Calming credit balance chaos

As a healthcare organization with credit balances, you no doubt have experienced credit balance chaos at one point. (Or perhaps you feel like it’s happening all the time. We’re not judging.) 

For healthcare organizations, resolving credits is particularly complicated for several reasons, including payment system complexities, e.g., multiple payor contracts and reimbursement rates, and significant legal and compliance risks, such as those related to neglecting unclaimed property rules. 

In addition, time and resource constraints continue to stress healthcare accounts receivable management teams. It takes a significant amount of time to research, work, and resolve credits. When teams are short-staffed and overwhelmed, dedicating staff to resolving credit balances (potential money heading out the door) versus debits (potential money coming in the door) can feel like the last thing you want to do. 

But work the accounts you must. So, let’s try and calm the chaos. Here are several ideas to get started. 

Take a global view.

Reviewing account balances at a population level allows your team to identify patterns and issues beyond just looking at individual accounts from highest to lowest or oldest to newest balance. Applying machine learning tools gives you a global view, helping you identify less complicated credit accounts and those that require more time and expertise to resolve. The machine learning tools Kodiak uses, for example, leverage customer data and proprietary credits resolution algorithms to identify credits that were not actually overpaid but rather over-adjusted and may just need a minor correcting adjustment. These tools can reveal historical transactional patterns that help A/R teams predict resolutions more confidently. (Read more about automating receivables here.) 

False credits, which are A/R credits resulting from an errant adjustment rather than a true overpayment of dollars, are one credit type healthcare organizations encounter frequently. Examples include bad debt, small balance, denials, and contractuals. Exempt insurance overpayments are another common type of A/R credit in healthcare. They are credits resulting from a true overpayment that is no longer due back to the payor per state credit balance statutes. These exemptions apply to commercial payors and vary greatly state to state. 

Embrace automation.

While machine learning tools and data analytics can uncover recurring issues with credits and identify root causes, automation can take it one step further. At Kodiak, we use our systems and tools to automatically resolve less-complicated transactions that don’t require a human touch. The technology can resolve accounts and post resolutions back into a customer’s patient accounting system automatically, bringing the accounts to zero. No team member from the customer side has to post the resolving transaction. Automation handles it all, saving the team valuable time to focus on more complex credit balances. 

In our work with more than 2,100+ hospitals, it’s not uncommon for us to find that up to 30% of accounts can be easily resolved through automation, while the remaining credits accounts require special attention by the organization’s team to review prior to leveraging automation. * 

Adopt continuous monitoring and cleanup.

Kodiak implements continuous monitoring to help net revenue teams automatically identify credits that can be easily resolved with automation or those that need more in-depth handling. Continuous monitoring and early detection help prevent problems in the future that lead to issues like false credits. In the Kodiak credits environment, data is refreshed daily, ensuring up-to-date balances. 

Partner up.

Not all credit balances signify lost dollars. But it takes time, expertise, and the right tools to effectively analyze a credit balance population, reveal the credits’ true nature, efficiently resolve them, and repeat that process in the form of continuous monitoring. Our customers are frequently surprised to learn that what can look like millions of dollars heading out the door due to credit balances is significantly lower because many accounts can be resolved through a posting correcting adjustment or identifying exemption opportunities in the case of true commercial overpayments. Both cases reduce overall liability and true-up financial statements while also providing financial pickup to your organization. 

It’s time to calm the chaos. Contact Kodiak today to see how we can help your account resolution team work smarter (and a little bit calmer). 

*Based on Kodiak’s internal data. Numbers are approximate, with percentages dependent on varying factors like organizational size and patient volume.