Fam Pract Manag. 2004 Sep;11(8):60.

Writing off patient balances


Our practice currently writes off all patient balances less than $25 as bad debt. We file a note in the account indicating the balance due in case the patient returns to our practice. Is this a reasonable policy? If we write off the balance as bad debt, can we ask the patient for payment at a later date?


I would suggest you attempt to collect the balances under $25 before writing them off. However, if your attempt is unsuccessful, implementing a policy to write off these small balances sounds reasonable. Otherwise, your collection personnel may be spending time every month sending statements and following up with patients who never intend to pay. Chasing these patients is a waste of your practice’s time and money, and this write-off policy helps demonstrate where you want your collection personnel to focus their efforts.

Filing a note about an outstanding balance in the patient’s record is also a good idea. It will remind you not only to attempt collection if the patient returns but also that you have been taken advantage of financially by this patient in the past. This gives you the opportunity to protect yourself from being victimized again by a nonpaying patient.

If a patient has an outstanding balance with your practice, you have the right to attempt to collect that debt, regardless of how long it has been or whether you have already written off the debt. The write-off is an internal issue in your practice; it’s not an agreement with patients to erase a debt.

However, there is one exception to this rule. If, as part of your write-off policy, you send a patient IRS form 1099-MISC for the amount owed as a “forgiveness of debt,” you are stating that you are no longer attempting to collect on the amount owed. You should not send a 1099 in the normal course of business for small amounts. This should be reserved for extreme situations. The 1099 would require the patient to declare the amount of the debt as income, indicating that he or she received something of value from you and is better off after the forgiveness than before it. In this case, you could not go back and attempt to collect the balance.

Billing for precepting


Our family medicine residency program is trying to get precepting coverage for our resident physicians when our faculty has development workshops and retreats. Should we bill for these services through a reciprocal-billing or a locum-tenens arrangement?


To assess whether either of these arrangements might work for your program, you should consider several factors. Under a reciprocal-billing arrangement, the following requirements must be met:

  • The maximum continuous absence of a physician cannot exceed 60 days.

  • No employment relationship can exist between you and the substitute physician. However, you can see each other’s patients on an occasional reciprocal basis.

  • The substitute physician must be certified with your insurance carriers, including Medicare.

  • The substitute physician must be an independent physician who has his or her own separate practice and bills under his or her own physician identification number.

If you choose this reciprocal-billing arrangement, either you or the substitute physician may bill. If you bill for the substitute physician’s services, add modifier -Q5 to all procedure codes and indicate the unique physician identification number of the substitute physician on the claim. Keep in mind that you may set up a reciprocal-billing arrangement with more than one physician, and your arrangements may be unwritten.

To bill for the precepting coverage as a locum-tenens arrangement, the requirements are different:

  • The substitute physician does not need to be certified with your insurance carrier, Medicare or otherwise.

  • The substitute physician does not need to have an established medical practice. Locum-tenens physicians generally move from practice to practice filling in for absentee physicians.

  • The substitute physician must perform all services in your office.

  • The substitute physician must have a contractual employment relationship with you, either directly or through an employment agency.

  • The substitute physician must be reimbursed on a per-diem basis or a similar fee-for-time basis.

Note that when you bill for the locum-tenens service, you should add modifier -Q6 to the procedure code.

Regardless of which of these two arrangements applies to you, remember that your substitute physicians must still meet all the teaching physician requirements for your residency program.


Copyright © 2004 by the American Academy of Family Physicians.
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