3.4.11 Issue #469 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter

Nancy Caudill
Senior Consultant
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Two Little Known Reports that You Must See
By Nancy Caudill, Senior Consultant McKenzie Management

Inquiries are always welcomed from clients and non-clients regarding articles and other information that is viewed on the McKenzie Management website. Recently, a call came in from a former client questioning the large credit balances that were on the practice’s Aging Report.  He was asked to email a copy along with the account statements involved.

Before sharing the findings with you, let’s discuss two very important reports that you, as a practice owner, should be reviewing monthly:

The Credit Balance Report
Depending on your software, this report can easily be generated to illustrate all the accounts in your practice with “credit” balances. These are accounts that have had payments and adjustments posted against charges that created a negative/credit balance. Many state dental boards require that these “overpayments” by the patient or the insurance company be reimbursed within 30 days.

You should have a protocol in your practice indicating how to manage credit balances in a timely manner. An example would be:

  1. Review the account to determine whether the credit balance is correct or should be transferred to another family member.
  2. If not, print a copy of the account ledger that illustrates how the credit balance was created and place on the doctor’s desk, requesting a reimbursement check be written.
  3. The reimbursement check should be written and returned to the business person for mailing.
  4. A “refund to patient” debit adjustment should be posted, along with another entry stating that the check was mailed, as well as the check number.

Entering a notation on the account ledger that the check was mailed creates a simple “paper trail” should the patient call requesting the status of their refund. The purpose of reviewing your Credit Balance Report monthly is to confirm that credit balances are properly managed and they aren’t being created incorrectly.

The Adjustment Report
Credit adjustments are posted to accounts for a variety of reasons, such as:

  • Insurance PPO
  • Bad Debt write-offs
  • Small Balance
  • Senior Courtesy
  • Family and Friends Courtesy
  • Professional Courtesy
  • Transfer $ - Credit
  • 5% Cash Courtesy
  • Posting Error - Credit

The above are examples of adjustments that affect your gross production numbers. Gross Production – Adjustments = Net Production

There are also debit adjustments, such as

  • Patient and Insurance Refunds
  • Recharge Bad Debt write-offs
  • NSF Recharge
  • Transfer $ - Debit
  • Posting error - Debit

Debit adjustments usually affect collections (refunds and NSF checks) but a recharge of a bad debt write-off affects production, as well as a posting error. When posting a “Transfer $ - Credit” there should always be a “Transfer $ - Debit” to offset it, as this is used to transfer money between patients or accounts.

The business team post adjustments routinely to manage the accuracy of your patients’ accounts.  At the same time, it is your responsibility to review the Adjustment Report each month to monitor their postings. Your production adjustment percent should not vary from month to month unless it is something unusual that you would be familiar with. When you notice that your credit adjustments are higher than usual, consult the Adjustment Report and review questionable adjustments with your business team.

Dr. Jones had over $50,000 in credit balances! He was extremely concerned, knowing that these were supposed to be refunded back to the patients. A few patients had several hundred to more than a thousand dollars in credit balances. Something was not right!

Upon review, it was noted that the patients carrying these large credit balances had “dual” PPO insurance coverage. The primary insurance paid their benefit and the difference between the “allowable” and the practice fee was posted as an adjustment, leaving the patient with a balance. The secondary claim was submitted, at which time they remitted their check for the remaining balance, leaving the patient with a $0 balance. Unfortunately, the business team member was also posting the difference between the practice fee and the “allowable fee” from the secondary remittance, now creating a credit balance. In some cases, more than $1000!

After discussing this with Dr. Jones, I found out that a new business employee was hired and it was “assumed” that she understood how to post PPO adjustments.  Obviously, in this case, she did not! Had Dr. Jones been reviewing his Credit Balance Report and Adjustment Report, as well as tracking his gross and net production, he would have realized within the first month that there was a problem and it could easily have been resolved.

Sometimes we “don’t know what we don’t know” and we “think we know what we know.”  This is true for employees, as well. Supervised training is essential for new employees, even if they indicate that they “know” how to complete certain tasks. It is very possible that the protocol they followed in their previous position is not the same protocol that you follow in yours.

There are occasions when you lose a key business employee unexpectedly and the baton doesn’t get passed to the new hire. Invest in training for the new person on board.  It will save you many dollars and bottles of aspirin in the long run.

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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