Those Nasty Credit Balances
As a practice owner, one of the scariest reports that you can review in your office is the “Credit Balance Report.” There are different ways to run this report depending on the practice management software that you are using, but you should take a look at it and create a game plan to deal with the “red hole” of balances.
First, let’s review how you accumulated these balances in the first place. The most common way is that the business team “guesstimated” the patient’s portion at the time of service, which is good, and fortunately for the patient, the insurance company paid more than anticipated. Now the patient has a credit balance on their account. Second, the patient paid a sum of money for treatment based on a treatment plan and the treatment plan changed, reducing the total charges for the patient and creating a credit balance. Third, a credit was given to the patient due to failed treatment (such as a root canal and the tooth fractured shortly after). There are also times when a patient will simply pay on their account for future treatment, either as a down payment or they are anticipating dental treatment and want to start setting money away.
Let’s review the most common scenario - the insurance paid more than anticipated. Doctors and the business team often ask: “Is it better to bill the patient after the insurance pays so we are collecting the right amount, or should we collect an estimated amount and then see what the insurance pays?” I think we can all agree that the patient would much rather receive a check from us due to an overpayment opposed to sending them a bill!
Can you accurately determine the patient’s portion with your practice software? If you have the PPO fee schedules and deductibles, maximums and percentage of benefits then you can get close, but there is never a guarantee when it comes to the insurance company’s reimbursement for services. They can easily deny a claim or downgrade it to a different service with a different fee. This is why we always recommend the patient be informed that even their printed treatment plan illustrating the insurance reimbursement is an “estimate.” Unfortunately, as we all know, patients don’t seem to hear this part of the presentation.
What to do with these balances? First, check with your state board. I am guessing that most dental board or state associations have guidelines on when these credit balances must be refunded to the patient. In California, it is within 30 days. You review your report and find balances for patients that you have not seen in years. How in the world are you going to deal with this? And let’s not forget that refunding this money is like paying bills. You received the over-payment years ago, not last month. Follow these steps for an organized way to approach the clean up and establish a protocol moving forward to avoid the mess again.
“Mrs. Jones, this is Nancy at Dr. Smith’s dental office. I know that it has been a while since we saw you and I am calling with some great news! We have discovered that you have a credit balance of $55 here in our office and we would love to welcome you back. You can use this credit balance toward any work that may be needed as well as our “Welcome Back” gift card. Would a morning or afternoon appointment be best for you?”
Of course, it is possible that Mrs. Jones has found another dentist and does not want to return. In that case, refund her credit balance and sleep better knowing that you just gave someone cash that they didn’t know they had.
We find that some patients actually do return. Some even say that they are aware of the credit and just keep it on their account but don’t want to schedule. In this case, make a note on the patient’s account so you don’t contact them again. Some patients will thank you and request a refund. This is the reason why it’s a work in progress. You don’t want to overload your cash flow with thousands of dollars worth of refunds, so take the process slowly.
Protocol for the future - as soon as a credit balance occurs on the account, contact the patient with the good news. Most will simply request that you keep it on their account, but you need this instruction from them. Issue the refund immediately should the patient become inactive, unless there are other family members that the credit balance can be transferred to.
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