Practice Management Alert

Question: How should patient payments be posted? If a patient has an outstanding account with multiple charges and makes a payment, should it be applied to the oldest charge first or the copay owed?

Michigan Subscriber
Answer: You should have a policy concerning how patient payments will be posted. If you are audited, the reviewers will examine your policy and whether you have adhered to it. Because you must collect copays based on your payer contract, your policy might say that you post payments to the copay first. Your policy also might say that in the absence of instructions from the patient on what the payment covers, your practice will apply the payment to the oldest charge first.
 
By applying the patient's payment to the oldest charge first, you reduce your aged accounts receivables in the oldest categories, which is a good accounting practice, but one that may upset your patient because the most recent charges will now remain unpaid. Let's say the patient's copay for today is $10, and there is a past-due balance of $90. If today's payment is for an amount greater than the copay, consider applying $10 to today's amount and the remaining amount to the oldest balance. This would be the ideal time to set up a payment arrangement with the patient to reduce the total debt and your aged accounts receivable.
 
You Be the Expert and Reader Questions answered by Jean Acevedo, CPC, LHRM, president of Acevedo Consulting Inc. in Delray Beach, Fla.; and Catherine A. Brink, CMM, CPC, president of Healthcare Resource Management Inc. in Spring Lake, N.J.