Why a bank lockbox is the best way for a medical practice to handle payments and correspondence.
If you want to maintain a consistant office address for all insurance companies and patients to send payments and correspondence with the least “hassle”, consider the benefits of using a bank lock-box operations.
What it is a Lock-Box?
The lock-box is a physical Post Office address, maintained usually by a bank, which has an associated depository checking account tied to it.
What is it for?
The receipt of payments in the form of paper checks and correspondence, including insurance company “Explanation of Benefits” (EOB’s).
Why would you use it?
a) Protects you from fraud and embezzlement by office or third-party billing staff. The bank has a fiduciary relationship and must be insured for this purpose. You will be more protected from mishandling of funds, if those funds are handled by an independent fiduciary.
b) the bank performs all “clerical” tasks such as opening the mail, removal of staples and clips, scanning of contents of the lock-box, making the bank deposits on a daily basis.
c) the bank deposits the payments every day into your designated depository account, providing you with access to either the original bank deposit slips and checks, or with web-based access to the scanned images of these documents over the bank’s lockbox management system.
d) Deposits are made much sooner than would be the case if payments were made directly to the practice’s office address.
e) the bank’s staff can be relied upon to do the required work EVERY DAY, without concern for your own employees missing work or not being able to take off to go to the bank to make the deposit.
f) your office staff does not have to tak the time to open the mail, copy the checks, make out the deposit slips, and transmit or deliver the contents to the bank to deposit or to the billing service to bill.
g) the lock-box address can remain as the remittance address with all insurance companies in spite of changes of physical address by the medical practice. This assures no interruption of cash flow or delay in receiving important notices from insurance companies, should the practice relocate or open additional offices. Since the lock-box address doesn’t change, you would not have to submit “change of address” applications to every payor.
h) The final and perhaps most important consideration of using a lock-box is …
to ensure a smooth transition, should you change from one billing service to another, or from a billing service to in-house, where you must ensure as of a specific date that all of the contents of the lock-box stop being delivered or transmitted to one party and begin being delivered or transmitted to a new party. All you have to do is send a letter to the lock-box administrator, with your instructions.
How much does it cost?
The cost varies from bank to bank. However, they usually charge a base rate, plus $.xx per check deposited. You will need to provide enough details to your bank to get their best rates, which usually get lower with higher volume. Check with several banks before making your choice. The better lock-box operations offer web-portal access to both the scanned images of all lock-box contents to a third-party billing service or office. They also offer on-line banking access to the depository account to confirm deposits.