Dental Office Administration. Chapters 63 & 64. Test 2

Question 1

What two types of bookkeeping systems are used in dental practice?

Answer 1

Accounts receivable and accounts payable

Question 2

What form in the patient record is used to gather financial information from a patient?

Answer 2

A registration form

Question 3

Accounting is…

Answer 3

the process of recording, classifying, summarizing financial transactions.

Question 4

Bookkeeping is…

Answer 4

the recording of the accounting process.
Accounts receivable management, which is commonly referred to as bookkeeping.

Question 5

transaction is..

Answer 5

any charge, payment, or adjustment made to a financial account.

Question 6

fidelity bonds is…

Answer 6

form of insurance that protects a business from employee theft. It’s for staff members who handle practice funds by receiving and banking patient payments or writing checks.

Question 7

pegboard system is..

Answer 7

manual bookkeeping system that keeps the transactions for the day.

Question 8

A charge slip

Answer 8

also referred to as a routing slip or superbill, is used to transmit financial information from the treatment area to the business office. At the end of the day, a specific number must account for each charge slip.

Question 9

a charge slip consists

Answer 9

three color-coded pages:
- white - for the patient’s permanent record.
- yellow - for the office or patient to submit to the insurance company.
- pink - for the patient’s copy.

Question 10

How does the use of walkout statements improve cash flow?

Answer 10

A walkout statement is written indication of a balance due on an account, given to a patient at the end of an appointment. It is like a receipt, except that it shows the current account balance. It is provided to patients who do not provide payment in full. A walkout statement should be provided with a postage-paid reply envelope, allowing the patient to mail the outstanding payment with a specified time period. The use of walkout statements improves cash flow because it speeds payments. It also reduces the number of statements that must be prepared and ,ailed at the end of the month.

Question 11

the responsible party is..

Answer 11

also known as the guarantor, is the person who has agreed to be responsible for payment of the account.

Question 12

A change fund

Answer 12

also known as petty cash fund, is a fixed amount of cash (usually $50 or less) that is maintained is small bills so that money will be available when a patient pays in cash.

Question 13

a restrictive endorsement

Answer 13

As a safeguard, checks should be stamped immediately with a restrictive endorsement, which prevents anyone from cashing a check if stolen.
Endorsement is made on the back-left side of the check and must match the name shown on the face of the check.

Question 14

deposit slip is..

Answer 14

itemized memorandum of funds (currency and checks) to be deposited into the bank.

Question 15

A truth in Lending statement

Answer 15

When a charge (for monthly statement) such as this is incorporated on an account, or when more than four payment installments are set up, the patient will receive a Truth in Lending statement.

Question 16

Divided payment plans are…

Answer 16

arrangements (financial arrangements) by which the patient pays a fixed amount on a regular basis.
For example, orthodontic treatment is commonly divided into a monthly payment plan.

Question 17

Accounts receivable management,…

Answer 17

which is commonly referred to as bookkeeping, involves the daily maintenance of financial records from all transactions related to the collection of fees for professional services provided to a patient.

Question 18

A journal page is..

Answer 18

detailed account that records all the financial transactions of the day. All payments are entered into the bookkeeping system, which includes the account history and the daily journal page.

Question 19

The accounts receivable report is …

Answer 19

a valuable management report that shows the total balance due on each patient account plus an analysis of the “age of the account” This shows how much of the balance is current (recent charges not yet billed), 30 days old, 31 to 60 days old, 61 to 90 days old, and older. This information is helpful in tracking and acting on overdue accounts.

Question 20

Give four ways that a business can follow through on the collection of fees.

Answer 20

Letters, phone calls, collection agencies (also some attorneys), and small claims court.
Note: One drawback to the option of seeking a small claims court judgment is that even if the court rules that the debtor must pay, it is still up to the practice to collect the amount of the judgment.
Typically, dental offices should begin collection efforts for overdue accounts after 30 days.

Question 21

Accounts payable systems…

Answer 21

manage all the money that is owed by the practice. Expenses and disbursements determine the cost of doing business in the dental practice.
As these expenses are incurred, they become accounts payable.
Disbursements are the payments made for these accounts payable.

Question 22

Expenses are called

Answer 22

overhead, which is the actual cost of doing business.

Question 23

A packing slip is…

Answer 23

a form used in a warehouse operation that lists the items to be shipped and the recipient of the shipment.

Question 24

invoice is..

Answer 24

itemized list of goods that specifies the prices and terms of sale. It may be included with the shipment, or it may be emailed separately.

Question 25

A statement is…

Answer 25

the total of all invoices (charges), payments, credits, and debits for the month.
Statements and invoices that have not yet been paid are placed in the accounts payable folder.

Question 26

What does COD mean?

Answer 26

cash on delivery or collect on delivery

Question 27

a returned item

Answer 27

A check written for more than what is in a person’s account will be returned. The check will be returned to the payee marked non-sufficient funds (NSF). A check that has been returned for this reason is known as a returned item; however, it is commonly referred to as having “bounced” (come back).

Question 28

Where in the checkbook do you record the checks written and deposited made on an account?

Answer 28

the check register. It is a record of all checks issued and deposits made to the account.

Question 29

What is COB?

Answer 29

Coordination of benefits. It is a process that carries use to determine the order of payment and amount each carrier will pay when a person receives dental services covered by more that one benefit plan (dual coverage).

Question 30

A predetermination in dental insurance is …

Answer 30

an estimate provided by the insurance company of how much they will pay for a proposed treatment plan and how much the patient will be responsible for out-of-pocket.

Question 31

What three methods are most commonly used to calculate fee-for-service insurance benefits?

Answer 31

1. UCR (usual, customary, and reasonable) fees.
   Usual fee refers to the fee that the dentist charges private patients for a given service.
   A customary fee is one that is within the range of the usual fees charged for the same service by dentists with similar training and experience within the same geographic area (such as a city or country).
   A reasonable fee is one that is considered justified by special circumstances necessitating extensive or complex treatment.
2. Schedule of benefits. Also known as a table of allowance or a schedule of allowances. It is a list of fixed specified amounts that the carrier will pay toward the cost of covered services.
3. fixed-fee schedule. It is an established fee for any treatment received by the patient. Under government programs, such as Medicaid, the dentist must accept the amount paid by the carrier as payment in full and may not bill the patient for the difference.

Question 32

________ is a specified amount of money that an insured person must pay before the insurance goes into effect.

Answer 32

A deductible

Question 33

What is the term for termination without notice or severance pay?

Answer 33

Summary Dismissal. Causes for summary dismissal include stealing, use of illegal drugs, and any other form of unprofessional behavior.

Question 34

What are the components of a basic practice financial policy?

Answer 34

Basic practice financial policies include:
- Statements on gathering financial information.
- Presenting the fee.
- Making financial arrangements with patients.
- Collecting overdue accounts.

Question 35

What is the significance of the daily proof of posting?

Answer 35

At the end of each workday, the entries on the daily journal page are compared with the appointment book to ensure that all patients visits have been entered. The total for receipts must match the amount in the cash drawer minus the change fund.

Question 36

When must the patient be provided with a Truth in Lending form?

Answer 36

The monthly statements represent a request for payment of the balance due on the accounts receivable. Under this plan, the patient is expected to pay the balance in full on receipt of the statement.
Some practices add a finance charge (usually 1%) to accounts that are nor paid within 30 days of receipt of the first statement.
When a charge such as this is incorporated on an account, or when more than four payments installments are set up, the patient will receive a Truth in Lending statement.

Question 37

What determines the cost of doing business in the dental office?

Answer 37

Expenses and disbursements determine the cost of doing business in the dental practice.

Expenses are called overhead, which is the actual cost of doing business.
They can be categorized as fixed overhead and variable overhead.

Disbursements are the payment made for these accounts payable.

Question 38

Who is charged a fee for a returned item?

Answer 38

A check that has been returned for the reason of not enough amount in a person’s account is known as a returned item; however, it is commonly referred to as having “bounced” (come back). The bank will add a charge against the account of the person (or company) who wrote the NSF (non-sufficient funds) check.

Question 39

What is predetermination?

Answer 39

Predetermination in dentistry is a process where a dentist submits a proposed treatment plan to the patient’s insurance company before starting the treatment.
If this is the patient’s first visit, it also may be necessary to file a predetermination for planned additional treatment. If so, the predetermination is submitted on a separate claim.

Question 40

What simplifies transaction processing for dentistry?

Answer 40

The CDT (Current Dental Terminology) codes are used to simplify transaction processing.