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MEDICAL FINANCING TERMS GLOSSARY
Healthcare has its own specialized jargon -- commonly used terms that are unfamiliar to people outside the industry. To put you on the inside track, we have included a glossary of some of the most commonly used terms and abbreviations.
Aged Trial Balance Summary -- Summary in dollars (by Payor Type) of the accounts that are current and overdue by: 30, 60, 90, 120 and 150 days up.
Batch -- An aggregate of accounts receivable purchased within a designated period of time (weekly, bimonthly, and monthly).
Cost Report Filing -- A reconciliation report submitted yearly to Medicare by the Provider.
Due Diligence -- Verification of facts about the provider, performed by the Medical Funding company before granting funding.
Durable Medical Equipment (DME) -- Medical equipment such as wheelchairs, hospital beds or oxygen concentrators.
Explanation of Benefit (EOB) -- A document defining conditions of payment on an insurance claim.
Gross Billing -- What the insurance company is billed; typically more than what is collected.
Health Maintenance Organization (HMO) -- A type of insurance plan.
Long-Term Care Facilities -- Special facilities providing care during extended stays such as nursing homes.
Medicare Offset -- An amount previously paid by Medicare to a Provider that exceeds the amount due. Subsequent Medicare claims will be paid when the account is reconciled.
Net collectable Value or Net Realizable Amount -- In the health care industry there is usually a substantial difference between the amount billed (gross) and the actual amount collected (net). This amount is called NCV or NRA.
Estimated Net Receivable (ENR) -- The amount actually collected from an insurance company by the Provider.
Preferred Provider Organization (PPO) -- A type of insurance plan.
Personal Injury Claims -- Accident claims. These are significant, as they may not be paid promptly by the insurance company if the case is litigated.
Provider -- Any entity that provides a medical service (Such as a doctor, medical clinic, hospital, congregate care facility or other medical facility).
Self Pay -- The amount of the medical bill that the patient must pay out of pocket.
Skilled Nursing Facility -- Specialized outpatient facility usually associated with a hospital.
Third Party Payers -- Entities (other than patients) responsible for payment of a healthcare receivable. Examples are insurance companies, Medicare, Medicaid, CMOs, CHAMPS and Workers Compensation.
FAQs About Medical Receivable Financing
FAQs About Medical Receivable Financing also known as Medical Factoring
What type of medical provider does FCFC fund??
We specialize in providing Medical Receivable Financing or Medical Funding to growing, successful healthcare providers and medical facilities, as well as pre/post bankruptcy clients nationwide who are looking for alternative financing solutions for their medical business. Healthcare providers and suppliers can also benefit from medical accounts receivable funding by upgrading technology, expanding services and renovating facilities without incurring additional debt. They include nursing homes, hospitals, home healthcare companies, rehab clinics, durable medical equipment (DME) providers, home medical equipment (HME) providers, MRI and imaging centers, clinical laboratories, dialysis centers and others with medical receivables and claims payable by Medicare, Medicaid, HMOs, and private insurance.
Do I need Medical Receivable Financing??
Yes. For growth or survival. Medical Receivable Financing can be used for purchasing new medical technology, expanding an existing medical practice, hiring additional staff, purchasing inventory or renovating facilities. It can also be used for cutting costs by taking advantage of pricing terms from suppliers.
Is Medical Accounts Receivable Funding a loan??
No. Medical accounts receivable financing is the sale and purchase of an asset at a discount. Unlike other methods for financing a medical business, you incur no debt on your balance sheet, and the net result of each transaction will be the conversion of your medical receivables or claims into cash.
What will it cost me to sell my medical receivables such as Medicare/Medicaid or Insurance Receivables??
A small percentage of your net realizable amount or net collectable amount (from claims submitted) to accelerate your cash flow.
How soon will I get the funds once I sell my claim??
A Medical Practice will usually receive funding advance within 48 hours of submission of an approved claim.
Do I have to sell all of my claims?
Depending on your funding facility you will be able to choose. FCFC has a very flexible program in which you choose which claims you select for funding, how often you want to fund, and which payor's claims you want to fund. The goal is to provide you with a customized funding plan that meets your needs as determined by you!
Is the medical accounts receivable financing program the same as commercial factoring?
The concept is similar but not the same. Both involve the purchase and sale of a business' accounts receivable, and neither incurs any debt. While, the process for commercial factoring and medical accounts receivable funding is similar, there are distinct differences:
In a Medical Receivable Financing Facility, since the payor of the claim is Medicare, Medicaid or an insurance company, funding is based on the net collectible amount of the claim taking into account the contractual arrangements between the healthcare provider and each payor. Determining the valuation of the claim requires extensive knowledge of the healthcare industry because payments vary for each payor and for each treatment, product or service provided.
In commercial factoring, funding eligibility is primarily based on the credit and track record of the factored company's customers.
What is claim-by-claim funding??
Claim-by-claim funding is a process that funds each claim individually. The net collectible amount (NCV) is determined for each claim depending upon the payor. The result is more funding and flexibility for your medical business than is available from other financing solutions.
What is batch funding?
Batching is a process in which a group of medical claims or A/R are funded as a single unit. The discount rate applies to the entire batch and fees continue to accrue until the entire batch is collected. Depending on your situation you may or may not batch because it results in less funding and flexibility for the healthcare provider.
Can I fund Medicare/Medicaid claims??
Yes.
What if I have bad credit??
Your approval for this program is dependent upon the creditworthiness of your payors, not your credit.
Do you fund self-pay receivables??
No.
Do you have a minimum volume per month??
We review each transaction on a case-by-case basis.
How are your discount fees determined?
The discount fees charged depend on:
- Number of days outstanding
- Monthly volume (dollars)
What is the advance?
The amount of funds you initially receive when we purchase your claim. The balance (the reserve) is returned to you less a discount fee when we collect.
What are the advantages of working with FCFC?
Our commitment to client satisfaction has made us an industry leader with the resources and experience to help you successfully fund your healthcare business without the hassles that normally go with debt financing. In business since 1995, FCFC understand the needs of a medical provider. FCFC Provides:
- A streamlined application and approval process
- A qualifying audit that offers you value-added benefits
- Customized claim-by-claim funding that puts you in control
- Cash infusion within 24-48 hours of submission of claim
How do I get started?
Call us toll-free at 800-346-0136 or complete our online application. We will be happy to answer your questions. There is no fee to have us review your application and receive a proposal. Alternatively, you can complete the form above and request a personal conference call at your convenience to further discuss your particular situation.
