Author: SOS Blog

Handling Larger than Expected Payments: The Auto-Transfer Feature

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Imagine that you have a charge entry for patient account Jeff Dunn, and the fee of $75 has been allocated entirely to the patient. That is, the payers on the account are Jeff and Aetna insurance, but the splits show $75 as Jeff’s responsibility, and $0 as the Aetna responsibility.  The service rendered is insurance billable and a claim has been submitted.

Happily, a couple of weeks later, a $65 payment for this service is received from Aetna and you proceed to enter the payment and apply it to this service. Remember that the Aetna charge split was zero, so when we apply Aetna’s $65, we see that it will result in a negative balance of $65 for the Aetna split, which is not permitted. (An amount in parentheses is negative.) In spite of the apparent violation, SOS allows you to apply the payment and save the Credit entry.

If we go back to the original charge, we see that SOS automatically changed the original splits, moving $65 from Jeff’s chargesplit to Aetna’s chargesplit, and applied the payment to the new Aetna chargesplit balance after adjusting the payers’ responsibilities. As a result, there is no longer a negative balance for Aetna! This result represents SOS G5’s Auto-Transfer capability, and you are welcome to use it routinely, if you wish. You could, for example, configure every patient’s primary non-insurance payer as 100% responsible for all fees, and just let SOS do automatic transfers to move responsibility to insurance when insurance payments arrive, as with our example above. Be mindful, however, that the patient will receive bills for the full fee up until insurance payments arrive. Once insurance payments are applied, the patient responsibility will automatically diminish, even if no patient payment has been made.

There are certain conditions in which Auto-Transfer will not be able to help. For example, you cannot apply a payment that exceeds the entire fee of a charge entry, nor can Auto-Transfer make it possible to apply a payment if there is not enough transferable responsibility to increase the current payer’s responsibility to match the incoming payment. Transferable responsibility includes:

  1. Any remaining payer balance (chargesplit balance) on the charge.
  2. Any previous payments by other non-insurance payers.
  3. Any non-system adjustments applied to other payers.

Auto-Transfer will convert responsibility from other payers in the order shown above. For example, if other payers have remaining charge split balances, Auto-Transfer will first move those balances to the payer from whom we are processing the new payment. If Auto-Transfer still doesn’t have enough responsiblity to match the payment, it will next un-apply other non-insurance payers’ payments, and finally reduce other payers’ non-system adjustments if necessary. If none of these actions match the needed responsibility, Auto-Transfer fails and you won’t be able to save the credit. If feasible, you can try again, applying a lower payment. Ultimately, it may be necessary to cancel the credit entry, go back to the patient’s ledger, and manually manipulate the charge’s splits and previous credits until you have enough responsibility on the right payer to allow you to apply the new payment.

Note that system adjustments are NOT considered transferable responsibility. System adjustments include adjustments resulting from Insurance Plan Exception settings (Insurance Carriers > Insurance Plans tab > Plan details screen > Plan Exceptions tab) and from Patient Discount and Sliding Scale settings (Patient details screen > Care Episodes tab > Care Episodes detail screen –  Service Discounts panel).

 

 

 

Entering Advance Payments

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An advance payment is entered in SOS as an undistributed payment or as an unapplied payment. Either way, you record the payment in the system so that it will be available in the future when eligible service charges are created.

As an example, let’s say that you receive a referral for a forensic evaluation from an attorney agree on a retainer of $1.000 and make an appointment for the client’s evaluation on a date two weeks in the future. A few days go by and the attorney’s check for $1,000 arrives in the mail.

  1. If the attorney or law firm does not already exist in your payer list, the first step is to add it.
  2. Because the payment is meant to be used for a specific client, we should also create a patient account for that person, if we have not already done so.
  3. Add the payer created in step one as a non-insurance payer on the client’s account.
  4. Open a new payment transaction, selecting the client as the Patient.
  5. Select the appropriate attorney or law firm as the Payer.
  6. Select the Credit Type as Check and create and select the new check.
  7. At this point, no services have been rendered yet so there are no charges to which we can apply the payment. To save the unapplied $1,000 on this specific patient account, check the Keep unapplied amount on this credit box to the right of the Amount Unapplied field and save the credit entry. This $1,000 check payment is now available to be applied to any future charges on this specific account.

    On the other hand, if you save the credit without checking the Keep unapplied option, the credit payment amount will revert to zero, but the payer’s check will recorded as undistributed. That undistributed $1,000 will be available to apply to any patient account for which this payer is responsible. The effect is exactly the same as if you had followed the alternate procedure described just below.

Recording a payment for future use without entering a zero dollar credit

There is a more direct way to record an advance payment from a payer for future use on any of a payer’s accounts. Perhaps your organization receives an annual grant from a charitable foundation to provide mental health services for eligible needy patients of some sort. In that case we would just record the check or electronic transfer. To do so:

  1. Create a new non-insurance payer (Billing Lookups > Private Payers) or open the payer if it already exists.
  2. The payer’s detail form includes Voucher tabs for all types of payments. If the payment is a check, for example, you would select the payer’s Check Vouchers tab.
  3. Create a new voucher for the grant check.
  4. Save the voucher.
  5. When an eligible patient is identified, add the charity to the patient’s list of non-insurance payers and save the patient. You will now be able to select and pay future charges using the undistributed voucher you previously saved as a voucher (step 3) when it arrived.

See also:

Handling Deductibles and Insurance Denials

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Deductibles

It is, at best, difficult to predict whether a patient will have met their deductible by the time a claim is processed. For this reason, most providers assume that payment will be forthcoming from the insurance payer. For this reason, healthcare providers routinely assign payment responsibility and submit claims as if any relevant deductible has already been met. If it turns out that the deductible has not been met, the insurer’s EOB will reflect that status, denying payment and handing responsibility for payment to the next insurance payer, or back to the patient if there is no other insurance to bill.

Recording the Insurance Denial

In order to record the denial and transfer payment responsiblity, you would use a Credit entry as follows, taking information from the insurer’s EOB:

  1. Open a new Credit entry from the Daysheet list.
  2. Select the appropriate patient account and Payer.
  3. Choose “DEN: Denial” as the Credit Type, and an appropriate Denial Code such as “DED: Deductible not met”. (If an appropriately descriptive code is not already in the pick list, simply add one using the New button at the bottom of the lookup list.)
  4. Leave the Credit Amount as “$0.00”.
  5. Highlight the Charge entry that was denied and click the Apply Credit button.
  6. The Credit Split window will open, showing the zero amount in the Apply A Credit Amount panel. To transfer responsiblity to the next payer, enter the amount to be transferred in the Optional – Transfer all or remaining charge split balance panel. SOS automatically determines and displays the next payer, which will be the next available insurance payer or, if no other insurance payers, the non-insurance payer, in that order.

Using Auto-Apply – The Quick and Easy Way to Record Non-Insurance Payments

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Applying non-insurance payments to a patient account is as easy as a single click of the mouse.

  1. Create a new Credit Entry, specifying the patient, payer, type of payment, and the payment voucher (in most cases you will add the voucher on-the-fly). The credit amount will default to the amount of your voucher. Your credit will look something like the image above. In this example, there are three outstanding charges and a cash payment of $50.
  2. Click the Auto-Apply button indicated by the red arrow in the image above. The available $50 payment will be immediately applied to the balances, starting with the oldest, until the payment is completely applied. See the results below:

The outstanding balances total $88, so the $50 payment was not enough to pay the last balance in full. There was, however, $12 left after paying the other two charges, so it was applied as a partial payment to the third charge.

Another possibility is that the payment is more than the total of all the outstanding balances. In the example below, there is a total outstanding balance of $138 and a payment of $150. SOS shows that there is an unapplied amount of $12. If you check the box indicated in this screenshot, that $12 will be saved as an unapplied payment for use on this patient’s account. If you do not check the Keep unapplied amount on this credit option, the $12 will remain on the voucher and can be used for this patient or any others for whom the current payer is responsible. Leaving the $12 on the voucher (this option unchecked) has the advantage of saving a little time if the $12 might have to be refunded in the future. See What is the Difference Between Unapplied and Undistributed Payments? for a full explanation of the difference between unapplied and undistributed payments.

Use of Auto-Apply is a great time-saver, but you can apply a payment manually if you prefer. Let’s say that you would rather pay the entire third charge balance and leave the older two for another day. In that case you would simply highlight the third charge and click the other button, Apply Credit, instead.

What is the Difference Between Unapplied and Undistributed Payments?

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Unapplied payments differ from undistributed payments in one important way. In SOS, an unapplied payment may be applied only to the current patient account. On the other hand, an undistributed payment can be applied to any patient account linked to the payer that made the payment.

For example, let’s say that we received a check payment from Medicare for $500, which, according to the related EOB, is in payment for services rendered to three different patients. Here is what we would do:

  1. Open a new Credit entry and select the first patient account to be paid. In Credit Type you indicate “Check”.
  2. A field appears with the label Check. Click that field to display a list of any available checks — that is, any checks that have remaining amounts that have not yet been used. These are what are called “Undistributed Checks” in SOS. In this example, there are none, so click the New button at the bottom of the empty list to record the details of the $500 check. When you finish saving your new check, you will have $500 of undistributed funds from the Medicare payer. The new undistributed check appears in the list box. At this point, those funds could theoretically be used to pay any Medicare patient. (Note that at this point, even if you were to close the Credit screen without saving, the new check would still be there as an undistributed $500 check.)
  3. Click the new check you just entered to select and return to the Credit screen. Notice that the entire $500 now appears in the Credit Amount field because that is how much is still available on the check.
    The EOB indicates that only $100 of the $500 check is for payment of this patient’s services. At this point, you have two options: You can either change the Credit Amount to $100 to match the EOB, or you can leave the amount as $500. (For clarity sake, we will ignore other amount possibilities.) The first option, changing the amount to $100, would result in an applied payment of $100, along the reduction of the check’s undistributed amount to $400. Remember that undistributed payment amounts may be used to pay any of the payer’s patient accounts. Given the specifics of our example, this option would be the correct one. After applying the $100 as appropriate to this patient’s open charges, you would proceed with similar payments on the other two accounts detailed on the EOB, using the undistributed $400 on the check.If you had proceeded with option two, leaving the amount of the Credit as $500, applying only $100 to the current patient account, the result would have been $400 of unapplied payment usable only on the current patient’s account! When you later tried to make a payment on the second patient account, you would have found that there were no longer any available funds on the check to apply.

In short, undistributed amounts, whether on a check or any other payment method, belong to the payer and may be applied to any of the payer’s patient accounts. Unapplied amounts, on the other hand, are payments that have already been attached to a specific patient but have not yet been applied to specific charges. The following graphic might help, if you are still not clear on the distinction between undistributed and unapplied payments.