Author’s Note:
In order to keep identities private I have removed names from this e-mail I received not long ago.

“I don’t know if you remember me or not but I worked with (a local area dentist) several years ago and I am currently working with another dentist now who does not want me to tell (his/her) patients when they have credit balances. (He/she) wants me to just act as though the patient doesn’t have a credit on account. Some of the credits are in the hundreds (of dollars). I know that you can keep credit running on account until all treatment is done but what then? I personally feel this is unethical because in a sense we are stealing money that is owed back to the patient. I was also told by Arizona law that the doctor does not have to return any money owed to the patient if it is under $50 dollars and then just adjust it off under miscellaneous adjustment. I am having a hard time believing this. And because the patient is never made aware of the credit then they are not given the opportunity to decide what to do with the money. What a mess this is. I am really struggling with this. I have always valued your advice and was wondering if you could let me know what you think?”

Of course you give the money back; it’s the right thing to do!

In terms of public relations, it’s a practice builder to let people know the account is overpaid and they have money coming back because you’ve caught it early – before they find out. It’ll sink a practice if people know you’re keeping their money for your own benefit.

More often than not, a credit balance is the result of an over-payment by either the patient/guarantor or a third party. The patient/guarantor may have paid in advance for treatment that was not completed for some reason, or an insurance payment was received over and above the estimated amount at the time of the co-payment by the patient. Either way, we have a patient services issue on our hands and it must be resolved professionally and ethically.

Let’s examine the possible insurance over-payment. Researching this issue with insurance companies revealed a few interesting concerns. First, the fact that the patient has a credit balance leads some to believe that the estimated insurance payment was incorrect. By under-estimating the insurance benefit, be it the deductible or the co-insurance amount, the patient portion was incorrectly estimated to be higher than it should have been. The end result is more money was collected than expected.

Now, if the practitioner is a contracted preferred provider with an insurance company, the doctor typically cannot charge more than the allowed fee. This is of course dependent on the contract the doctor signed with the insurance company, and contracts vary in terms and conditions. If the doctor is not a contracted preferred provider, then charging the doctor’s usual fee is fine, and the portion not paid by the insurance can be billed to the patient. If payment from the patient is collected up front for the co-insurance and deductible, and the subsequent insurance payment creates a credit balance, then a refund to the patient is obligatory.

Also, it’s not out of the realm of possibility that the insurance company may not have been accurate in its payment and paid an incorrect amount for the claim submitted. For example, the claim was for a sealant and the insurance company paid the benefit for an all porcelain anterior crown.

Yeah, right; surely, I jest. But you get the point. It could have even been the insurance company entered the incorrect CDT code resulting in payment in excess of the claim amount. In these cases, the over-payment is due back to the insurance company. My recommendation here is to contact the insurance company either by phone or mail and request assistance in resolving the over-payment. Cover your bases by keeping track of your correspondence.

Another situation that may result in an over-payment and credit balance is when the patient has dual insurance. The primary pays their allowable benefit on the claim. The secondary insurance company may pay an amount that results in total payments more than the original charges. In this case, we probably don’t know what the contract terms and conditions are with the employer of the insured and the insurance company. It may be that the employer contract specifically states that the insured may not profit in excess of the allowed benefit. In other words, the treatment is $100, the insurance company allows $90. That’s all you get, and if you receive more money, then you have to send it back; you can’t bank it.

So, we’ve hashed through some of the more common events when the patient has insurance. But what if the patient doesn’t have insurance, or the practice doesn’t participate as a contracted preferred provider, or doesn’t accept assignment of insurance benefits at all? Realistically this can happen when a treatment plan is presented, the patient pays in advance, and some of the treatment paid for is not provided, or charges for treatment are less that what was originally quoted. Result: over-payment by the patient, and a credit balance.

Take another element in to play, say the patient uses a finance company, such as CareCredit. A good example may be that the patient qualifies for a 12-month interest free arrangement and CareCredit sends the office $3000 for the treatment plan amount. If the amount is not used towards treatment and it is agreed that a credit balance exists, do not send the money to the patient; they cannot use the funds for anything other than the agreed upon dental services. According to CareCredit, it is important to treat this as a credit similar in scope to a credit card charge back. In other words, rebate CareCredit the amount. CareCredit, if applicable to the arrangement, will then provide a rebate when the balance is returned for the portion of the merchant rate paid by the dentist.

In terms of the statement regarding the Arizona Law that allows for a business to adjust off an amount under $50 and not send the money back to the customer, I doubt very much that such a law exists; it just doesn’t make sense. Especially when laws are made to protect the consumer – how does this protect the consumer?

Well, we can’t assume this is true unless we research it. I searched the Arizona Revised Statutes and found nothing. The only reference to over-payment is in the tax code; nothing in the dental section of the statutes. I phoned the Arizona Attorney General’s office and was connected to the law library. The person there helped search for statutes that relate to over-payment and refunds and found nothing in the dental section as well. She did, humorously enough, find that fertilizer was mentioned under agriculture regarding refunds. Hmmm, so if you pay for more &%$# that you use, you can get your money back?!

My take on this issue is unless someone can provide you with chapter and verse of the law don’t buy it. If they produce the law in writing, have them send me a copy; then and only then will I eat my words.

The basis of law, according to my sources, is that reasonable and prudent judgment is at the forefront of any issue. In other words, “What would be a reasonable and prudent way to handle this?”

This really leaves us with the dilemma of figuring out what to do with money owed the patient. Ask the question, “If the patient found out the money was due them, and the practice just wrote it off and didn’t say anything, what reaction would you expect from the patient?” Would one really risk a potential complaint made by the patient to the Board of Dental Examiners against the doctor?

Okay. The credit balance is on the books and we know what happened because we’ve witnessed the event unfurl at the office. But there may be credit balances on the books where we don’t know the history and we must be sure there is a refund due. Diligence must be taken to ensure the accounting is correct.

First things first, find out what we’re up against. Run a Credit Balance Report from the Account Aging or Accounts Receivable section of your management system. See if the program will sort from the largest balance first. You’ll find 80% of the amount of money in credit balances linked to about 20% of all of the accounts in the report. Focus your efforts on the few accounts that have the largest amount of money due.

Work the accounts, audit for insurance payments and adjustments, patient payments and adjustments, and make sure the account balance is accurate.

Once verified, inspect the patient’s chart or computer record and determine if the patient has a scheduled appointment, if there is any uncompleted treatment, or if the patient is past due for their periodontal maintenance visit. If an appointment is scheduled in the not too distant future, make a note in the record that you will have a conversation with them at that time. If an appointment is not scheduled for treatment or periodontal maintenance, and the audit reveals a true credit balance, contact the patient to schedule an appointment for care and apply their credit to future treatment.

Follow a friendly dialogue like the one that follows:

“Mrs. Herbert, I have great news! There is a credit balance on your account, and after reviewing your record I found {you still have dental treatment that has not been completed/you are past due for your periodic examination and periodontal service}. We can go ahead and apply this to your next visit. I have a couple of appointments available this week, one is on Tuesday at 11:00 am, or Wednesday at 3:30 pm, which would be more convenient for you?”

Be prepared, if the subject comes up or the patient asks, to explain how the account has a balance in their favor.

If the patient is current with their periodontal maintenance and recommended treatment is complete, ask the patient if they would prefer that the doctor refund their over-payment, or to keep the credit balance on their account for the future. Ask them how they would like to handle it, let them choose, and proceed accordingly. If the patient wishes to obtain a refund, mention that you would gladly write them a check.

Don’t delay writing the check! Nothing will create ill will more than if a person is expecting their money in the mail and it doesn’t arrive in a timely fashion.

For insurance companies, whether or not they are due a refund depends upon the statute of limitations they place on their claims processing. My recommendation is to first complete this project for patient balances; then examine on a case-by-case basis those accounts that have been overpaid by insurance and contact the insurance company as stated earlier.

Be careful not to let this project slide by the wayside. Again, patients who discover they have a credit balance and nothing has been done to refund their money may become upset and discouraged with the level of service you provide. Don’t let this happen; move quickly to resolve current credit balance accounts, and proactively manage them monthly.

If someone does call the office asking about a credit that may be on their account, let them know that you’d be happy to audit their account right away and respond within 24 hours. Take a number where the person can be reached during the day and be punctual with your follow up.

Referring back to the person who submitted the question for this month’s article, it’s entirely up to the owner of the practice regarding what he/she does with the money. If the owner chooses to do something that is against your principles, it is probably a good idea to make a decision to find a practice that is more in line with your main beliefs. Not a tough call, really; keep to your principles of good business and professional service and find a practice in which you feel comfortable working and can feel proud that you are a patient advocate.