Today, I want to talk about the matter of credit balances and the Goldilocks principle. This is the principle, you will recall from the childhood story "The Three Bears", that after testing items, Goldilocks determines that one of them is always too much in one extreme (too hot/cold or too large/small) and that one is "just right." At Rawls College of Business, where I occasionally teach classes, we fancy this up and say that something must fall within certain parameters, as opposed to reaching extremes.

Now, to the matter of credit balances--this is when it appears, or in actuality may be fact, that the patient and/or his (or her) insurance company have paid us more than they owe us. Frankly, it feels at times that we are between the proverbial “rock and a hard place.”

Why do I say such a thing? Well, we encourage (insist) that clinical departments collect patient copays, coinsurance, and deductibles at the time of service. We also insist that the Business Office sends statements to patients explaining what we are owed. All of that is proper. The problem arises when collecting from patients at the front desk or through the Business Office results in an overpayment, thus a credit balance situation.

Here is an example--say the patient is seeing multiple doctors and having their deductibles or co-insurance met by paying medical bills to multiple practices or specialists. If the patient, in this example, has a $1000 deductible and a 10% coinsurance and is seeing two providers a credit balance situation can easily occur. It is even more likely when collecting payments from patients with secondary and tertiary insurances.

The three main reasons Texas Tech Physicians has patient credits are:
• Patient overpayment
• Patient payment in addition to insurance payment
• Patient payment and insurance payment after insurance initially denied and the encounter was moved to patient self pay

When we have a credit balance, we have a policy that must be followed. We can issue a refund, maintain a credit balance for those expected to receive services soon, or if it is a very small amount or we do not have a good address of the patient, we can write-off a credit balance. We must be very careful with write-offs since this is other people’s money. You see, patient credits are a liability much like a bank reports deposits as a liability. I hope I have not confused anyone—a certain amount in credit balances is positive, it means we are aggressive in collecting--too much, is it a problem. So, I say the Goldilocks principle applies—credit balances have to be “just right.”