The Right Way to Do Write-offs
A write-off is an amount that a practice deducts from a charge and does not expect to collect, thereby “writing it off” the accounts receivable or list of monies owed them by payers or patients.
There are lots of reasons why write-offs are taken, and it is common practice to divide write-offs into two major categories.
Necessary or Approved Write-offs
These are write-offs that you have agreed to, either in the context of a contract, or in terms of your practice philosophy.
Contractual write-offs are the difference between the practice fee schedule and the allowable fee schedule you’ve agreed to accept.
Charity write-offs are the difference between the practice fee schedule and anything collected. Charity write-offs may be in accordance with a community indigent care effort, a policy adhered to in a faith-led healthcare system, or a financial assistance program.
Small balance write-offs are amounts left on the patient’s account that may not warrant the cost of sending a bill, which has been estimated to cost about $12.00 each, taking into account the statement process, as well as the cost to receive the check, post it, and deposit it. Many practices write off the small balance (usually $15 or less) and collect it when the patient returns. Others run a special small balance statement run once a quarter.