Are you curious about the term “write-offs” in medical coding companies?
Write-offs are the amount a service provider must remove from his earnings. There are two types of write-offs: those based on the terms of a contract and those based on subsequent negotiations. The difference between the total invoice and the maximum allowable by the carrier is nullified by a contractual write-off.
Hence, it is essential to conduct regular coding audits to ensure the reliability of financial data. They ensure that your business’s code aligns with legislation and standards. In addition, monetary savings opportunities may be uncovered through write-offs discovered through coding audits.
It is usual practice to classify write-offs into two broad groups based on the underlying factors:
Table of Contents
Common Types Of Write-Offs In Medical Coding
Charity, small balances, no insurance, and contractual adjustment write-offs are among the most common.
- Charitable write-offs – These are provided as a matter of course whenever the amount collected and the fees charged are in harmony. You can think of them as an honest attempt to help the community financially without breaking any rules.
- Small balance write-offs – These are considered when a patient’s account has a balance of less than $10 or $15 and is therefore considered uncollectible. Instead of paying modest bills in the mail, primary care providers prefer to receive payment in person.
- No insurance and prompt payment write-offs – In most cases, these are supplied by financially secure practices that offer discounts to patients who pay in whole after their care, are uninsured, or become so near the end of their treatment that they can no longer afford insurance.
- Contractual write-offs – Differences between the agreed-upon fee-for-service amount and the patient’s maximum allowable part are called “contractual write-offs.”
What Is A Provider Write-Off?
A provider write-off refers to the amount subtracted from the total cost of care by a facility that acts as a healthcare professional for an insurance company. One way in which insurance companies “write off” costs that exceed policy limits is by simply declining to pay providers for services that were provided.
Comparison Between Billed Amount, Allowable Amount, And Write-Off Amount?
If you visit a doctor who is part of your insurance network, you won’t have to fork over any extra cash to cover the gap between the allowable cost and the actual cost billed; instead, your doctor will have to discount the excess off your bill.
You should use one when you have good reason to believe you are entitled to a write-off—for example, when the patient’s insurance is invalid—. This qualifies as a legal tax write-off.
Guidelines For Managing Write-Offs
- You can begin with the most fundamental write-offs and add more as you see fit.
- Sort out which types of write-offs need upper-level clearance. Don’t have employees request permission for minor write-offs, but don’t give them free rein to write off whatever they want. Include a discussion of write-offs in your compliance plan so that all employees know their roles and obligations.
- Write-off categories should be reviewed weekly, with special emphasis paid to outliers and long-term patterns. It’s important to remember that if you increase your fees without renegotiating your contracts, the amount of money you have to write off because the terms of those contracts will go up, and your performance review should reflect that.
- Regularly review write-offs to ensure accuracy. Your team will appreciate knowing that their efforts are being monitored, and you’ll have confidence in the accuracy of your financial data.
- Avoiding write-offs of more than 5% of your total anticipated collections is recommended. Expected collections are calculated by subtracting necessary and allowed write-offs from the total amount of gross charges.
Regular Coding Audits
Since coding is the most time-consuming and difficult process, mistakes in the code may appear unavoidable. The overall health of the Coding Process can be improved through regular coding audits that uncover errors, failures in following coding principles, and client-specific protocols.
Analyze Your AR Days
To maximize collection and minimize claims in extended days or more than 60 AR days, it is essential to analyze delayed and denied claims and perform consistent follow-ups to guarantee claims are paid within 30 days. We all know that the longer one spends in AR, the less likely one will be paid.
Cost Vs. Reimbursement
What percentage of claims are settled for the full amount or according to the fee schedule is also crucial information to have at your disposal. Since unpaid claims can add up to a significant revenue loss, Revenue Cycle Management must analyze and appeal with the payer until the claims are properly settled.
Write-off Percentage
Understanding the leaks in your revenue can be achieved by keeping tabs on the amount of money you had to write off when examining your paid claims. Assuming that most of your write-offs result from being paid less than what was originally agreed upon, you should investigate ways to either recoup those funds or reduce the frequency in the future.
Paid Vs. Denial Percentage
Checking your paid and refused claim % once a week or once a month. By doing so, you can identify problem areas in your revenue cycle management and take steps to fix them.
Physician Credentialing
Improving Revenue Cycle Management can be as simple as ensuring your doctors have valid credentials and that they renew them on schedule. A qualified medical team is essential for insurance claims to be processed. Claims will be dismissed without further review if the physician’s credentials are invalid. Keeping track of when your credentials expire might help you avoid a last-minute panic that could cost you money.
