I am willing to wager than no radiology billing company was ever chosen by a group or imaging center because of the way they worked credit balances and issued refunds. There is little glamour in the subject.
What are credit balances?
Credit balances are monies owed by the company to patients and insurance companies from overpayment of services. These occur when payments and adjustments exceed the actual posted charges.
Some groups who aren’t on top of their game might think this is a positive asset. Credits do sound good, right? Well, credit balances shouldn’t be mistaken for extra revenue. Rather a corporate liability that must be paid out. On a billing consultation, I once told the president of a large radiology group that they had $600,000 in credit balances. He was excited until I told him what this really meant for him.
Why are credit balances important?
Failure to properly address credit balances and issue refunds can have a hugely negative impact on the provider. Here are just a few consequences of mismanaged credit balances…
- Penalties + fines
- Misstated profits
- Lost revenue
- Reduced staff productivity
- False sense of security
Despite not being very fun to talk about, credit balances and the process of issuing refunds is extremely important. In the event a patient, or an insurance company overpays, it is critical to have a system in place to generate refunds, both correctly and in a timely manner. We’ve seen many cases where this system is lacking, or non-existent, and it’s amazing how quickly the entire accounts receivable process starts to unravel.
Related: 6 Ways Radiologists Screw Up Billing
In auditing groups, I have seen all kinds of mismanagement. In one case there was the co-mingling of funds between the billing company and the group. Another was the imaging center whose policy it was to not issue refunds unless they were requested. These are all very big mistakes carrying serious financial and legal implications.
It is illegal not to issue refunds. Credit balances do not have to be for federally-funded patients to violate the law. All refunds must be refunded within 60 days from the receipt of the excess payment. State laws may vary as well and must be consulted. There are also laws about unclaimed property that must be followed and can be audited at any time.
Radiology Billing Mistakes—Are you giving out free money?
In the case I mentioned above with the $600,000 credit balances, the refunds had been mismanaged for years. We discovered that about 50% of their issued refunds weren’t actually due. Essentially, half of the money the group credited out was by mistake. Do you think the patients cashed those checks? Absolutely!
Dexios was hired by this large radiology group to assess the entire billing system. During the process, we discovered that most of the credit balances were not due, rather created through sloppy payment posting (double posting adjustments, etc.). Fortunately, we resolved about two thirds of the $600,000 in credit balances without issuing a refund by cleaning up the group’s accounting.
Schedule a practice billing consultation now!
If your refunds and credit balances are causing you concern, let Dexios check it out. We may find that many of the credit balances are not actually due. We’ll also help you put in place a proper system for handling credit balances and educate you on what they are and what they mean for your group.
Stay compliant and keep your revenue cycle flowing smoothly, contact Dexios today for more information.
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