Learn how AngelTrack calculates the balance due when insurance is and is not involved, and learn how to pull data for tax purposes.
AngelTrack tracks each individual dispatch until it is fully paid, no matter how long that takes. This tracking can be switched off when receivable balances are sold to a collections agency, or written off on your taxes.
How the Balance Due is Calculated
How the "Balance due" is calculated depends on whether or not the call was covered by insurance, even if the carrier leaves everything as copay.
When an insurance carrier has not adjudicated a price, then the balance due is a straightforward calculation:
| $ 1500.00 | Price quote |
| plus $ 20.00 | Service charges |
| minus $ 5.00 | Discounts applied |
| plus $ 7.00 | Finance charges |
| minus $ 1425.00 | Payments received |
| equals $ 97.00 | Balance due |
Service charges and discounts are voided by a "Price allowed"
When insurance is claimed, the insurer has the authority to set the final price for the service, overriding any other agreement or contract in play. This is true the moment the insurer acknowledges coverage, even if the insurer does not then pay any benefits (owing to a deductible).
It also binds any collections agency that you sell the receivable to.
AngelTrack knows this, and so the "Price Allowed" field will -- if set -- always override the "Price Quote" field:
| $ 1500.00 | Price quote (ignored) |
| plus $ 20.00 | Service charges (ignored) |
| minus $ 5.00 | Discounts applied (ignored) |
| $ 360.00 | Price allowed |
| plus $ 7.00 | Finance charges |
| minus $ 310.00 | Payments received |
| minus $ 5.00 | Payments sequestered |
| equals $ 52.00 | Balance due |
When the insurer returns an EOB that acknowledges coverage, the EOB will include the adjudicated price. This is true for paper EOBs as well as EDIs. AngelTrack stores that adjudicated price in the "Price allowed" field. At that moment, all service charges and discounts become void, in keeping with insurance contract requirements. In other words, once the insurance company determines an allowed price, that is the price AngelTrack uses.
If necessary you can clear the "Price allowed" field, and revert to regular pricing. Discounts and service changes will then apply again.
Patient responsibility [PR] adjudications
Insurance carriers adjudicate the amount which the patient is obliged to pay. This amount is abbreviated as the "PR". It is a complicated topic, and is discussed at length in the Patient Responsibility guide.
When a PR has been determined, and when the patient is the obligated party (i.e. when Payor is set to "Patient"), then the PR determines the balance due. Normally, the PR asks the patient to pay exactly the balance remaining after adjudication:
| $ 1500.00 | Price quote (ignored) |
| plus $ 20.00 | Service charges (ignored) |
| minus $ 5.00 | Discounts applied (ignored) |
| $ 360.00 | Price allowed |
| minus $ 310.00 | Payments received from insurance |
| minus $ 5.00 | Payments sequestered |
| equals $ 45.00 | Non-patient balance due |
| $ 45.00 | Patient responsibility [PR] |
| equals $ 45.00 | Patient balance due |
Not allowed amount [NAA] / Copay forbidden
When a PR asks the patient to pay less than the balance due after adjudication, or entirely forbids the collection of the copay (as Medicaid often does), it is called a "not allowed amount" [NAA]:
| $ 1500.00 | Price quote (ignored) |
| plus $ 20.00 | Service charges (ignored) |
| minus $ 5.00 | Discounts applied (ignored) |
| $ 360.00 | Price allowed |
| minus $ 310.00 | Payments received from insurance |
| minus $ 5.00 | Payments sequestered |
| equals $ 45.00 | Non-patient balance due |
| $ 35.00 | Patient responsibility [PR] |
| $ 10.00 | Implied "not allowed amount" [NAA] |
| equals $ 35.00 | Patient balance due |
Finance charges add to the PR
Finance charges can require the patient to pay more than the Patient Responsibility [PR] amount adjudicated by the carrier:
| $ 1500.00 | Price quote (ignored) |
| plus $ 20.00 | Service charges (ignored) |
| minus $ 5.00 | Discounts applied (ignored) |
| $ 360.00 | Price allowed |
| plus $ 7.00 | Finance charges |
| minus $ 310.00 | Payments received from insurance |
| minus $ 5.00 | Payments sequestered |
| equals $ 52.00 | Non-patient balance due |
| $ 45.00 | Patient responsibility [PR] |
| equals $ 52.00 | Patient balance due (PR + finance charges) |
Patients can never be required to pay more than the PR plus any finance charges
The patient can never be required to pay more than the PR amount (if set), other than finance charges (e.g. late charges), so this can provoke a patient refund even if a non-patient balance remains:
| $ 1500.00 | Price quote (ignored) |
| plus $ 20.00 | Service charges (ignored) |
| minus $ 5.00 | Discounts applied (ignored) |
| $ 360.00 | Price allowed |
| plus $ 7.00 | Finance charges |
| minus $ 310.00 | Payments received from insurance |
| minus $ 5.00 | Payments sequestered |
| equals $ 52.00 | Non-patient balance due |
| $ 20.00 | Patient responsibility |
| $ 30.00 | Implied "not allowed amount" [NAA] |
| equals $ 27.00 | Total patient obligation (PR + finance charges) |
| minus $ 32.00 | Payments received from patient |
| equals $ − 5.00 | Patient balance due (patient owed a refund) |
Clearing a "Price allowed"
Any time a biller deletes an allowed price (as adjudicated by insurance), the following will occur:
- All service charges and discounts will take effect, whereas they are normally eclipsed by an allowed price;
- Any PR amount will then be ignored, whereas it would normally reduce the total amount owed by the patient; and
- The balance due will then be controlled by the Price quote.
Bulk clearing the "Price allowed" during facility/affiliate invoicing
Your facility and affiliate contracts will usually stipulate a fixed price schema that overrides any adjudications from insurance carriers, because it will apply only to denials and rejections*. The Invoice Generators have a ☑ Clear any insurer adjudicated prices checkbox to automatically clear all such adjudications during invoice commit, so that the facility's or affiliate's contract price schema will prevail.
*Anything approved by insurance must instead go onto a patient invoice, regardless of whether the insurance carrier actually paid anything versus leaving it all as copays. AngelTrack's automatic workflow will do this for you.
Apparent insurance overpayment
Sometimes the adjudications and payments from the insurance carriers do not add up.
For example, after all the adjudications are in, suppose a claim for $1500 got an allowed price of $330 but received $340 in actual payments from insurance. The insurance carriers have evidently overpaid by $10... but this could be due to an error in the adjudication data, or a typo while inputting a paper EOB, or an oversight during an approval-reversal-redetermination cycle, or one of myriad other reasons.
AngelTrack has no way to know how it happened, and so AngelTrack does not consider the apparent $10 overpayment to be refundable to the insurance carrier. Instead it is the responsibility of the insurance carrier(s) to decide whether an overpayment has actually occurred, and if so, to claw it back.
If the dispatch is still set Payor = Insurance, then the $10 appears as a credit balance, the trip will advance to "Finished", and the credit balance will appear as a negative writeoff amount, offsetting any real writeoff amounts in the various writeoff reports.
If, however, the dispatch has moved to Payor = Patient, then the overpayment is no longer a credit balance, because it isn't refundable to the patient (or to anyone else). Instead the dispatch's balance goes to zero, the trip will advance to "Finished", and there will be no writeoff amount. The apparent $10 overpayment will appear in revenue reports as cash received, but it does not become an offsetting entry in the "Balance" or "Writeoff" columns.
Selling Receivables to Collections
To learn how AngelTrack automates and manages the sale of stale receivables to a collections agency, take a look at the Sold Receivables Guide.
Tax Calculations
AngelTrack's Revenue Accrual Report can quickly provide you with highly pertinent data needed to close out your books and file your taxes. It produces four important subtotals for you:
- Total charged amount, which is the gross sum of all price quotes, service charges, and discounts.
- Total contractual adjustment, which is the difference between your retail price and the price allowed by insurance. For example, your retail price may be $1500 + mileage but Medicare only pays about $250 + mileage; the difference (about $1250) is the contractual adjustment.
- Total payments received, which is the sum of all payments and reversals from insurance, facilities, affiliates, and patients.
- Total cash writeoff, which is the difference between the amount you were entitled and the amount you received.
Depending on how much Medicare/Medicaid work you do, your contractual adjustment can be enormous.
Your accountant will decide whether or not the contractual adjustment has useful tax implications. If your accountant is not aware of the potential benefits of the contractual adjustment, then we recommend consulting an accountant who specializes in healthcare accounting.
A simple example
Suppose you run exactly one stretcher call with a 10 mile transport. At your retail price of $1500 + $5 per mile, the charged amount will be $1550.
Medicare covers the call, but only pays $250 + $5 per mile, for a total benefit of $300. The contractual adjustment is therefore $1550 - $300 = $1250.
Medicare cuts a check for $260, leaving a $40 copay for the patient. Suppose the patient only pays $10 and then stops responding. That means your payments received is $260 + $10 = $270. Your cash writeoff is therefore $300 - $270 = $30.
Finally, suppose you sell the $30 balance to collections and receive $5 for it. AngelTrack doesn't know you received $5 for it, so it will still report a total cash writeoff of $30. Your accountant must subtract the $5 received from collections before calculating your final taxes, which should therefore be:
| $ 1550 | Charged amount |
| minus $ 1250 | Contractual adjustment |
| minus $ 270 | Payments received: as reported by AngelTrack |
| minus $ 5 | Payments received: sale to collections, booked separately |
| equals $ 25 | Cash writeoff |
Note that AngelTrack's writeoff tracking system also has other ways of pulling the data for written-off and sold receivables; refer to the Writeoffs Guide to learn more.
Clear it With Your Legal Team First
The foregoing is not legal advice.
Before using any data from AngelTrack concerning revenue, collections, or writeoffs, you should consult your legal team and your accountant. Taxes and deductions in the healthcare industry are complex, especially when Medicare/Medicaid writedowns are in play.