What to do if Your Patient Overpays

Over the last 30 years, I’ve found the dental practice tends to run the usual production, collection and accounts aging reports as they close out each month. Unfortunately, it’s not been standard for the dental practice to report, monitor and address the patient credit balances on account.

Patient credits are something which exists in most dental practices and because the routine auditing and account reconciliation of patient credits, refunds, and overpayments are often misunderstood, this aspect of running the dental practice is widely mismanaged. Creating guidelines for both reporting and properly handling the credit balance will provide a truer accounts receivable for the practice. In addition, not only does this give the practice abilities to generate patient production, it can help keep the practice on the good side of the law when respecting your states unclaimed property statutes.

Routine Reporting

An important piece of providing accurate practice financial information is to have access to the necessary reports that helps us prepare the real numbers. Our accounts aging lets the practice see who owes money and rarely do we miss those account balances. If so, this becomes costly for the practice. It too, can be expensive if those credit balances begin to add up.

It’s vital the practice owner begins to routinely monitor these numbers and immediately requiring this report to be generated, audited and completed each month for each account. I recommend running the report half way into the month which then would provide ample time for account auditing, adjustments and refunds to be made before the end of the month closing.

Disciplined Account Auditing

Effective time management can make or break the best of dental practices. I’ve encountered many practices with a relaxed mindset when prioritizing front administrative duties geared towards auditing the reason why the credit occurred in the first place. If the practice fails to adopt a discipline time to carefully audit each account, often times it becomes a monumental task.

Auditing the account to confirm the reason why the credit occurred in the first place is crucial. Did the credit stem from an insurance overpayment or patient overpayment? Did the proper adjustments occur when posting from the explanation of benefits? Was the payment posted on the correct family member? I recommend a series of steps to methodically and accurately determine where the credit occurred so that the proper refund or account adjustment can be applied to the account.

  1. Determine how many patients are on the account and make a note of all balances on this account.
  2. I find it easier to go back into the account and find the date where the balance is zero for each family member.
  3. Confirm all charges on the patient account are accurate and reflect what’s occurred in the patient’s chart.
  4. Determine if the credit stems from a patient pre-payment for future treatment (be sure to place a note on the account if so).
  5. Confirm all claims were processed and paid correctly and correct adjustments were applied to the account. Correct interpretation of the E.O.B. can many times pose a challenge in proper posting efforts.
  6. Confirm all doctor courtesy adjustments were applied correctly.
  7. If the account history reveals an error occurred in previous posting attempts, enter detailed explanation on the ledger and correct the account accordingly.
  8. Confirm the patient does not have unfinished restorative or hygiene treatment needs. See reasons below.

Refund Keep or adjust credits

Whether the patient credit is refunded or remains on the account is at the discretion of the patient, not the practice. Remember, it’s the patient’s money, not the practice’s money. Listed below are the top reasons we tend to see the practice ultimately would not refund the money back to the patient.

  1. Determine if the patient has unfinished treatment needs. If so, I recommend contacting the patient to give the opportunity to use these funds towards future care. Should the patient direct the practice to keep the money as a credit they may use to pay for future treatment needs, then a refund will not be issued.
  2. Another acceptable reason to keep the credit on the account is if the patient is pre-paying for future treatment needs. We would then just keep the money on the account.
  3. Lastly, if the practice contacts the patient, explains the account audit resulting in a credit and the patient directs the practice to keep the money on the account, then a refund would be issued.
  4. Insurance overpayments should be refunded immediately back to the insurance company, NOT THE PATIENT. Often times I’ve seen the practice refund insurance dollars back to the patient incorrectly. If an insurance overpayment is discovered, thorough detailed documentation is vital for the successful refund efforts. When refunding credits back to the insurance company, be sure to include all documentation associated with the payments that created the credits on the account.

Regardless of the reason, proper documentation is not only key in successful account management but also supports the legal requirements of the dental practice showing the monies were rightfully attempted to be returned to the patient.

Legal Compliance

If you find the above reasons do not apply to your patient’s scenario (no unfinished treatment, not pre-paying for treatment), or the patient simply requests the money to be returned, then return the money immediately.

Additionally, if you have made all attempts to return the monies in good faith, such as mailing letters to last known address, calling the patient, etc. and are unsuccessful, confirm accurate and thorough documentation supports your efforts as unclaimed property.

Unclaimed property or money goes to the state of the patient’s last known address, and if you do not have a last known address, it belongs to the state where the dental practice is located. You can look up your state statute of limitations and guidelines at unclaimed.org.

Angela Pratt is a trusted dental management consultant for our clients.

Read more about Angela here.

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