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Steps to Cleaning Up the Accounts Receivable

Note: This was written recently by one of our awesome consultants, Judy Rutty, as an update to some existing material. Please pay special attention to the part about the “abandonment period” and be sure your office complies with your state guidelines. MG
 
For overdue balances:
• If an account is over 2 years old and no payments are being made, write off the balance.
• If an account is over 90 days and is less than $50, then flag the account as “Do not treat the patient until the balance is paid”. If you are using paper charts, then staple the chart shut.
• If an account is 90 days, no payments are being made and the balance is more than $50, then use one of the two options outlined in the Options for Contacting Delinquent Accounts handout.
• If an account is over 120 days, no payments are being made and the balance is more than $500, send them one certified notice indicating you will take legal action in ten days if the balance is not rendered. (A sample letter is on page 24 of Collection module.) If they do not respond with full payment, then send them to collections. If high-risk loan companies are available in your area, check with them to see if they are willing to work with your delinquent patients. If they are, then give the patient the option of applying for a loan before you turn them over to collections. If they refuse this option or the loan company turns down their application, then pursue legal action.
• If an account is over 30 days and a financial arrangement is not in place, call the patient and make one.

For clean up of credit balances:
Laws in your state govern the return of refunds to patients. Each state has an abandonment period at the end of which, patient refunds must be turned over to the state using an annual report form. Failure to comply can lead to fines and penalties. Please contact your state’s Comptroller’s office or visit their website to find out the abandonment period, annual reporting due date and the details of the reporting process.

In cleaning up your credit balances you may not be able to afford to refund all credit balances in one month. If that is the case, then determine how much you can refund each month and contact that many people every month until you have completed your clean -up process. Use these steps to clean up your credit balances.
• If a credit balance is over two years old, call first. When you reach the patient tell them “in a recent audit of our books we discovered you have a credit balance of $X. Do you want a refund check or do you want to leave this as a credit on your account?” If you have to leave a message, then identify yourself and the office and ask the patient to call you back at their convenience. If the phone number is disconnected, then send a letter with the “address correction requested” notation on the envelope. If patient doesn’t respond or the letter is returned undeliverable, write this accounts name on your list to report to the state in this year’s annual report. (If the abandonment period is longer than the age of the credit balance, flag this account as one you will have to report to the state at the end of it’s abandonment period.)
• If the credit balance is less than two years old and the amount is more than $25, check their treatment plan and recall status. Call the patient and say “in a recent audit of our books we discovered you have a credit balance of $X. Do you want a refund check or do you want to leave this as a credit on your account and use it toward the (crown/prophy) you need?” If they want to apply their credit toward their treatment or recall appointment, then offer to make them an appointment. If you have to leave a message, then identify yourself and the office and ask the patient to call you back at their convenience. If the phone number is disconnected, then send a letter with the “address correction requested” notation on the envelope. If the letter is returned undeliverable, flag this account as one you will have to report to the state at the end of it’s abandonment period.
• If the credit balance is less than two years old and the amount is less than $25, then leave it on the account and do not contact the patient.

One of the sources of bad reviews is inattention to, or deliberate resistance to returning refunds. To prevent receiving bad reviews and keep your database clean, watch for credit balances that occur when you post checks and deal with them immediately. Sometimes credits occur because the check is being applied to the wrong family member. In that case, repost the check correctly. If however the credit balance has been verified as corect, then contact the patient. If they (or another family member) have more treatment to be done, you can use this call as an opportunity to get them scheduled. If the patient prefers a refund, a quick delivery develops goodwill with your patients that can translate into referrals.