Category: Billing

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.

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.