The Impact of Write-Offs on Your Anesthesia Practice’s Financial Health and Why You Should be Auditing Them Regularly:
Part 1 of our Anesthesia Billing Revenue Cycle Health Series
In the anesthesia billing world, there are two types of write-offs: contractual write-offs and other adjustments. Whether you’re outsourcing to a third-party billing vendor or have an in-house operation, your staff should be thoroughly educated on the types of write-offs and the policies and procedures of when and how to accurately complete one.
Let’s look at contractual write-offs. A contractual write-off is the difference between what an anesthesia group or hospital anesthesiology department bills for services versus what will contractually be paid (or should be paid) based on the contract with that payor. Any reporting you receive from your billing vendor should present the amount billed for the service, the expected allowed payment according to the terms of your contract and the amount paid. This information will clearly demonstrate to you that your revenue cycle partner is doing what they say they are doing. Over the past 3 years we’ve noticed a trend in that many payors are simply underpaying claims and not adhering to the terms of their contract. Your monthly financial review should include spot checking billed amounts/expected allowed/primary payments. If you notice that your billing vendor is routinely accepting underpayments, that means they are likely erroneously writing off funds to contractual write-offs and this will make your Net Collection Ratio (NCR) appear higher than it should be. We will get into NCR more in Part 2 in our series on Revenue Cycle Health – Stay Tuned!
Now let’s focus on those “other adjustments”. Other adjustments often include:
- Charity write-offs
- Small balance write-offs
- Bad debt write-offs
Then there are those adjustments that often can be avoided such as:
- Timely filing write-offs
- Provider not enrolled
Most reports typically only include data on contractual write-offs and lump all categories of “other adjustments” together.Your anesthesia billing vendor should provide you with a monthly report that breaks down the categories used for “other adjustments” and the amount written-off to each category. Having to ask for this information could potentially be a red flag.
Regularly auditing contractual write-offs and other adjustments will ensure that payments for anesthesia services you rendered are being appropriately collected and applied and give you peace of mind that your revenue cycle vendor is a trusted partner.
Written by Jeanette Mini.
Stay tuned for Part 2 of our Anesthesia Billing Revenue Cycle Health Series!