Payment Posting

July 1, 2003

How to evaluate your payment posting process

Business is booming -- that much is clear by the stacks of checks delivered each morning to your practice's mailbox. Collections are stable, despite the news that you hear in the healthcare press.
Everything is just fine. Isn't it?

Maybe not. Consider the case of a practice I recently visited that was dealing with an office manager's departure. After listening to a physician boast about the excellent state of affairs his practice was in, I was surprised to discover a batch of uncashed checks in the former manager's desk, buried beneath some old papers.

The manager, it turns out, had volunteered to post payments every other week, but could never seem to get through her stack. For two years, she'd dump whatever she couldn't get to into this drawer, presumably to be processed on a rainy day. 

Don't let something like this happen to your practice -- and don't assume everything's fine just because you see checks coming. You should still evaluate your payment posting process on a periodic basis. Here are some tips for a careful review.

Start with staff

Any evaluation of your payment posting process should begin with your employees. You need enough staff -- and the right staff.
Don't take lightly appeals for help from your manager or other employees. Although you can often change work processes to increase productivity and decrease stress, sometimes you simply need more people. I have seen physicians keep the same number of staff even as their practices doubled in patient volume. Staffing benchmarks are often reported on a "per physician" basis, but that's a poor measure. Staff levels should be based on volume, not merely the number of practitioners who happen to be working at the practice.

In addition, overwhelmed staff will rarely do more than beg for more help. That is, they won't necessarily show you the consequences of understaffing -- such as the stacks of unprocessed checks or encounter forms waiting to be keyed.

Upon starting a new job, an office manager I know was shocked to find her new practice in such poor financial shape -- until a billing staff member escorted her to the practice's basement storage unit.

There, the biller pointed to the grocery bags full of claim denials -- stacked four feet high on two walls -- that had never been worked. These employees were stretched so thin that it was all they could do to get the charges out the door and the payments posted -- so the thousands of nonpayments and underpayments were filed in grocery bags that they hoped to get to one day.

Don't let complaints for more staff fall on a deaf ear. Getting by with as few staff as necessary is one thing, but hurting your practice is another. 

In addition to having enough staff, it pays to have the right staff. Although payment-poster is usually considered an entry-level position in a billing office, it shouldn't be. The need for accuracy cannot be overstated, and productivity is essential given the volume of payments handled by most practices. Take the time to check references when hiring posters, and use your instincts when interviewing candidates.

Keep your eyes peeled

While hiding unprocessed checks may be the sign of an overworked staff, stealing from you is a serious crime. Yet it happens all the time.

That's partly because it isn't very difficult to pull off. In fact, 30 percent of business failures in the U.S. are linked to employee embezzlement. Without any oversight, employees can get very creative.

For example, an employee who staffs the front office is usually assigned the tasks of checking in patients, collecting their time-of-service payments, and posting their charges upon checkout. An unscrupulous employee can register a patient, but fail to post any service on that date, pocketing the copayment without raising suspicion. If someone is checking the schedule of patients who arrived, she could post the charge, but not the payment -- or she could record a waiver of the copayment as a professional courtesy or contractual allowance.


A single embezzling worker loots an average of $127,500 from a small business before getting caught, according to the Association of Certified Fraud Examiners, which estimates the overall cost of workplace fraud at $400 billion annually.

If your new poster starts driving a Ferrari six months after starting (and didn't win the lottery in the meantime), you'd be wise to pay close attention to what he's doing. But often it's a trusted long-term employee who gets away with these schemes since no one questions his work.

What can you do?

Without getting too bogged down in internal controls, you should separate duties wherever staffing distributions allow it, look over the daily billing and collection records, and use your intuition about suspicious activities.

Also, be prudent about granting authority to give discounts or write off money. I was chatting with the checkout clerk of a pediatric practice that had just discovered an embezzling scheme involving patient discounts. For years, the office manager had requested that staff route any patients needing "financial counseling" -- that is, they couldn't afford to pay their bill -- to him. These patients would always emerge from the manager's office satisfied. It turns out the manager was telling patients that the practice would gladly accept a discount -- usually 50 percent or more -- if they made the checks out to him. 

Watch your write-offs

Be sure that your billing system allows you to post payments on a line-item basis, and that your staff is doing so. Bulk posting will not allow you to research any concerns or questions you have regarding payment posting.

You should also require staff to use specific write-off codes, and be sure that employees don't simply write off money to "Medicare contractual." It is possible for an employee to pick a check from the stack to be posted, sign it over to herself, forge your signature, and deposit it in her account. Since many banks still allow third-party endorsement, and the account can just be written off as a contractual allowance, she may get away with this embezzlement quite easily.  

Employ a quarterly auditing process as part of your performance review of billing staff. Dig into write-offs to make sure that employees are not automatically writing off money that could be collectible.

Meanwhile, don't let unidentified payments pile up. If a check made out to another practice comes to your office, you shouldn't let it sit in a drawer waiting for someone who has extra time one day. Make it a priority to research unidentified payments at least monthly. You may hit upon chronic problems -- say, an insurance company has your physician's identification number mixed up with another physician's -- that you'll want to resolve as soon as possible.

Don't trust that your payments will always be accurate. I have seen countless instances of practices robotically posting payments from insurance carriers without evaluating them for accuracy, and processing refunds without even looking at the account. A recent survey of orthopedic practices in Texas by Medical Present Value (www.mpv.com) revealed that one out of every five claims was underpaid.

Before your staff writes off money that the insurance company claims is a contractual allowance, arm employees with information about what you should get paid so that they can flag and follow up on any variances. Moreover, verify the accuracy of each refund request before issuing it.

Also, watch out for costly typos. Even a single missed keystroke during payment posting can create havoc later in the process -- and cost you money. As numbers are keyed in erroneously, accounts must be researched, and refunds often processed. This really costs you unnecessary overhead, and it throws off the accuracy of your collection reports.

Time really is money

Get your payments posted and deposited quickly. It's better to have a dollar today than a dollar tomorrow -- and consider the headaches you can create if you don't post a patient's payment quickly. Your billing system may automatically send him a statement, even though he's already paid. You'll either create a refund (if the patient pays again) or an angry call from a patient -- either way, it costs you money and decreases patient service.


I've seen practices that have trouble with this seemingly straightforward concept, particularly when it comes to posting time-of-service payments promptly. Perhaps checks are stapled to encounter forms, or kept in an envelope -- and until the codes are accurate and charges are entered, these checks don't make it to the billing office to be posted.  Although a thorough charge-entry process is important, don't create problems in payment posting. You need to get those checks in.

One way to increase promptness is to take advantage of available technology. Many insurance carriers offer electronic payment remittance and funds transfer. Electronic remittance means payments are posted directly to your billing system; electronic funds transfer means they are posted directly to your bank account. Although you'll still need staff to research payments that don't make it through the automated process, to ensure that what you're receiving is correct, and to rebill or appeal denied claims, automation can reduce your staff cost tremendously and diminish the possibility of fraud.

Elizabeth Woodcock, MBA, FACMPE, is director of knowledge management for Physicians Practice. She can be reached at
ewoodcock@physicianspractice.com.

This article originally appeared in the July 2003 issue of Physicians Practice.