A credit balance is any account in a negative balance, caused by improper or excess payment made to a provider. Though credit balances can represent actual overpayments made by the payer, they often result from preventable billing errors such as improper coordination of benefits, duplicate payments posted, errors calculating coinsurance, and many more.
Because so much time is already spent submitting claims, colleting payments, etc. – it’s no wonder medical billing professionals seldom look forward to spending additional resources returning money. Nevertheless, this critical function of revenue cycle management cannot be overlooked. There are three main categories of credit balances, defined by their payer source: patient credits, commercial credits, and government credits.
Patient credit balances are those caused by improper payments from patients, typically resulting from miscalculating their coinsurance or out-of-pocket costs.
Commercial credit balances are caused by improper payments made by commercial insurance payers, often caused by registration errors, improper coordination of benefits, and contract issues.
Medicare and/or Medicaid credit balances are improper payments made by government payers, they carry with them the strictest regulation and highest probability of fines & penalties if mismanaged.
Credit balances are complex and have many root causes, however, there are a number of common causes that almost all providers run into.
Changes in billing occur when a bill is audited, resulting in a charge being added or removed from a bill. A charged being added or removed can result in a change to the reimbursement of a claim. When a refund is due to change in billing, the payer has already paid the claim based on the original charges.
Registration errors lead to Coordination of Benefits issues. When patients are checked into a hospital, they typically present their insurance card to the registration clerk. There may be times when a patient has two insurance carriers, but is not aware of how the benefits should be coordinated. Claims can then be billed out incorrectly. For example: Both the primary and secondary policy could get billed as primary because of an oversight. Often, insurance information is updated after a claim has been billed.
Another scenario would be that the patient was simply registered with the incorrect information. Even a single payer registration could be subject to errors such as data entry, incorrect effective dates, failure to verify current eligibility, etc.
This is similar to the previous error. Even if all registration protocols are followed perfectly, there is still the possibility of a coordination of benefits error(s). For example, a secondary payer could pay as primary, not knowing that there is other coverage - same goes for tertiary or quaternary.
Providers contract with insurance payers to pay negotiated rates for various services. When these contracts expire, an insurance company may pay following the expired contract.
Duplicate payments are 2 identical payments. How this is caused can often be a mystery, but it does occur quite frequently.
Multiple payments is when a claim is paid (usually correctly) and then an additional payment is made, causing the credit. This can also occur when a claim has a change in billing. The claim gets paid correctly based on the original charges and a rebill is sent for the correct total. That corrected claim also gets paid, causing a credit.
Resolving credits is not always a straightforward process, often involving extensive research on each individual account in a negative balance. At larger hospitals and health systems, this is practically untenable. Without partnering with a vendor specialized in credits, or applying substantial human resources to them, it’s not uncommon to see more credits being created than resolved, leading to a growing backlog of credits and growing financial pressure.
While some credit balances are the result of an overpayment, many more are the result of an improper payment that cannot be resolved simply with a refund. The complexities of credit balances make them a real challenge for hospitals and health systems, that's where Crossroads Health comes in! Credit balance resolution isn't just an add-on service for us, it's all we do. Our staff is made up of credit balance experts whose sole focus is the complete resolution of credit balances.
The short answer is yes, credit balances can be prevented! That said, it is quite difficult to do so within the existing landscapes of EHRs that lack appropriate functionality and with vendors improperly managing credits due to their massive profit incentive from payer contracts.
Crossroads Health, on the other hand, has built a complete credit balance solution designed to properly resolve ALL credits (regardless of source or dollar amount) then identify their root-causes and implement corrective actions to prevent them. Discover the complete credit balance solution today by requesting a consultation with Crossroads Health.