I would love to take a poll to see what practices are doing with the credit balances patient’s have accrued…if anything at all. Among the dental offices we have worked with, it is across the board on how each handles an account when the patient ends up with a credit balance. Some offices just leave the balance sitting there, hoping the patient will come back and use the credit. Others contact the patient and ask how they would like to handle it, a refund or hold the credit on the account.
There are a few practices that immediately send a check to the patient. However, there are also practices that don’t even realize the credits are there, or that the number of accounts with them is so high.
Let’s talk about the best way to handle these accounts.
First and foremost, there are rules and regulations on how to handle these accounts so just ignoring them is not the correct way to go. Let’s discuss those:
You can only hold a credit balance for future use if the patient requests that in writing.
If a patient doesn’t return for treatment, the dental office MUST refund the money. If the practice does not have the patient’s address and cannot get in touch with them, the money goes to the state. This is called unclaimed property. If you have never searched your name there, you might want to do that and see if there is any money for you. It is illegal for a business not to report unclaimed property to the state.
Each state has its own regulations on how to handle unclaimed property. The National Association of Unclaimed Property has a link to the information for each state. You can find that at https://unclaimed.org/. If you choose Report at the top of the website, you will see the option for State-by-State Reporting Information. This will tell you how long you can wait to report, how to report and the due dates for reporting and when payments are due.
With that being said, you will want to create a protocol for handling credit balances in your practice. Do not let the number of accounts or amount of the credit balances climb so high that it is an overwhelming task. I have seen this in offices that are looking to sell the practice, and they don’t even realize the task has completely gotten away from them. Don’t let that happen to you! No one is going to want to buy a load of credit balances from you but more importantly, you might have to pay hefty fines to the state for not reporting the credits.
Consider the following tasks when setting up your protocol:
Run a Credit Balance Report out of your software on a monthly basis. This will keep the task manageable.
Each credit balance should be investigated to verify that the credit is real. There are many times a credit balance has occurred because an incorrect PPO adjustment was applied, a payment was mistakenly entered twice, or a procedure wasn’t posted to the ledger. Take the time to determine the validity of the balance and ensure that the person verifying these credits understands what they are looking for on the account.
Once the credit is verified, contact the patient to let them know the credit exists on their account.
You can give them options on how to handle the credit: do they want a refund or keep it on their account for further use. If they choose to save it for later use, you will need to get that information in writing for your records.
Some offices will send a statement with the credit balance and give the above options. The patient can make their choice and send it back to the office for processing.
If the credit is to the insurance company, the office needs to call the insurance company and ask how to handle the overpayment.
Always document any conversation you have whether it be with the patient or the insurance company. This documentation should include:
Date and time of the contact
Team member making the call
Who the team member spoke to regarding the overpayment
The solution that was agreed upon
Determine when and how refunds will be made to your patients and add that to the protocol
If the practice cannot get in touch with the patient regarding the balance, this is when reporting to the state comes into play. You will need to create a process on how this will be handled. Reporting for most states is required once a year. The deadline for some states is July 1, others November 1st, etc. Please go to your state’s website to find the regulations you must follow.
Please begin handling the credit balances in your practice if you have not been doing that already. It is an important part of your business. Take the time to review each account with a credit balance. Many times, the credit is an error that will need to be fixed. If not, make contact with the patient or insurance company (whichever holds the credit) and follow your protocol.
A couple of things to remember are:
This is not the practice’s money. It belongs either to the patient or back to the insurance company.
The state will fine you if you are not processing and reporting these credits to the patients as well as the state.
Handling these accounts on a regular basis will ease the burden when having to complete the tasks of verifying the account as well as sending those refunds. You don’t want to suddenly find out you have $50,000 in credits that require refunding. That is a chunk out of the bank account all at one time.
If you have any questions about handling your credit balances or how to know if they are legitimate credits, please do not hesitate to contact us at info@gtsgurus.com
Janice Janssen, RDH, CFE, Consultant
At age 14, Janice Janssen got an after-school job working for her dentist. Twenty-something years later, she is the co-founder of Global Team Solutions and an expert in practice consulting. Besides hands-on experience, Janice has gained professional recognition for her hard work and commitment to excellence. She is co-author of OMG! Office Management Guide, the “bible” used in GTS training workshops. She is a member of the Academy of Dental Management Consultants (ADMC), and is a Certified Fraud Examiner (CFE), which positions her as an expert in educating dentists to deter fraud and embezzlement in their practice.
Janice can be reached at: janice@gtsgurus.com
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