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Understanding Write-Offs in Medical Billing

Understanding Write-Offs in Medical Billing

A write-off is an amount that a practice deducts from a charge and does not expect to collect, thereby ‘writing it off’ the accounts receivable or list of monies owed them by payers or patients. A write-off is an amount that cannot be collected from the patient due to several issues. Collecting accurate reimbursements from insurance and patient is really important for any practice for their financial suitability. Any practice will try their best to collect accurate reimbursements from patients and payers, but still, why any practice has to provide a write-off, some of the reasons are listed below.

Mandatory/Approved/ Necessary Write-Offs

These write-offs are provided as part of your practice’s financial rules or as per the terms of the contract.

Contractual write-offs

As per your contract with the payer, every procedure code is assigned a dollar amount called an allowable fee. While submitting claims it doesn’t matter, how much you charge for the services, the insurance carrier will pay only an allowable fee. In such a case, you have mentioned the rest amount as a contractual write-off.

Charity write-off

There are again related to your practice’s overall philosophy. Some practice mentions it as financial assistance towards community or financial assistance program. You need to be clear about what falls in the category of charity so that your billing team can account for them accurately without any confusion.

Small balance write-offs

As the name suggests, small balance write-offs are provided when the balance is not much even to raise an invoice. If the balance is $12 then, sending mailing invoices, calling to remind them would be a lot of effort, in such case provider write-offs such an amount. Normally practices add that amount to patients’ next visit and collect it at the office when they visit the next time.

Promotional write-offs

To encourage 100% payment at the time of visit, some practices also offer promotional write-offs. In the case of self-pay patients with no active insurance coverage, such write-offs are provided to reduce recovery efforts.

Other Write-offs

Write-offs mentioned above are either part of your financial philosophy or contractual obligation towards the payer. While following mentioned write-offs represent inefficiencies in your medical billing operations. Such amounts should have been collected but due to some inefficiencies, your practice has to mark it as a write-off and let go of the amount.

Uncredentialed write-offs

These are quite common write-offs for any practice. Provide may not be credentialed with payer so payer won’t be paying any amount. You have to let go of this amount as the patient has active insurance coverage and due to lack of credentialing, you have to write off this amount. Most practices take insurance details in advance and in the case of new payers, they inform patients about non-coverage and self-pay situations.

Timely filling write-offs

Every payer has a deadline for submitting charges, sometimes your billing team misses some charges. Submitting a claim after the timely filing limit will result in claim denial and you have to write off this amount. Medicare requires that claims be filed no later than 12 months after the date of service to be paid. Medicaid varies from state to state. Commercial payers usually have very tight timely filing limits and most average three months.

Admin write-offs

This write-off may be provided in case of an unsatisfactory patient experience. These write-offs are situational and are approved by the practice manager or providers as per the situation.

Differentiating Between Write Off and Adjustment

Medical billers while posting the payments gets confused between a write-off and contractual adjustment. As discussed above, a write-off refers to an amount deducted by the provider from a medical bill and does not expect to collect payment owned by patients or payers. On the other hand, an adjustment or a contractual adjustment is a discounted insurance rate or allowable payment based on the contract with the insurance company. For example, if the charge for a procedure is $90 and the insurer pays $80, the remaining $10 will be a contractual adjustment from the final payment, provided the patient has an active insurance plan.

Write-offs are part of medical billing but need to keep them under check all the time. You need a well-structured financial policy mentioning write-offs situations. You can’t do much about mandatory write-offs but keep a constant check on other write-offs. Make sure your other write-offs should not exceed more than 5 percent of your expected practice collections. Review your write-off amounts on a quarterly basis and make changes if required.

Medisys Data Solutions is a leading medical billing company providing specialty-wise billing and coding services. We can assist you in reducing your other write-offs like uncredentialed and timely filling write-offs. We assist you in every step of providing credentialing and submit every claim within the standard time limit. To know more about our medical billing and coding services, contact us 302-261-9187

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