CMAA Financial Management and Accounts Receivable 5 — Questions and Answers
Question 1: A patient's check is returned by the bank marked 'NSF.' What does NSF stand for and what is the correct next step?
- Non-sufficient funds; contact the patient and repost the charge to the account (Correct answer)
- No service fee; waive the balance and write it off
- Not secured funding; send to collections immediately
- Necessary surcharge fee; add a penalty to the account without notifying the patient
Correct answer: Non-sufficient funds; contact the patient and repost the charge to the account
NSF means non-sufficient funds; the payment must be reversed on the account and the patient contacted to arrange an alternative payment.
Question 2: Which federal law regulates the practices of third-party debt collectors attempting to collect medical bills?
- HIPAA
- Fair Debt Collection Practices Act (FDCPA) (Correct answer)
- Truth in Lending Act (TILA)
- Equal Credit Opportunity Act (ECOA)
Correct answer: Fair Debt Collection Practices Act (FDCPA)
The FDCPA sets rules for how debt collectors may contact patients, prohibiting harassment or deceptive practices when collecting medical debts.
Question 3: A patient has a Medigap (Medicare Supplement) policy. After Medicare pays its portion, the Medigap plan typically covers:
- The provider's full billed charge
- The patient's deductible and/or coinsurance amounts (Correct answer)
- Only preventive services
- Prescription drug costs exclusively
Correct answer: The patient's deductible and/or coinsurance amounts
Medigap policies are designed to cover the patient's share of costs such as deductibles and coinsurance that Medicare does not pay.
Question 4: When a medical office writes off a balance as 'bad debt,' the appropriate accounting entry is to:
- Credit accounts receivable and debit bad debt expense (Correct answer)
- Debit accounts receivable and credit revenue
- Credit revenue and debit cash
- Debit cash and credit bad debt expense
Correct answer: Credit accounts receivable and debit bad debt expense
Writing off bad debt removes the receivable from the asset column (credit A/R) and records the loss as an expense (debit bad debt expense).
Question 5: A practice receives an overpayment from a commercial insurer. The correct action is to:
- Apply the overpayment as a credit toward future services without notifying the payer
- Refund the overpayment to the insurer promptly and document the transaction (Correct answer)
- Write off the overpayment as revenue
- Transfer the overpayment to the patient's account
Correct answer: Refund the overpayment to the insurer promptly and document the transaction
Keeping an overpayment from an insurer without reporting and refunding it can constitute fraud; timely refund and documentation is required.
Question 6: Which statement best describes the difference between a co-pay and a deductible?
- A co-pay is a fixed amount paid per visit; a deductible is the annual amount paid before insurance benefits begin (Correct answer)
- A deductible is a fixed amount per visit; a co-pay is the annual out-of-pocket maximum
- Both co-pays and deductibles are the same dollar amount set by the employer
- A co-pay applies only to hospital stays; a deductible applies only to office visits
Correct answer: A co-pay is a fixed amount paid per visit; a deductible is the annual amount paid before insurance benefits begin
A co-pay is a set fee due at each service encounter, while a deductible is the yearly amount a patient must pay before the insurer begins covering costs.
Question 7: A medical administrative assistant notices a claim has been pending with the insurer for 45 days without payment or denial. The best next step is to:
- Write off the balance as uncollectible
- Submit a corrected claim with new codes
- Follow up with the payer via phone or portal to check claim status and document the contact (Correct answer)
- Bill the patient the full charge immediately
Correct answer: Follow up with the payer via phone or portal to check claim status and document the contact
Proactively following up on pending claims and documenting each contact is essential to prevent timely filing denials and ensure revenue cycle efficiency.
CMAA Financial Management and Accounts Receivable 5
A patient's check is returned by the bank marked 'NSF.' What does NSF stand for and what is the correct next step?