Discounts, less commonly, may also be extended to clergy, pharmacists, and dentists.    
       
Other adjustments may be made for patients with limited income. For example, if a patient had been going to the ambulatory care center for many years, but recently lost a job or ran into unfortunate financial circumstances, the physician may ''write off," a portion of the bill. This sum will be written off against the physician's income, and the patient will not have to pay any amount or will pay a reduced amount according to what is affordable. This courtesy usually applies to only existing patients and is not offered to new patients.    
       
Adjustments also may occur with Medicare, Medicaid, Blue Shield, and private health insurance patients. Physicians who accept assignment in these programs agree to accept what the insurer allows. For instance, a fee of $150 may be charged, but $95 is accepted as payment in full by the provider. The remainder of the bill, $55, is written off so that the patient is not responsible for this remainder of the fee.    
       
Medical assistants must be aware, however, of the pitfalls of adjusting or reducing fees. It is difficult to accept all hardship cases and still remain a viable practice. It is always a helpful resource to patients who cannot pay to be given the names and telephone numbers of local health care clinics that may be able to accept them as patients on a sliding scale or no-fee basis.    
       
Credit Arrangements    
If the patient will need to pay a substantial out-of-pocket amount, it is helpful to make the patient aware of this and discuss different credit arrangements that can be made. Many ambulatory care settings will work out installment payments, usually without finance charges, to spread the cost of services over a pre-agreed period of time. This eases the financial burden on the patient and also makes it more likely that the office will be able to collect monies due.