Self-pay credit balances can be a problem for your organization. Left unaddressed, they can have harmful consequences down the road, yet taking the time to properly resolve them can be a daunting task. So what should you do? Here are some pointers on how to resolve these challenging items on your balance sheet.
What are Self-Pay Credit Balances?
A credit balance is a balance that shows on self pay accounts as a credit to the payer. They come about as a result of human error: generally, a credit balance is the result of a payment that has been improperly posted by a couple of different parties. Because it is a time-consuming hassle to issue refunds, many hospitals will instead allow the credit balances to accrue over time, trying to ignore them in hopes that they will eventually go away. But they won’t—and they can cause your organization real problems.
What’s the Big Deal About Self-Pay Credit Balances?
One reason self-pay credit balances are a problem is because they can lead to unpleasant problems down the road. For example, an insurance company may believe that it has overpaid and may request a refund months after the payment was originally made.
Another—but somewhat related—problem is that the liability of carrying too many credit balances on an organization’s books can lead to compliance issues. An organization is not supposed to have over a certain amount of liability on its books (the exact amount will of course vary depending on a number of factors). When there are too many credit balances, it can cause compliance problems.
What Can You Do
Ultimately, resolving credit balances is going to take time and effort on your part. Some hospitals have full-time staff members whose only job is to review patient accounts and resolve any outstanding credit balances.
Outsourcing this work is an option for some hospitals that are unable or unwilling to retain staff simply for the purpose of dealing with credit balances. Depending on a number of factors—the size of your organization, your operating budget, and the availability of in-house employees (among other things), outsourcing this task may be the right choice for you.
While there’s really not a shortcut for dealing with credit balances that have already accrued on self-pay accounts, you can take steps going forward to minimize this issue in the future. A key component is having properly trained employees in order to minimize the chance of an error in posting credits to an account.
In addition, employees need to be aware of the limitations of the accounting system you are using. Some systems result in the inadvertent creation of credit balances simply because the users don’t understand how the system works. Keeping your employees updated and trained on the accounting system will go a long way towards reducing the need to come in and clean up excess credit balances.
By being proactive and ensuring that employees are properly trained, you can reduce the frequency of self-pay credit balances and help keep your organization running smoothly.