MediRevv Logo
We’re hiring!
Contact us

Here's What You Need to Do About Those Self Pay Credit Balances

heres-what-you-need-to-do-about-those-self-pay-credit-balances.jpgIt’s a safe bet that your organization has self pay credit balances that you would like to pretend do not exist (otherwise, maybe you wouldn’t be reading this). Like weeds in a garden, they tend to crop up no matter how carefully you tend to your rows. Perhaps you have thousands or even millions of dollars worth of credit balances, but you simply don’t have the staff to clean them up.

It would be nice to spray a cloud of weed killer over the whole plot to make it go away, but unfortunately there isn’t technology to automate projects to handle credit balances, so that means you have to use your own staff to do it.

Why credit balances accrue

Credit balances on self pay accounts seem to be the dirty little secret of the industry. They occur most often as the result of improperly posted payments from both patients and payers. Human error? Yes, but many patient accounting systems manage A/R in ways that inadvertently create credit balances, so being aware of system limitations is actually part of the solution.

It's a bit of a trap. Your patient accounting system and your payment posting processes can both result in credit balances rising. Understanding why and staying ahead of the accumulation is key.

In short, it’s a real pain—not to mention costly—to have to issue credit back, and that’s precisely why healthcare organizations allow credit balances to accrue. Yet doing so presents financial and compliance issues, which hurt your organization.

Why it’s complicated

Some weeds deceptively look like flowers. It’s the camouflaged aspect of credit balances that makes them tricky. Unresolved, they result in an understatement of both profitability and days in A/R. Credit balances remain hidden, where even keen revenue cycle leaders may not know or remember to look for them.

But even when the weeds can be identified, pulling them at the root is a challenge. Over 50 percent of all credit balances are instances of improperly posted payments that must be reversed but the patient doesn't warrant a refund. Documentation still needs to be placed on each account as to the reason why a refund will not be issued. Do you have someone who can do this at your organization, and at what cost?

What if you don’t address it?

It’s less likely for a patient to self-determine that a credit balance exists on his account, but insurance companies may ask for refunds from overpayments or misapplied funds and it may come months later.

So, leaving the weed plot to grow isn’t the right solution. Provider organizations may be penalized based on the standards implemented by the state, and credit balances can lead to serious penalties imposed by Medicare. Furthermore, the time wasted and lost payment opportunities reduce the efficiency and profit of the facility.

What are your options for resolving credit balances?

Every organization is unique, but as a point of reference, a 300-bed hospital might require two full-time employees to resolve credit balances, while larger hospitals require 10 or more staff members year round.

Handling the credit balances in-house requires an employee who is knowledgeable about how to handle this issue. Keeping in mind the weed-flower dilemma, it’s important to have well-trained staff reviewing accounts to accurately determine whether the payer should be refunded, or if the patient has an open balance on another invoice where that credit can be transferred in order to avoid sending out refunds. This is detail-oriented work; it is time-consuming and therefore costly.

Unfortunately, technology can’t pull these weeds. When healthcare facilities don’t have the funds or the right staff to take care of this ongoing problem, asking for help is a logical next choice.

Outsourcing plays a vital role in finding a cost-efficient and effective method to correct credit balances.

The Bottom Line

Self pay credit balances are frequently a struggle and the financial and compliance consequences make them a burden. If you’re looking for self pay credit balance resolution, we’ve already got our gardening gloves on.

To learn more ways to improve your self pay collections, read our free eBook, A Winning Self Pay Strategy. Click below!

self-pay-strategy


 

Related Posts