Practices, both large and small, frequently lose money to employee theft. In many cases, the practice may have kept copies of cash handling policies filed in a drawer or stored electronically. However, what management thought was happening was not the reality of the practice’s daily cash handling procedures. Here are some real examples of how employees stole from practices, and what physicians and practice managers can do to avoid theft losses.
Bills Not Claimed Through Insurance to Pocket Co-Payments
One way front desk employees can steal substantial amounts of cash from busy practices is by destroying charge tickets. This enables them to pocket cash co-payments without the patient alerting the practice when the patient receives a bill for the balance because the charges are never posted (no charge, no bill). What is particularly insidious about this method of concealing theft is that the practice loses all revenue associated with the charges, not just the patient’s co-payment. When charge tickets are destroyed to cover theft, the charges are never submitted to the insurer. So while an employee may pocket $1,000 this way, the practice may actually lose $5,000.
At one large specialty practice, a front desk supervisor stole several thousands of dollars this way. By the time the practice discovered the theft and submitted billing to insurers for office visits, injections, and imaging tests, the timeline to file the bill had expired and the insurers denied payment for most of the charges. Ultimately the employee was caught through a patient complaint. After pocketing his cash, the supervisor forgot to remove the charge ticket from the batch, and the patient was later sent to third party collections for the amount he had already paid. When the patient called to complain, a manager noticed in the system that his appointment had been cancelled in the system by the supervisor. This raised a red flag, because the physician had to see the patient in order to fill out the charge ticket that resulted in the patient’s bill.
Cancelled Appointments, or Not?
Cancellations and no shows, common occurrences in busy physician practices, create another opportunity for employees to steal. Always audit your cancellations and no shows. One way to do this is to cross reference a system-generated list of cancelled appointments and no shows with physician notes in the electronic medical record system. Physician office visit notes clearly show whether a patient was seen in the office. In the case of a supervisor stealing thousands of dollars, a report of system cancellations would show that she has cancelled a dramatically higher number of appointments than any other supervisor. A review of physician notes would show that many of the same patients were actually seen on the day of the cancellation. This audit method works because the physician notes would be housed in a different system where the supervisor could not delete them.
An Extra Tip
Another way to minimize theft opportunities is to limit which employees can post credits to accounts. When the same employee who can accept cash from a patient also has the ability to give a credit or adjust a balance in the system, that employee can pocket the cash and post a credit or adjustment to the account so that the patient is not alerted by receiving a bill. Too many practices allow the same office staff members who receive cash payments to post contractual and other allowances. To detect this kind of theft, physicians or practice managers should run reports on adjustments by type. Contractual allowances should be equal to the difference between gross charges and the allowed amount, so any amounts that don’t add up should be investigated.
All of these methods of employee theft can be countered through separation of duties and auditing. Outsourced bookkeeping is a simple and cost-effective way to separate cash posting, balancing, and reconciliation functions. Outsourced accounting and part time CFO services can include additional reporting and auditing to ensure that the practice’s cash remains with the practice.
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