#177 The Patient Payment Posting Mistakes Inflating Your AR (Part 3 of 4)

When your patient AR report shows thousands in past-due balances, it’s easy to blame high deductibles. But a lot of that money is already in your bank account sitting unapplied—or it’s a phantom balance the patient never actually owed. 

In this episode (Part 3 of our Payment Posting series) we walk through the four patient payment posting mistakes that inflate AR and damage patient trust: 

• Unapplied patient credits — money in your bank, AR still open, patient gets billed again 
• Payer denials shifted to patients by mistake — poster doesn’t read the ERA denial code, patient gets a statement for money they don’t owe 
• Co-insurance misposted as a flat copay — wrong payment code at check-in, ledger breaks when the claim processes 
• Unauthorized write-offs — billers clearing their queue by wiping balances with no authorization or audit trail 

Each mistake has a fix you can implement this week. 

📋 Free Payment Posting Audit Checklist — the same framework we use in real practice audits: →https://eligibility.natrevmd.com/payment-posting-checklist

Resources mentioned:

1. Payment Posting Audit Checklist — https://eligibility.natrevmd.com/payment-posting-checklist

2. Book a revenue review — https://calendly.com/heather-natrevmd/

3. All episodes — natrevmd.com/podcast 

4. Subscribe on YouTube — https://www.youtube.com/@NatRevMD

Transcript

SPEAKER_00 0:04

You might think your patients are just bad at paying their bills, but here's what we're actually seeing when we audit practices with a huge portion of patient AR: that it's not always a collections problem, but it's a posting problem. Welcome to Nat RevMD, a podcast where we share tips on optimizing medical billing and improving practice efficiency so you can have the business of your dreams. I'm your host, Dr. Heather Signarelli, founder of Nat RevMD. Let's get started. Alright, so this week we are doing part three of our four-part payment posting series. So in part form, we covered the foundations. Payment posting actually is why getting it wrong can corrupt downstream metrics in your practice. Part two, we actually went through some of the insurance payment posting issues. We talked about ERAs, manual EOBs, denial codes, contractual adjustments, all the things that can quietly inflate your insurance. And today we're going to talk about the patient side. This is where practices lose trust with their patients because the mistakes we're going to cover today don't just hurt your revenue. Obviously, if patients get bills that they don't actually owe, it's frustrating for everybody. And the front desk is the one sometimes getting a lot of those questions. And so by the end of this episode, you're going to know the four payment posting mistakes we see most often and how to spot each one in your system this week and the specific process to change those fixes. All right, so let's get into it. We're walking through the four mistakes one by one. For each one, I'm going to explain what it is, why it happens, and exactly how to fix it. So obviously, order matters and inflated AR is a financial problem that you can fix. So a patient who gets a bill for a copay, they already paid, uh, calls the front desk and they are upset, they're angry, they tell their friends, and that's a reputation problem. And so that's obviously very, very frustrating. Um, mistake number one is all about unapplied patient credits. And the first mistake is really just about making sure that those patient credits that are coming are actually applied to the claim. So how this happens is the patient pays a$50 copay at the desk, at the front desk, they're checking in, prepays for a procedure, but that money gets deposited in your bank, but the front desk never links the payment to the specific charge in your practice management system. They don't link it to the CPT code, right? So the money just sits there in an unapplied bucket. And depending on your software, statements can go out that sometimes don't include that. And so they may get an itemized statement and may look like they still owe that$50 from a date of service that they did pay the copay, but it wasn't applied. And so then that patient balance stays open on your AR and a statement goes out and the patient calls confused and frustrated. And so some practice management softwares make this much easier. It does get a little tricky if you have a whole bunch of patient AR with refunds mixed in, uh, where you have uh patients who needed refunds but haven't had those done on a timely, you know, in a timely manner. And then you have unapplied payments sitting there. Or alternatively, you have a situation where a patient has a balance due for older dates of service, but that wasn't collected at the front desk. So then you get that$50 copay. And depending on how you structure your applied rules, that credit, or excuse me, that payment for that patient could be applied to an older date of service where they did have a balance that was not collected. And then you're in a situation where the patient sees a balance for the copay, but they were like, no, I know I paid that copay. But what they really don't recognize or remember is that they had an older date of service, a payment that was due. So obviously, why does this happen? This can happen for a number of different reasons. There could be a disconnect between the front desk collecting money and the billing team, how they're supposed to be applying that money to older dates of service, newer dates of service. The cleanest way to do this, obviously, is to try and keep patient payments applied to the correct date of service. But also when the patient checks in, right, and pays that copay, the front office should also be collecting any balances. So they should be collecting the balance and then that should be applied to the correct date of service. And then that copay sits unapplied until the adjudication of the right date of service is done. So we've got to just make sure that at check-in, any amount that comes in that's collected by the front desk has a has a tag, right? Is this a balance or is this a copay? It has the right date of service associated with it, that they're collecting any balances that are due. And that obviously you're reconciling between the front desk collections, any uh applied, any applied patient balances is non-negotiable and needs to be collected up front. Obviously, if your practice management system has an unapplied payments report, you want to run that. And you also want to make sure that you're managing those refunds. We can see practices that have issues around this, but if their refunds aren't cleaned up and the unapplied isn't managed, that then in certain software systems, this can really make payment statements very, very, very confusing for patients. Obviously, the better your software is, a lot of this stuff can make me much easier. Personally, Tibra is my least favorite. Well, maybe not my least favorite, but it's low on the list. Um, and it does have some wonky rules around this that cause a lot of issues. There's workflows and things you can put around it. You just have to make sure that everybody's on the same page of what that workflow looks like. So again, Tibra, not my favorite EMR system for this reason. And again, really, really important to make sure this process is understood and that the workflow and who's doing what is really, really hammered in. All right, so mistake number two, shifting patient payer balances to patients by mistake. So this actually can be a setup problem in your practice management software. So the second mistake is one where we see that obviously is going to damage patient trust. Payer balances shifted to the patients by mistake. So say a payer denies a claim, sometimes the denial is legitimate, and sometimes it's a payer error or something that you're working through, coordination of benefit issues, timely filing, whatever the denial could be. But if the payment posting rules are set up to where it auto-shifts it to the patient, even though you haven't worked the denial yet, that can be obviously frustrating for the patient. So you really want to make sure with that when those ERAs come in and the denials come in, and it automatically that it doesn't automatically move the full balance to patient responsibility unless you're really intending it to be sent to the patient. This can also happen with secondary payers. So the primary payer insurance payment comes in. And say there isn't a secondary payment or secondary payer set up or there's a coordination of benefit issues, all of that can result in, depending on how your PM software is set up, that it accidentally shifts it to the patient instead of it being something that's purposely sent over to the patient. Now, having said that, there are situations where you've contacted the patient, you're trying to get eligibility issues, you're trying to deal with coordination of benefits, and you're not getting anywhere. And so sometimes sending it to the patient and them actually receiving a bill will then actually trigger them to call to give you the right eligibility information. The tricky part part becomes then if it's past-timely filing, and then how you can you deal with that? Are you allowed to charge the patient for that issue or not? And so a lot of nuances around this. That's why it's so, so important to ask patients for all of their insurance information. Definitely go further and probe that question. Are you sure you don't have two insurances? If you do, which one do we need to be billing first? And if they don't know the answer to that, they need to be calling the insurance company to get that information. So obviously, this is how practice can end up sending patients to collections over balances, the payer created or the billing data was wrong. And so downstream statements, collection referrals, write-offs is built on bad information. So obviously, this can happen for a number of reasons, right? Payers may be moving too fast, the practice management software isn't set up, they're trusting the ER ERAs without truly reading the denial codes or understanding the denial codes, or not having uh an EOB to actually read off and just making some assumptions. So, really, really important. The biggest area that I see with this is actually the auto-posting rules and those not being managed with a review step, or there's the PM rules are just set up flat out wrong from the beginning. So, really, really important to fix those. Obviously, train your posters to review those denial codes, making sure that they understand why and when they're going to send it to patient responsibility, reviewing those patient statements before they go out. Obviously, that's easier said than done. If you're sending out hundreds of patient statements every month, you're spot checking those. Somebody's not typically reviewing every single one of those line items. So, really, really important that you have a solid process so that when your patient's statements are going out, you trust them. Um, really important that if you do have insurance AR that is still being worked, that it stays in that bucket and that it's never flipped to the patient until that insurance issue is closed with the payer. Obviously, this in and of itself can cause a lot of improvement in your patient statement accuracy. So, quick pause. If you want to check whether your team is making either of these mistakes, we do have a free payment posting audit checklist with the exact steps that we use in real practice audits. The link is in the show notes, in the YouTube description, and pinned in the comments. So please check that link out and hopefully you uh enjoy that resource. If you have any questions, shoot us an email at infotnatrevmd.com. All right, mistake number three, misposting coinsurance as co-pays. And this really is probably larger than that. It's misposting payments in general when it comes to patient payments that are collected. And I kind of alluded to this in mistake number one. But obviously, if a patient comes in with a 20% co-insurance plan, the front desk is collecting that, hopefully. And so you're maybe collecting a copay, but are you collecting the coinsurance? Or if you are collecting the co-insurance, is it accidentally flagged as a copay? Most of the time, this would be corrected if one that EOB comes in. And so you just want to make sure that your billing team has, uh feels like that they have the authority to make sure that those payments that are coming in are posted correctly, so that when it does list the itemized uh information for a patient statement, that it is all accurate and clear. Obviously, patients get confused over coinsurance and co-pays all the time anyway, but this just makes it easier if you know that when the front office is collecting something, that they're collecting it appropriately with the right flag, so that then the billing team knows, okay, that's a copay or that's a co-insurance. Obviously, the EOBs or ERAs, the payer is going to calculate the real patient responsibility, right? They're gonna calculate that$85. Um, and so then you can see that the$30 payment posted against the$85 balance, having the right codes is going to make it easier to the patient to explain what may be left as patient responsibility and why, because they're gonna call and ask the questions. Well, I already paid my money. Why do I owe more money? And so just really making sure that you understand copay versus co-insurance or deductible, that's another common question that patients get confused on. Um, we have offices, our offices have access to a patient AR-like pamphlet. Um, and I think I've sent it out in in past, but that allows for folks to really understand the patients, to understand what is the difference between copay and co-insurance and deductibles and all that stuff. So uh, because that just is going to help educate them and make sure your front desk knows the difference as well because really important. So obviously, you want to make sure that eligibility is checked. Um, and when you check that, you are knowing whether or not they have a deductible, copay, coinsurance, all of that, um, so that you can accurately collect that information at uh the front desk. So fixing this, obviously, just set it eligibility verification before every appointment, before the patient is checked in, a couple days before addressing those issues, training your front desk to read the eligibility responses, make sure that they are using the correct payment code when they're collecting this information, making sure that if they're collecting also a balance, that that's then flagged as well so that we know, okay, I'm collecting$250. And then the billing team can then apply, okay, there's a balance there from old dates of service, and I'm collecting coinsurance and I'm collecting co-pay. So you'll just want to make sure that that workflow is worked out between your PM software, your front desk, and your billing team. All right, mistake number four. All right, so this is all about unauthorized write-offs. This is gonna be really, really tough. And one of the important reasons why it's important to have multiple different write-off codes built within your system. And so, say there's uh a backlog of small patient balances,$12 here,$8 there,$20 there. And they are, say it's an in-house billing team, and maybe they're the ones who are managing those patient collections, and they just decide to create a generic adjustment code and just write off all of that stuff under$20. But the office doesn't believe that that's the right thing to do. And there's different ways to do this. Small balance write-offs can be a pain because it's costing you more money to send out the statement. Um, but at the same time, you want to have a very uh specific protocol and policy around what is allowed to be written off, when and by whom. Um, I highly recommend that the office manager has to be the one who approves write-offs or is the one that's making the policy around write-offs. So you just want to make sure that unauthorized write-offs, both in the insurance world and in the patient payment area, aren't done inappropriately or without knowledge. So, you know, we don't write off anything without the practices and knowledge uh acknowledgement if it's outside of uh contractual adjustment. Uh, just want to make sure that everybody's on the same page about why it needs to be written off. You know, how do you fix things that are being written off for the future? Or do we have a protocol around these certain write-offs are approved? Obviously, you know, why does this happen? Obviously, over on staff, right? So if you have hundreds of claims that are at that$15, you know, balance, um, and you've asked somebody to make those phone calls to collect that$15, or you're just sending statement after statement after statement every month, um, that's just going to create both a workload for them. Um, it's probably not collectible at that point. And now you're wasting, you know, 12 months of statements potentially just because you're sending them out over and over again. And that can add up. And so, really important to have a policy around small balance write-offs. When do you do it? Who needs permission to do it? How do you categorize that from a write-off code? Who do you send, you know, who are you sending to collections? What balance does that look like? And having all of that mapped out together. Um, so really, really important that the office manager sit down with the billing team and work through these processes. It is part of our checklist when we're onboarding and do practice to sit down and go over this within those first few months once we're sending out statements just to make sure that everybody's on the same page around how to manage this. So, really, really important to think through refunds, collection process, small balance, write-offs, how many statements are you really going to send up to a patient? You know, three, who then manages sending out those patient statements or um calling and contacting those patients should there be a balance still. And just that whole process, really, really important to have a process around. All right. So before we recap, like I said, if you are thinking, gosh, I need to check my system, we have that free payment posting audit checklist. The link is down in the show notes. It's a framework we use within our own uh practices to make sure that everything is as clean as can be. All right, so let's recap. Four patient to payment posting mistakes that can inflate your AR and create this like phantom balance that you think is going on. Obviously, the first was unapplied credits, um, money in your bank account, AR still open, patient gets billed. So, really want to make sure that um one, hopefully your PM software catches those and they're not sending out patient statements in that situation. Not all softwares do that. Obviously, you want to fix and make sure that those unapplied patient credits are being pulled and managed. The other thing to really make sure is that refunds are also managed as part of this. Obviously, that's typically in the practices um realm to address, but refunds can really muck up a patient's a patient's balance sheet. And so if the refunds aren't addressed and then there's new balances and the new money collected, it can get really messy. So, really, really recommend a monthly refund process. So the second was payer balances shifted to patients by mistake. Right poster doesn't read the denial code or doesn't understand or doesn't have an EOB to go with it. So the patient thinks that they owe a balance, but it was never theirs. It's still in the insurance bucket. Number three was around co-insurance and co-pays and mixing uh or not understanding those patient collections and how to apply those from both the front desk and on the backside when the claim adjudicates. And then last was really around unauthorized write-offs, making sure that both on the insurance bucket and the patient payment bucket that write-off codes are specific and there's an approval process for non-contractual write-offs. And that includes patient balance write-offs as well. All right, so in the next episode, in the final episode of this, we're gonna talk about the payment posting audit for your practice, what to look for, how to document what you find when there's a problem, how to work with your billing team if you are finding issues. Again, I believe everybody should come and sit down together, um, address those issues. Again, whether you have an in-house team or an outsourced team, my big belief is that you're all one team and that then you work through the KPI and fixing those, those. Obviously, if you're not getting the communication and the uh attention you need from your billing team, that's a different story. And that certainly deserves, you know, looking and trying to find a new partner. All right, so we'll look to chat with you in the next episode. All right. So we would love it if you would subscribe so you don't miss an episode and certainly share it with a friend or a practice owner or a billing lead if you found this episode helpful. All right, thanks so much.