FAQs
What is a credit balance?
A credit balance is an accounting term that describes a balance that is carried on a provider’s financial books when payments for patient accounts exceed actual charges. Having a balance may mean that the provider has been overpaid for the services that were delivered. The nation’s 6,000 hospitals accumulate more than $8 billion in new credit balances each year, according to the Healthcare Financial Management Association.
How are credit balances generated?
A credit balance can occur through a variety of billing miscalculations, errors and overpayments. Examples include: when more than one health plan makes a full payment for the same service, creating duplicate payments; when patients are billed incorrectly and pay more upfront than what is required by their health plan; or when mistaken interpretations of insurance contract agreements create incorrect billings.
Not all credit balances are overpayments that require refunds. The credit balance can be an erroneous allowance, caused by an incorrect rate or code that needs to be reversed, but no refund is required.
Why do providers and health plans need to work out credit balances?
Health plans are interested in resolving credit balances to make sure they recapture any overpayments as quickly as possible. And providers are required to reimburse government payers, such as Medicare, within a specified time period or face penalties. An analysis of credit balance accounts also can reveal overlooked billing opportunities for the provider. Failing to analyze credit balance accounts regularly can result in lost revenue for both parties.
The Healthcare Financial Management Association recommends that a provider’s credit balances not exceed the equivalent of two days of patient billing revenues to avoid distorting profitability and accounts receivable days.
Why do providers and health plans need a third party to work out credit balances?
A company such as Arbor Healthcare specializes in resolving payment errors quickly, efficiently and securely. With access to the provider’s complete payment record of each claim, Arbor’s field analysts accurately resolve the errors, optimizing recoveries for health plans and minimizing processing time and costs for payers and providers. Using a third party also reduces provider staff time required to settle claims, time that can be redirected to accounts payables, for instance.
Does Arbor work for the health plan or the provider and who pays for Arbor’s services?
Arbor’s client-centered service model focuses on building strong relationships with both providers and health plans to accelerate and improve outcomes while reducing claims management costs. Arbor works all assigned accounts, not just the largest ones for its client health plans. Arbor’s fees for this service are paid by health plans.
Are providers required to cooperate with Arbor?
Each provider determines when the timing is right to work with a healthcare claims expert such as Arbor. Arbor is committed to creating a respectful environment to deliver benefits to all parties. We work hard to gain the cooperation of providers and then to demonstrate our value.
Do Arbor analysts work remotely from Arbor offices or at provider locations?
Our field analysts work on-site at provider offices, where they build strong working relationships with providers’ employees and work hard to resolve all assigned accounts.
When examining healthcare claims, how do you ensure patient privacy?
Our procedures and technology are compliant with the Health Insurance Portability and Accountability Act, which addresses the security and privacy of health data.
Is there a deadline to resolve credit balances?
Federal programs such as Medicare, Medicaid and Tricare, the military’s health insurance plan, require that credit balances be resolved in a timely manner or providers can face penalties. In addition, some states have passed legislation that requires credit balances to be resolved within a specific period of time.
Do you find refunds for patients?
From time to time, we do resolve accounts that result in patients owed a refund. But our focus is resolving credit balances and obtaining refunds for health plans.
