As the name implies, a Credit Balance occurs when an excess of money is collected compared to Charges for a service provided by the Provider. This could be for many reasons and should be addressed while the final steps of medical claims processing are done. The credit balance could be due to an overpayment from the patient in the form of coinsurance or deductible; or it could be due to overpayments from insurance payers. Let’s discuss a few scenarios and why it is important that they are handled promptly:
Patient credit balance:
Patients could have paid an amount in advance based on the assumption of what their Payers would cover. Once the medical claims processing is complete and the Payer pays in full, then the Patient’s payment is in excess. The doctor’s billing solution can also call the patient and give them the option to adjust this excess against future visits or send a check. But in any scenario, the patient’s consent must be obtained and is mandatory.
Pay credit balance:
Many times the credit limit occurs due to overpayments by payers. Even the patient’s credit limit is usually due to the payer paying more than expected. In processing medical claims, it is very important to handle payments from Payers with priority. This not only projects the correct cash flow as a result of the doctor’s billing solution, but also avoids inflated AR. Some scenarios about paying off credit balances:
1) Both primary and secondary payer pay as primary
2) Paying the country more than the amount allowed by mistake
3) Cross errors, especially between Medicare and Medicaid
4) Privately purchased plans: always pay as principal, although there could be another
Rules:
In all these cases, there are very strict guidelines and deadlines within which excess money must be returned to the Payer or the Patient, as the case may be. In the event of Payer errors, the Payer must be notified of the error within 30 to 120 days, depending on the Payer. The Payer and the State could consider that it is not notified within the established period as ‘Fraud’ with severe penalties. If payers refuse reimbursement (as in the case of privately purchased Plans), then that money belongs to the Patient and the Patient must be notified. Providers of medical claims processing and medical billing solutions should be aware of these requirements and process credit balances on a daily or weekly basis to avoid problems for the provider and the practice.
Recoveries and compensation:
Some payers would adjust current and future claim payments against credit balances owed to other payers that are recoveries. When Payers match current and future claim payments against past overpayments on their own Plans, these are called Offsets.
The best option for managing credit balances is to outsource medical billing to a professional medical claims processing company.
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