Credit balances usually occur as a result of honest mistakes, errors in processes, or simply due to the timing of payment. It has been suggested that an error rate of 1-2% is inherent in all processes that require human intervention, not the least of which is a hospital’s billing process.
The Healthcare Financial Management Association (HFMA) estimates that a small-to-medium-size hospital generates approximately $2M in credit balances annually.
A practical example:
Hospital A, a 250-bed acute care facility with annual revenues of $90 Million, has $1.8 Million in credit balances representing approximately 2,000 patient accounts sitting on its books.
Typically, 15% are overpayments that result in refunds to the patient or payer. The remainder are usually the result of posting errors, a high percentage of which (up to 60%) will yield into a one-time net income pickup when corrected.
But what does this correction look like? In our example above, we’ll assume that a patient’s charges for service were $23,000, but, at the time of posting, the amount was miskeyed as $2,300 instead.
Under Accrual Accounting, a corresponding entry is made under Accounts Receivable, albeit in the erroneous $2,300. When discovered and corrected, the immediate pickup on the books is $20,700, not to mention the additional billing opportunity for the same amount.
To remediate these internally would require more than 1,300 resource hours*, say nothing of the opportunity associated with pulling resources off of daily tasks such as billing, payment posting, etc.
The Business Side, Inc. have the resources and expertise ready to go on short notice to organize, prioritize, and remediate your credit balances in a rapid, methodical fashion in order to get you the biggest pickup while keeping the costs for such down, allowing your billing resources to remain focused on current day-to-day functions.
Our rich industry knowledge and deep payer relationships allow us to do the work in a fraction of the time that other resources might and to deliver a strong “win” to the bottom line in a situation that is otherwise seen as a necessary “chore”.