The "Write" and Wrong Way to Write-Off

Is your company missing out on hundreds, maybe even thousands of dollars simply by writing off claims that unknowingly could have been collected on?  

A very conservative write-off figure for some of our customers is 1-2% of monthly charges commonly referred to as the “Bad Debt Allowance.” As an example, if a facility has $200,000 in monthly charges then they can expect at least $2,000 per month or $24,000 per year. 

Through this brief article, let us help you analyze your write-off practices to determine if there is a better way!  Please leave questions/comments/concerns in the comment section below and we would love to help!

Lets first do a quick refresher on which write-offs may be deemed necessary and which may be considered unnecessary.

Necessary or Approved:
-Contractual; the amount over the carrier's allowed amount is written off
-Charity; may be in accordance with a community indigent care effort, a policy adhered to in a faith-led healthcare system, or a financial assistance program.
-Small Balance; outstanding amounts that may not be worth the time or cost of labor to collect on
-Prompt Payment or Self-Pay Discounts; discounted treatment costs for those paying in full at their appointment or who do not have insurance.

Unnecessary:
-Timely Filing; tardy filing in accordance with payers requirements (Medicare requires within 12 months, Medicaid varies, commercial payers vary)
-Uncredentialled Provider; caused by filing a claim for a provider before they are credentialed with the payer*
-Administrative; manager approved due to issues such as: not in-network, practice error, bad service to the patient, etc.
-Bad Debt; simply difficult to collect and you choose to no longer pursue payment. 
-Collection Agency; written off A/R and given to a collection agency on the behalf of the practice (not forgiven, may go to different A/R or collection account).

5 Helpful Write-Off Management Tips

1- Categorize Write-offs (Necessary, Unnecessary, and then into subcategories as needed).  This will help streamline your approaches and make how you tackle these potential write-offs efficiently.

2- Set standards for which write-offs need approval by a manager.  This will help save time for the manager and the biller by not getting routine write-offs signed off on.  Also be sure to have a system of checks & balances to ensure accuracy and that there is not an abuse of power here.

3- Hold a monthly review session for write-offs where trends, issues, accuracy, and areas of improvement are reviewed.  You need to make adjustments to your system according to fee and contract adjustments.  This also shows the staff they are being held accountable for their work.

4- Finally, try not to write-off more than 5% of expected claim collections (utilized the formula gross charges minus necessary and approved write-offs).

5- Consider utilizing a third-party medical billing company to review claims and report back which should be written off, which can still be collected, and to see if old AR is collectable as well.  This is one of the custom medical billing services REVEX offers; if you are interested, please reach out to info@mcaskilled.com for a free consultation or drop a comment below!

Please leave questions/comments/concerns in the comment section below and we would love to help!



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