How To Improve Credit Balance In Medical Billing
In the delivery of healthcare services, credit balances play a very important role in protecting a healthcare provider from fines and compliance issues. It is considered as one of the most significant risks in the revenue cycle as unresolved credit balances can lead to financial risks for a healthcare facility.
There can be quite a few reasons to lead to unresolved credit balances; however, it is essential to address them effectively. Therefore, incorporating efficient practices can help you improve credit balances in medical billing. This article discusses how you can do that.
What is a credit balance?
Before we understand how to improve credit balances, it is important to understand what that term denotes.
Credit balances are the consequences of adjustments and improper payments made to the existing practice that exceeds the posted changes. They occur due to complicated payment processes and healthcare billing systems. They are a liability and not a positive asset for the provider and lead to financial risks as the “cash” belongs to the patient or payer.
The Healthcare Financial Management Association identifies three main causes of credit balances, which are:
● 10% mis-postings
● 35% overpayments and duplicate payments by patients or other payment providers
● 55% incorrect publication of allowances
There are various financial risks associated with unresolved credit balances. It leads to Medicare penalties, fraud, misstated profits, lost billing opportunities, wasted labor and processing costs. Not to mention, it also leads to negative publicity and loss of goodwill.
Best practices to improve credit balances.
To summarize, some pointers that you can incorporate to improve credit balances are:
● Identifying the true sources of overpayments
● Working balances from oldest to newest
● Analyzing the credit balances using:
○ Patient admission forms
○ Patient accounts receivable details
○ Payer remittance advice
○ Hospital records
● Determining whether a refund is due to Medicare, another insurer, the patient or beneficiary
● Adhering to payment rules
● Identifying primary payer and liable insures
● Verifying the validity of credit balances
● Monitoring staff compliance with different procedures and policies
● Avoiding preventable causes of credit balance
● Seeking professional assistance
Importance of credit balance in healthcare revenue cycle management (RCM)
RCM is considered a core component of fiscal responsibility. Credit balances in RCM need to get identified and resolved. A credit balance review is required and regulated by law. It is necessary to clean up the open accounts in accounts receivable (A/R). Credit balance resolution services ensure that every credit, adjustment, and payment is checked in the A/R spectrum. If any error caused due to incorrect billing, payment duplication, or coding error is identified, a medical billing company will help pinpoint the source and resolves the mistake.
In conclusion, it can be said, resolving credit balances can be an expensive and time-consuming activity. It is not recommended to ignore them, as unresolved credit balances can lead to negative effects and financial risks in the future. Therefore, healthcare providers should engage in third-party vendors who implement efficient processes and have experienced resources that can help resolve the credit balances of the your organization.
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