Practice Management Alert

Question: Is it insurance fraud when an insurance check is mailed to the beneficiary, she cashes it and does not settle her balance with the doctor? How should I explain this to the patient with an unsettled balance?

Indiana Subscriber

Answer: No, it's not considered fraud. However, it can be theft of income or service. You should send a letter to the patient and inform her that you are aware the insurance carrier paid her directly and that the money should have been turned over to you. Inform her that a check was cashed that was meant for your practice and that she has 14 days to make full payment. (See sample letter below.)

ABC CLINIC
123 Main Street
Anywhere, USA 12345

Mr. X
999 Nowhere Road
Keep Money, USA 09876

Dear Mr. X,

On 01/01/02, you came to the USA clinic and requested to see Dr. Z. At that point, Dr. Z provided medical care and services to you. Per your request, a claim was submitted to your insurance company.

It is our understanding that your insurance company processed the claim and sent the payment to you with the issuance of check # ____, dated _____, in the amount of ______. Per your insurance company, you cashed the check. As of this date, we do not show that you have settled your account with us.

If payment is not made to us, we will notify your insurance company to report this payment to the IRS. Your insurance company is required to report all payments made during the tax year, and we will show that their records reveal payment was made to you instead of the physician.

We will also send a copy of 1099-MISC form to the IRS informing them that this is taxable income. As you are aware, failure to report income received is considered a violation of 26 U.S.C. 7206 (1).

You can make full restitution of your debt by sending payment of $_____ to be received no later than _______. Due to the expense in trying to recoup this debt, we will not accept requests for installments.

Very truly yours,

Director of Reimbursement

cc: Insurance company name IRS