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Indian Health Service The Federal Health Program for American Indians and Alaska Natives


     Indian Health Manual
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Part 5, Chapter 1:  Manual Exhibit 5-1-C

Disposition of Receipts from Third-Party Payor


DISPOSITION OF RECEIPTS - THIRD-PARTY REVENUE

(Includes PNC Bank Lockbox Process)

  1. PURPOSE.  The purpose of this guidance/instruction is to provide for the safe/efficient receipt and deposit of third-party revenue, minimize the opportunity for fraud and/or mismanagement, and enhance the reconciliation process with the Indian Health Service (IHS) CORE Accounting System (CORE).  This guidance also explains the attached flowchart, which includes the PNC Bank (PNC) Lockbox Process (See Manual Exhibit 5-1-C, Attachment 1,Disposition of Receipts from Third-party Payer).

  2. DISPOSITION - BY THIRD-PARTY PAYER.  The IHS submits claims/bills to a Third-party Payer (TPP) where they are reviewed and a determination made as to whether the claim will be paid, denied, or pending.  The TPP will provide the IHS with one of four possible dispositions including detailed information relating to that particular disposition.

    1. Explanation of Benefits (EOB)

    2. Remittance Advice (RA).

    3. Payment by Check.

    4. Explanatory Correspondence.

  3. RECEIPT OF DISPOSITION.  Dispositions are received by the IHS through the following methods:

    1. At the Service Location.

    2. At the Area Finance Office.

    3. Through the PNC Bank (Paper Checks) Lockbox. (Note: All TPP must be provided proper notification for mailing checks to the lockbox.)

    4. Through PNC.  (Note:  This is accomplished by Electronic Funds Transfer (EFT) or through an Automated Clearing House (ACH)

  4. PROCESSING DISPOSITION.

    1. At the Service Location.

      1. The disposition (check/EOB/RA/correspondence) must be received by an authorized collection clerk/officer and logged in at the service location.

      2. The collection official must separate the disposition into one of the following categories:

        1. Medicare,

        2. Medicaid,

        3. Private Insurance (PI),

        4. Children's Health Insurance Program (CHIP)/Medicaid,

        5. Children's Health Insurance Program-PI,

        6. Federal Medical Care Recovery Act (FMCRA), or

        7. Other Reimbursements (BeneficiaryMedical Project, Non-Beneficiaries, Workmen's compensation, etc.)

      3. The collection official must separate the original check from the EOB/RA and make copies of all checks.  A copy of each check must be attached to the original EOB/RA.

      4. The collection official must complete a schedule of collections for each payer category (i.e., Medicare, Medicaid, or PI) listing all checks and totaling the amount received (See Manual Exhibit 5-1-C, Attachment 3, Schedule of Collections).

      5. The collection official must complete a field receipt (See Manual Exhibit 5-1-C, Attachment 2, Field Receipt) indicating the total for each payer category, attach the original field receipt and schedule of collections to the original check, and forward these to the appropriate service location lockbox at PNC Bank.  (Note:  All FMCRA checks inadvertently sent to the IHS must be forwarded to the Regional Office of the General Council (OGC) via certified mail.)

      6. The collection official will attach a copy of the field receipt and the schedule of collections to the original EOB/RA and forward these to the service location accounts receivable (A/R) clerk.

      7. The A/R clerk must reconcile the field receipts, schedule of collections, and EOB/RA with the PNC Bank daily transmittal and collection batch information received from the Finance Office.

      8. The A/R clerk will then post the information to individual patient accounts.

    2. At the Area Finance Office.

      1. The disposition (check/EOB/RA/correspondence) must be received by an authorized collection clerk/officer and proper transmittal and collection batch information received from the Finance Office.

      2. The collection official must identify/compile the disposition by service location and separate it into one of the following three categories: Medicare, Medicaid, or PI.

      3. The collection official must separate the original check from the EOB/RA and make copies of all checks.  A copy of each check must be attached to the original EOB/RA.

      4. The collection official must complete a schedule of collections for each service location and payer category (i.e., Medicare, Medicaid, or PI), listing all checks and totaling the amount received.

      5. The collection official must complete a field receipt for the appropriate category (Medicare, Medicaid, or PI) and attach the receipt and schedule of collections of the original check.  (Note:  Receipts are separated by service location.)

      6. The collection official will forward the original field receipt, schedule of collections to the appropriate service lockbox at PNC Bank.

      7. The collection official will attach a copy of the field receipt and schedule of collections to the original EOB/RA and forward these to the service location A/R clerk.

      8. The A/R clerk will reconcile the field receipt, schedule of collections, and EOB/RA received from the collection official with the PNC Bank daily transmittal and collection batch information received from the Finance Office.

      9. The A/R clerk will then post this information to individual patient accounts.

    3. Through PNC Bank Lockbox.

      1. The disposition (check/EOB/RA/correspondence) is received in the PNC Bank lockbox for separate service locations.

      2. The PNC Bank will make copies of all checks and attach them to the original EOB/RA/field receipt.

      3. The PNC Bank processes original checks and deposits them into the appropriate service location PNC lockbox.

      4. The PNC Bank will separate the contents of each service location lockbox into one of two categories:  payment/deposit or correspondence.

      5. The PNC Bank will update each service location account by ensuring all daily deposit information is recorded.

      6. The PNC Bank will forward to each individual service location its appropriate daily transmittal packets.  (Note: Normally, this will be the A/R section of the service location.

      7. The A/R clerk will compile the data in accordance with collection batch received from the Finance Office and post the data to the individual accounts.

    4. Through PNC Bank. (By EFT, ACH, or checks sent directly to the PNC Bank)

      1. The PNC Bank receives (from TPP) EFT, or ACH payment in the appropriate service location child account.

      2. The PNC Bank will update each service location account, ensuring daily deposit information is reflected in the special reports.  The PNC special reports must be reconciled to the copy of the check, the EOB, and the deposit ticket.

      3. The Area Finance Office will download from each service location the special reports (of daily deposit information) into the Area Office revenue database.

      4. A collection batch for each service location must be prepared by the Area Finance Office using the revenue database reports.

      5. The Area Finance Office will send an e-mail to each service location A/R clerk with the appropriate collection batch information.

  5. 835 Electronic Remittance Advice File.

    1. Downloading File.

      1. The PNC Bank will receive the Health Insurance Portability and Accountability Act (HIPAA)835 Electronic Remittance Advice file from TPP and place the file on the PNC’s Web site.

      2. Each service location must access the PNC Web site and download the HIPAA 835 Electronic Remittance Advice file to the collection batch received from the Finance Office and post it to the appropriate individual accounts.

      3. Accessing and downloading the HIPAA 835 Electronic Remittance Advice file is permitted by authorized A/R personnel only.

    2. Alternative Methods.  Alternative methods for accessing/downloading are allowed but must be covered by local procedures developed specifically for this activity.

  6. Collection Batch.

    1. Building the Collection Batch.  The following activities/functions must be performed by finance personnel at the Area Office or service unit when building a collection batch.

      1. Log onto PNC Pinnacle Web to view deposit information using the PNC special reports option.

      2. Import special reports information of the lockbox/EFT/ACH information into an Excel file format.

      3. Download daily deposit information into the Area Office revenue database.

      4. Update individual service location third-party revenue status.

      5. Provide daily deposit, month-end, and year-to-date revenue status reports to the Chief Executive Officer, Administrative Officer, Business Office Manager, and the Financial Management Officer.

      6. Use daily deposit, month-end, and year-to-date revenue status reports to perform daily reconciliations with CORE.

      7. Log into each service location A/R system daily, and build a collection batch for each payer category, i.e., Medicare, Medicaid, and PI.

      8. Provide collection batch information to the A/R Branch for posting to individual accounts.

    Attachments 1; 2; and 3

    PLEASE CONTACT YOUR AREA DIRECTIVES, DELEGATIONS AND CONTROL OFFICER OR THE MANAGEMENT POLICY AND INTERNAL CONTROLS STAFF at 301-443-2650 FOR A COPY OF THIS ATTACHMENTS

    Attachment 1:  Disposition of Receipts from Third-Party Payor; attachment 2:  HHS/PHS Field Receipt; Attachment 3:  HHS Form Approved by Comptroller General U.S.


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