What is a credit balance in medical billing?
A credit balance means more was paid on an account than was owed, by a payer, a patient or both. It usually has to be refunded, and Medicare overpayments must be returned within 60 days of being identified.
Account ledger
| Date | Item | Amount | Balance |
|---|---|---|---|
| 03/14 | Charges | $320.00 | $320.00 |
| 03/14 | Patient paid estimated copay and deductible | -$150.00 | $170.00 |
| 03/20 | Payer paid | -$111.22 | $58.78 |
| 03/20 | Contractual adjustment, CO-45 | -$183.10 | -$124.32 |
- The patient only owed $25.68. The $124.32 credit is theirs, and it should be refunded or applied to another open balance with their consent.
Credit balances come from duplicate payments, payments by two payers when only one owed, patient prepayments that exceeded what they owed, and posting errors. They’re money the provider is holding that belongs to someone else.
Payer or patient?
The fix depends on whose money it is. A payer credit goes back to that payer, by refund or by letting it recoup. A patient credit is refunded to the patient or, where the policy allows, applied to another balance. Payer money never moves to another patient’s claim.
Rules and deadlines
Overpayments from Medicare must be reported and returned within 60 days of being identified, and many state Medicaid programs have similar rules. Unclaimed patient refunds can fall under state unclaimed property laws. A credit balance should never be cleared with a write-off.
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