Understanding Negative Claim Balance in Account Receivable

• In Account Receivable (AR), accurate posting is critical to ensure the claim balance reflects the correct financial position. Even a small error in posting can move the account into a credit (negative balance) or debit (positive balance). Let’s understand this with a simple example.

• Suppose a claim is submitted for $100.00 and it is processed by insurance and allowed & paid for $20.00 then it should be posted as follows.

• Allowed - $20.00
• Paid - $20.00
• Coinsurance - $0.00
• Deductible - $0.00
• Copayment - $0.00
• Adjustment - $80.00

• Calculation: $100.00 (Charge Amount) – $20.00 (Paid Amount) – $80.00 (Adjustment Amount) = $0.00

• With the above posting, the balance amount will become zero. However, if there is any incorrect posting in the adjustment or payment amount, the account may move into either a credit or debit balance. Let's understand this with the following scenarios.

• Scenario 1: In the above posting example, if the adjustment is incorrectly posted as $90.00 then the claim balance will move into a credit of (-$10.00).

• Calculation: $100.00 (Charge Amount) – $20.00 (Paid Amount) – $90.00 (Adjustment Amount) = -$10.00 (Credit Balance)

• Scenario 2: In the above posting example, if adjustment is incorrectly posted as $75.00 then the claim balance will move into a debit of ($5.00).

• Calculation: $100.00 (Charge Amount) – $20.00 (Paid Amount) – $75.00 (Adjustment Amount) = $5.00 (Debit Balance)

• If you find any account in credit then always check whether the posting is done correctly or not.

• The claim may not be always in credit due to incorrect posting. Below are other possible reasons.

• Duplicate Insurance Payment:

• The insurance company may accidentally pay the claim twice. In such cases, it is important to verify whether the claim was actually paid twice or if the payment was posted twice in error. If the insurance company truly issued two payments then it is required to send refund back to the insurance carrier.

• To issue a refund to the insurance company, it is necessary to contact the insurance representative to confirm the appropriate method and address for sending the refund. Sometimes, a refund request is already sent by the insurance and the request includes all the detailed instructions on how and where the refund should be submitted.

• Excess Patient Payment:

• Sometimes, a patient may pay more than their actual responsibility, which can also result in a credit balance. In such cases, The excess amount may be applied to other outstanding claims with pending patient responsibility.

• If no other claims with outstanding balance exists then the amount may be refunded to the patient or can be adjusted with the patient resp of future claims.

• All of the above activities are typically handled by the Credit Balance (CB) team. However, in the absence of a CB team, these responsibilities fall under the Account Receivable (AR) team.