The complex process of medical billing is well known in various practices and medical centers, but there’s a specific aspect that can be incredibly convoluted, which is the concept of a credit balance.

As the owner of a medical practice or healthcare provider, you’ll need to know what credit balances are in the context of medical billing, because they can impact a range of financial transactions and need to be resolved as quickly as possible.

So, in this article, we will explore the answer to the question ‘What is credit balance’ in terms of medical billing, why credit balances happen, and the best ways you can resolve them quickly if they have occurred in your practice or medical center.

What Does Credit Balance Mean in Medical Billing?

First off, credit balance means that an amount of money is owed, either to one of your patients or an insurance company from your medical practice – it’s due to payments that exceed the cost of the treatment or medical service rendered, and they need to be resolved by your practice.

Of course, there are a couple of reasons credit balances can happen; the insurance company might make an overpayment (more than the allowed amount) to your medical practice or medical center, or a patient might pay more than the cost of the charges owed. Any excessive amounts can become a credit balance.

Now, in other scenarios, such as when the insurance coverage of a patient changes, credit balances can also happen, and it leads to a retroactive adjustment of claims that were previously paid. In cases where a new insurance plan lowers the cost paid for a previous claim, there will be a difference in the reduced payment and the original one. And this difference is the credit balance.

Credit Balance in Medical Billing: Consequences to Consider

In terms of credit balances in medical billing, there are consequences to consider, not just for your patients, but for you as a healthcare provider.

Your patients might feel stressed, confused, and concerned about receiving another bill for medical services for which they have already paid, and it can even affect their credit reports or credit scores plus the patient’s likelihood of gaining healthcare services in the future.

For your medical center, healthcare practice, or yourself as a healthcare provider, administrative costs can be a problematic consequence of credit balances as well as further paperwork to handle them. It’s your responsibility as a healthcare provider to track the credit balances to ensure you resolve them promptly, yet without timely resolutions, your healthcare practice may find itself in a difficult position.

For example, government agencies may seek to complete an audit into your medical billing process if it’s found that you haven’t resolved a credit balance. It can be take up a lot of time and lead to penalties for your practice.

Best Practices for Resolving Credit Balances as a Medical Service Provider

Yet, there are ways to resolve credit balances as a medical service provider, and following a few steps and best practices will ensure you handle this promptly and efficiently. Here, we’ll look at the best practices you can use to resolve a credit balance:

You can begin by identifying overpayments, which requires you to look closely at the patient’s account, review it in detail, and consider why the credit balance has happened. 

When you’re analyzing credit balances, you can either use a patient admissions form to review the payment details or the accounts receivable details of the patient to review all of their payments. Stick to routine credit balance reviews and include them in your revenue cycle management process.

We then advise taking action promptly if you notice an overpayment. Legally, if you’re a Medicare Part A or B provider, you have an obligation to report overpayments and return them with a balance transfer within 60 days of identifying the credit balance.

Now, you have the option to issue a refund to the insurance company or the patient when handling credit balances. But you can also adjust a future medical bill to incorporate and account for the credit balance or build a good relationship with the insurance company and work with them to handle an over payment.

Work Alongside a Medical Billing Management Service Provider

Of course, it can be challenging to manage credit balances as a medical service provider. So, what’s also ideal for handling this is to work alongside or partner with a medical billing management service provider, such as PMN, as choosing to outsource your medical billing process with services such as ours can mean fewer mistakes and fewer chances of overcharging.

We can do this by helping you ensure you use the correct billing processes and offering a medical billing and coding audit. Such audits mean the coding and billing are as accurate as possible, ensuring you avoid mistakes on your end and are less likely to charge a patient twice for medical care.

Using accounts receivable management, medical billing management services can also help you refile corrected claims and avoid making errors during the process, as well as collect owed payments with precision, and credit appropriate accounts when required. This means you can also minimize the gap between receiving owed payments and handle this with accuracy to ensure patients do not overpay.

They can also offer you the tools you need to monitor the financial performance of your practice of health care center.

Choose a Medical Billing Services Provider Such as PMN to Avoid Credit Balances

There’s always medical billing support available with a provider such as PMN; we can help you minimize the chances of credit balances happening with your healthcare practice or medical center. We’re here to help, particularly if you’re unsure how to manage the billing process effectively and charge clients with precision or you require specific tools and software to have additional visibility into the performance of your medical practice.

We are backed by more than 20 years of experience in medical billing services and coding support, so we are ready to offer the services and software, tools and advice needed to help you handle credit balance issues.

If you’re trying to find out further facts about our services, go ahead and contact Physicians Management Network. Our client-centric medical billing and coding company can aid your medical center minimize – reach out today for more information.

FAQs

Should a Medical Practice Write Off Credit Balances as Bad Debt?

This isn’t recommended since it applies to debts that are not likely to be collected. Instead, one of the best practices for credit balances is to first look into the credit balance and then return any overpaid funds. You can either return these funds to the patient or their insurance company if they have overpaid for treatment.

When Processing a Credit Balance and a Refund is Due to a Patient which Actions Should You Take?

This involves checking that you’ve got the patient’s correct current address as a first step. It’s key to making sure that when you send the refund the patient will actually receive it. After checking this, you can proceed to send the check to the patient.