Credit Balance & Refunds
What is a credit balance?
Credit balances occur when payments and adjustments exceed posted charges. They are not “extra cash” or a positive asset for a provider. Instead, they are a ticking time bomb that needs to be addressed through an effective accounts receivable (A/R) solution initiative.
What are the Primary Causes of Credit Balances?
Most credit balances do not reflect actual monies owed to payers by providers. According to the Healthcare Financial Management Association (HFMA), the typical composition of credit balances looks something like this:
Understanding the risk of Credit Balances
Failure to address the issue of credit balances poses a number of risks for the provider, including the following:
- Lack of compliance with government payers. Failure to timely and accurately process all credit balances can result in significant fines, withholding of money and even imprisonment.
- Misunderstanding the provider’s financial situation due to an understatement of the accounts receivable and overstatement of liabilities.
- Reduction in staff productivity. Assuming a backlog of old credits as well as an incoming daily flow of new credits, existing staffing levels may not be able to handle the necessary CBO processing capacity.
- A false sense of security due to assumption that credit balances are a “profit center” or tangible asset
- Lost revenue opportunities. Credit balances often camouflage billing opportunities due to misposting. This includes other payers and self-pay co-payments and deductibles
- Lack of internal control in the management of credit balances can lead to potential internal fraud
- Credit balances can also result in negative publicity and loss of goodwill for any healthcare organization
How do we help you with this?
Patient Credit Balance
Our staff is well versed in reviewing the accounts and during the course of review; if determined credit balance is a result of patient overpayment, we process the refund accordingly or move the status to patient refund for a refund check to go out to the patient in a timely manner. Also, ensure account balance is zeroed out.
Government Payers Credit Balance
Our staff is aware that all government payers refunds should be processed within 60 days from the time of refund request date. We prioritize the requests from government payers and process the requests.
Valid requests – After our review, if refund request is valid; it would be moved to insurance refund status or we post the refund depending on your requirement.
Disputes – After our review by refund analyst, if determined request is not valid; it would be moved to a senior analyst to review for a possible appeal if we dispute the decision.
Commercial Payers Credit Balance
Refund requests from commercial payers on majority of instance occur due to COB issues, incorrect allowed amount, eligibility issues etc. Our staffs are well aware of this and process the refund requests accordingly.
Valid requests – During our review, if determined request from insurance is valid; we either process the refund or move the status to insurance refund / follow up with the payer to see if they would be willing to offset the payment from future payments depending our your requirement.
Disputes – After our review by refund analyst, if determined request is not valid; it would be moved to a senior analyst to review for a possible appeal if we dispute the decision.
