4.24.15 Issue #685 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter
 


Nancy Caudill
Senior Consultant
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How Much Money Do You Owe Patients?
By Nancy Caudill, Senior Consultant

Credit balances are an aspect of expenses that many dentists are not aware of, and as a result their practices do not have a game plan to pay them. First, what is a credit balance? The simple definition is a negative balance on a patient account. Secondly, if the patient has a credit balance, how did it happen? This question has multiple answers:

• The insurance reimbursement was more than anticipated after the patient’s “estimated” portion was paid at the time of service.
• An adjustment was made on the account for entries such as incomplete treatment, courtesy adjustment, failed procedure adjustment, etc.
• The primary and secondary insurance companies did not coordinate the benefit payments, creating an over-payment.
• The fee posted to the account was lower than the allowable for the PPO plan.
• The patient has “prepaid” for upcoming treatment.

The Credit Balance List
Now that you have a list of patients with credit balance, what happens next? It depends on the reason for the credit balance in the first place. Ask your Financial Coordinator to generate the credit balance list, then have a meeting with him/her and do research on each account to indicate the following:

1. Is it an overpayment made by the patient and is the credit owed to the patient?
2. Is it an overpayment by the primary/secondary insurance carrier and the money is owed to the insurance company?
3. Is it prepaid funds by the patient for treatment that has not been performed yet?
4. Is the credit balance due to the insurance company paying more for a service than the amount posted to the patient’s account?

Let’s review each scenario mentioned above.

1. If the patient contributed more than needed at the time of service as part of the “guestimation” of their portion, the patient should be contacted to determine if they choose to keep the credit balance on their account for treatment to be performed in the future, or if they prefer a refund check.

Contact your state dental society or board and see what the guidelines are for returning credits to the patient. In California, for example, it is 30 days.

If the patient elects to keep the credit balance on their account, a note to that effect should be logged in the patient’s digital record. If the patient requests a refund, the ledger should be printed showing how the credit balance was created, and this “invoice” should be presented to the accounts payable person for reimbursement. Once the check has been written, an entry should be made on the patient’s account and attached to the “refund to patient” adjustment, indicating the check number and the date it was mailed.

2. If the funds should be returned to one of the insurance companies after an inquiry is made (typically it is the secondary that overpays), the same process as above is followed, using a “refund to insurance” adjustment code. The patient nor you should benefit from two insurance companies paying more than the fee for the service.

3. If the patient has prepaid for services in advance, a note should be made to that effect so there is no question.

4. It is common for the credit balance to be a result of the insurance company paying more for a service than the amount posted to the patient’s account.

With most practice management software programs, you have the option to submit your claim to a PPO carrier with your “office fees” and at the same time, post the PPO fee to the patient’s account. In fact, insurance companies encourage you to submit your fees opposed to the already discounted PPO fee. It is the only way they can keep up with what dentists are actually charging.

If your fee schedule for a PPO plan is not current, the claim is submitted with your office fee and the patient’s account is posted with a potentially inaccurate PPO fee. As a result, the insurance company pays more based on the office fee that was submitted. This creates an overpayment on the patient’s account.

As a practice owner, it is important for you to understand this money is not a credit balance that requires the funds to be returned to the insurance company. Instead, the fee schedule should be increased to reflect the correct amount on the patient’s account and a production code should be posted to the patient’s account for the difference between what the insurance company allowed and paid vs. the amount that was posted to the account. We use a production code because the original production amount was not accurate, so the production needs to be increased.

You can create an “in office” production code such as PPO and use this code when posting the correction. This will also allow the production for that provider to be more accurate.

The difference between an old PPO fee and the increase that the PPO plan is allowing is usually only a few dollars, but it should be corrected.

If you would like more information on how McKenzie's Consulting Coaching Programs can help you implement proven strategies, email info@mckenziemgmt.com

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