Correctly Handling Medical Balance Write-offs

Correctly Handling Medical Balance Write-offs

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You and your staff work hard taking care of patients and deserve to be compensated for your efforts. With third-party payers, uninsured patients, or ones with high deductible insurance, there are unfortunately times when you have to write off some, or all of the charges, for a visit. Medical billing is complicated enough without adding this to the mix, but it is a fact of doing business. It takes well-trained revenue cycle management staff and clear, consistent billing policies and procedures to handle all your billing challenges.

Standard or Expected Write-offs

There can be a number of reasons for write-offs, some of them are approved and even expected, such as the following:

  • Contractual write-offs are the difference between the set fee from the practice fee schedule and the allowable fee schedule the practice has agreed to accept. An example of such an agreement is the one made between a practitioner and an insurance company.
  • Hardship or Charity write-offs happen when a patient is having a hard time financially and is incapable of paying. These write-offs can be due to policy adherence in a faith-based health care system, as part of a community indigent care effort, or a financial assistance program. Documentation of the patient financial hardship and a qualification process must be in place before considering this write-off.
  • Self-pay (no insurance) discounts happen when the patient receives a discount off the set fee schedule for paying their balance in full at the time of service because they are uninsured.

Unexpected or Unnecessary Write-offs

All of the reasons above are standard write-off reasons, however, some situations can happen that are not expected and can get you into trouble either financially, legally, or both, if not handled correctly.

  • Errors in medical claims such as coding issues, documentation issues, or erroneous patient information lead to denials. Once this occurs your staff needs to be able to immediately make corrections and appeal the medical claim denial. If it isn’t appealed promptly the revenue is lost.
  • Missing medical claim filing deadlines for a payer. Each payer has a contracted deadline for filing medical claims and if this is missed you don’t get paid. Each payer is different so ensure you know each payer’s deadline.
  • Un-credentialed provider write-offs happen when you file a claim for a practitioner who has not finalized their credentialing and contracting with payers prior to the filing.
  • Waiving or writing off copays or deductibles by writing these balances off you could be violating regulations including the Anti-kickback Statute, the False Claims Act, the Civil Monetary Penalties Law, and/or some state laws and regulations.
  • Payer Changes happen when a payer makes changes without notifying a practice.
  • Bad debt write-off is debt that, after exhausting all avenues to collect, you decide to write off the debt for good.

Suggestions for Managing Write-offs

To ensure you are managing your write-offs it is suggested that you start with basic write-off categories and add more as needed. Also, decide which write-offs need manager approval. Although not all write-offs should require approval, as this can complicate the process more, there are times when it is prudent to get an approval.

It is also advised that you do write-offs monthly and track them to see if you spot any trends.  But remember, if you raise your fees but don’t renegotiate your contracts with payers, your contractual write-offs will start trending higher. Also, keep in mind that sending a balance to collections is not the same as writing off a debt. The monies owed are not forgiven but transferred to a third party to collect for you.

And it is a good idea to audit your write-offs periodically to ensure they are being handled correctly. Knowing they are being checked can keep your staff vigilant and you will know you are making business decisions on accurate information.  Overall, try to keep your write-offs to a minimum.

Ensuring the financial health of your practice is a priority and being in control of the unnecessary write-offs can help to support a healthy financial situation.


Who is Billed Right?

In 2006, two business partners had a vision of creating holistic services that help improve medical billing operations. They started by listening to doctors and building a service model around what doctors need the most. As a result, Billed Right’s Revenue Cycle Management (RCM) model was born. The focus continues to be on solving the problem, rather than selling a product, and hence, Billed Right’s advanced RCM model revolves around personalized service in today’s corporate world, while still cutting costs and improving both patient care and practice revenue.  As a strategic partner, we look to streamline your revenue cycle and operational management thus helping you to grow your healthcare practice.


Contact Billed Right to learn more about how we can become your strategic partner.

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