A/R Standard Definitions

Reference for the RBMA Accounts Receivable Benchmarking Survey
Revised 10/1/2022

This information is provided to Radiology Business Management Association (RBMA) members for informational purposes. Please check with your legal and/or economic advisors for specific advice and application.

I. CHARGES

Gross Charges–The full dollar amount (undiscounted) billed for all services rendered to patients based on the practice fee schedule (list price). The RBMA recommends using one standard fee schedule to record gross charges, rather than attempting to reflect any contracted discounts. One method of establishing a fee schedule is using a multiple of the Medicare Physician Fee Schedule (e.g. 2 or 3 times MPFS). Use of an undiscounted fee schedule will allow for more accurate comparisons to survey results since most organizations will use a consistent fee schedule. The difference between the fee schedule charge and a lesser/discounted contracted amount would be classified as a contractual adjustment.

II. CHARGE OFFSETS

There are two different CATEGORIES of offsets against Gross Charges: adjustments and write-Offs.

1. Adjustments–Amounts which are not expected to be collected, by virtue of laws, regulations, contracts or internal policies applicable to the services provided by the entity.
   a. Insurer Contractual Adjustment (Uncontrollable): The difference between the Gross Charge and the amount paid under terms of a contract covering the patient. Examples include the amount in excess of the Medicare “allowed amount,” any amounts in excess of the Medicaid allowance, or the difference represented in a discount to a PPO or HMO.
      1. MPPR (Multiple Procedure Payment Reduction) Adjustments: Reflects a health plan policy whereby the primary procedure code is paid in full and subsequent codes are discounted when billed with the primary procedure. This is common with surgical procedures (IR) and certain multiple diagnostic procedures completed during the same encounter on the same day.
      2. Capitation Adjustment: This is a subsidiary form of Contractual Adjustment and should be used when you have agreed to a third-party contract that provides capitation payments for services rendered to a patient. The difference between what would have been the Gross Charges had these services been billed on a fee-for-service basis, and the case rate payment received, is the adjustment amount.
      3. Provider Enrollment Adjustment: A payment adjustment due to provider (individual or organization) being out of network, either by choice or due to insurance plan processing delays.
   b. Policy Adjustments (Controllable):
      1. Charity Adjustment: The difference between the Gross Charge and the amount (if any) that will be received for services to patients provided under a prospective charity arrangement. These would not be classified as a Write-Off because the charity status is known at the time of service. An example is when the radiology organization provides a service to the community, e.g., a “free clinic” for children. These accounts are also often credited pursuant to a contract or understanding with the hospital and/or policy of the radiology organization.
      2. Self-Pay Discount Adjustment: These amounts are credited pursuant to a policy regarding prompt payment of an account.
      3. Contracted Rate Adjustment: The difference between the Gross Charge and the amount paid under terms of a contract with a third party for services. An example is an agreement with a hospital for discounted wellness services to its employees.
      4. Administrative Adjustment: The difference between the Gross Charge and the amount paid in accordance with the entity’s administrative policy. Examples include professional courtesy and employee discounts.
      5. Other Miscellaneous Adjustments

2. Write-Offs: Amounts that are expected to be collected, but the organization was unsuccessful in collecting.
   a. Bad-Debt Write-Offs: The difference between the Gross Charge and the amount collected from a patient where the difference is not covered by any other Adjustment or Write-Off. For example accounts assigned to a collection agency for collection are Bad-Debt Write-Offs. Any amounts received as a result of the work of a collection agent are included in the Gross Collections and are not netted against this Write-Off amount.
   b. Bankruptcy Write-Offs: The difference between the Gross Charge and the amount collected (if any) from a patient or third party, who has been adjudicated bankrupt.
   c. Non-Covered Service Write-Off: The difference between the Gross Charge and the amount collected (if any) from a patient receiving a service not covered by their insurer.
   d. Timely Filing Write-Off: The amount denied due to a failure to file a claim or appeal within a contractually-specified time period for filing.
   e. Small Balance Write-Off: The amounts credited or debited because they fall below a threshold value for collection efforts.
   f. Return Mail Write-Off: The amounts credited due to a failure to locate the party responsible for payment. An example is patient statements that are returned with bad addresses.
   g. Estate or Deceased Write-Off: The difference between the Gross Charge and the amount collected (if any) from the survivors, or from the estate, of a deceased patient.
   h. Out of Network (credentialing) Write-off: Non-Payment by the carrier because provider is not recognized under the contracted Tax ID
   i. Medical Necessity Write-off: This is a subsidiary form of Contractual Adjustment and should be used when you have agreed to a third party contract allowing the third party to define medical necessity.
   j. No Precertification Write-off: This is a subsidiary form of Contractual Adjustment and should be used when you have agreed not to seek payment in instances when services are not pre-approved, as required in a third party contract requiring precertification of specific exams.

III. Accounts Receivable:

The balance of money due to a firm for services delivered but not yet paid for by payors and patients.
1. Debit Balances: The amount of money owed to the organization for services provided. Debit amounts increase the accounts receivable.
2. Credit Balances: The amount of money owed by the organization to payors or patients due to an overpayment. Credit amounts reduce the accounts receivable.

IV. Collections:

Gross Collections–Revenue collected from Gross Charges.
1. This includes:
   a. Payments from insurance companies
   b. Payments from patients
   c. Payments from governmental payers
   d. Value payments. Value-based programs reward health care providers with incentive payments for the quality of care they give to people with Medicare.
   e. Withholds returned to the entity as part of a risk sharing arrangement
   f. Bonuses and incentives paid to the organization for good performance (ex. MIPS payments)
   g. Collection agency payments
   h. Group/contract/direct bill payments (run through the billing system)

2. This does not include:
    a. Stipends
    b. Medical director fees
    c. Revenue from billing services or administrative services to other entities

V. Collections Offsets:

There are three categories of Collection Offsets: refunds, returned checks, and recoupments.
1. Refunds are any repayment of funds paid in error by an insurance company or patient.
2. Returned Checks are Gross Collections paid by negotiable instrument, where the negotiable instrument was not honored upon presentation to the entity’s depository institution.
3. Recoupments from advanced payments (example Medicare advance payment recoupment)

VI. Billing/Collection Expense:

All costs identified as incurred in the process of collecting, recording and transmitting charge information, plus the costs of collecting, posting and depositing payments for these services.
1. Outsourced billing costs. Usually a percentage of collections, but may also include other costs listed below.
2. Human resource costs (salaries/Benefits etc.)
3. IT/System costs
4. Financial and other fees (lockbox/credit cards etc.)
5. Purchased services fees (credentialing etc.)
6. Business office costs (Rent/Office/Supplies)
*See RBMA chart of accounts

VI. Procedures:

Total Professional Component, Technical Component or Global CPT®/HCPCS codes billed during the reporting year. Counts of the following commonly billed items are not included:
1. Contrast media
2. Radiopharmaceuticals
3. Other similar codes used for supplies and technical services that are tangential to providing the ordered services
4. Category II codes
5. Reporting only codes (Quality payment codes etc.)