Are Credit Balances Costing You Money?

Ink pen laying on financial documents

Often, when we think about reviewing Accounts Receivable reports, we overlook the liability of credit balances. We tend to focus most of our attention on commercial payers and accounts that are over 60-90 days past due, but ignore balances with a credit that, unfortunately, can leave your practice open to numerous business and financial risks.

Primary Causes

The primary causes of credit balances might come as a surprise to you. Most do not reflect monies owed to payers or patients by providers. According to the Healthcare Financial Management Association (HFMA), the typical composition of credit balances looks something like this: (Genesis Healthcare Solutions, 2019)


55%: Incorrect posting of allowances

35%: Duplicate payments/overpayments by patients and payers

10%: (Mispostings) Posting errors

The majority of credit balances hide potential collectible revenue for your practice. These types of errors cover-up unpaid line items on your Accounts Receivable reports and failure to discover these issues quickly can open you up to the risk of missing a filing limit or an opportunity to send a corrected claim or file an appeal. These seemingly meaningless credits on your accounts receivable report could potentially cost you thousands. (Shatzman, 2011)

Additional Risks

Additional risks include audits, fines, and penalties when providers fail to return overpaid funds on time. Medicare requires overpayments to be returned within 60 days of discovery. When it comes to resolving overpayments from insurance companies, here are four steps to help you quickly resolve and return the funds. (Hicks, 2019)

  1. Send a letter to the insurance company, notifying them of the overpayment.
  1. Never send a refund to the insurance company without contacting them first to learn their process for handling overpayments and refunds. Document every interaction during this process.
  1. Allow them 30 days to respond to your letter. You will be notified of how to issue a refund, or that the insurance company has elected to deduct the overpayment from future remittances. Notate the accounts affected to reflect this transaction.
  1. If you do not hear from the insurance company, contact them by phone to follow up.


Resolving credit balances is a tedious task. The best way to prevent these credits from becoming unmanageable is by implementing a regular strategy and a proactive approach. Following best practices will ensure accurate Accounts Receivable and help maintain healthy patient and payer relations. (Cloud-Moulds, 2014) Being prepared to explain why a credit balance has occurred, and seeing the issue from the patients’ point of view, will go a long way towards building trusting and loyal patients, as well as a robust and financially secure practice.

About Author

Ray Foxworth, DC, FICC, MCS-P

Dr. Ray Foxworth is a certified Medical Compliance Specialist and President of ChiroHealthUSA. A practicing Chiropractor, he remains “in the trenches” facing challenges with billing, coding, documentation and compliance. He has served as president of the Mississippi Chiropractic Association, former Staff Chiropractor at the G.V. Sonny Montgomery VA Medical Center and is a Fellow of the International College of Chiropractic. You can contact Dr. Foxworth at 1-888-719-9990, or visit the ChiroHealthUSA website at Join us for a free webinar that will give you all the details about how a DMPO can help you practice with more peace of mind.

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