Why does my automated insurance payment show a negative unallocated amount?
If you find that a recent automated insurance payment came in with a negative amount listed in the unallocated column - don't panic.
In this scenario, the payer has simply credited themselves for a portion of their initial payment made toward a previous claim submission. Instead of retracting their initial payment, they applied this credit as a negative amount to be included in the sum of a more recent payment.
This credit makes the new payment lower than expected by the exact amount of the "Clawback" – since they are only paying the difference from what they previously paid toward that appointment.
However, the new payment report from the payer is showing the total amount of their finalized payment as allocated to the appointment. This results in the negative unallocated amount that you see being equal and opposite to the initial payment.
We will dive into this example later, but here you can see that the "Clawback" amount is the same as the unallocated amount:
What exactly is a "Clawback"?
This process can be referred to as a "Clawback" in insurance terms. This simply means that the payer has re-assessed their financial obligation for a previous claim submission and determined that they either overpaid or underpaid initially. This is common for insurance payers to do after running an account audit on a clinician, or after a recent change of the provider's contracted rate.
Note: Insurance companies may refer to this as Clawbacks, Take-backs, Adjustments, Retractions, or Recoupments – these terms all mean the same thing.
How is this documented within SimplePractice?
To document this, the payer sends a payment report crediting themselves for the amount that they initially paid, but later determined was incorrect. This Credited Payment Report is essentially just reversing the documentation of the initial payment that was made, but they won't actually be retracting money from your account.
You will see this denoted by our system on the associated payment report by the letters "CR," indicating the amount that has been credited towards the insurer's balance due.
The credited amount and the finalized amount will both be included in the same insurance payment that the payer makes out to you – listed with the same reference number and payment date. However, this is split up into two separate insurance payments in our system. You will see that the payment reference number on both insurance payments will be the same, but the credited portion of the payment will be denoted with the letters "ADJ" to indicate that it is the adjusted amount.
Clawback portion of Insurance Payment:
Finalized Insurance Payment:
Let's walk through an example:
In this example, the expected total of the check is $92.16, since this is the amount that is allocated to the July 5th appointment. So, why is the amount listed on the check only for a total of $38.16?
In this case, the payer already paid $54 toward the July 5th appointment in a payment made on July 21st. So, the new payment only needs to cover difference between the finalized amount and what they already paid (the amount that they already paid is equal to the clawback amount):
[Finalized amount - Clawback amount = Total of new payment]:
$92.16 - $54 = $38.16
This results in the amount they already paid (the clawback) showing as unallocated. Here's how our system calculates the unallocated amount:
[Unallocated Amount = Total of new payment - Total amount allocated to the DOS]:
$38.16 - $92.16 = -$54
Note: This is the same formula that our system uses to calculate an unallocated amount on any payment.
What do I need to do to fix this?
Keep in mind that, even with the unallocated amount showing, this data is correctly being displayed by our system—and most of the time there is no additional action required from your end.
However, if the reassessment of the previous claim resulted in an adjustment to the Client Responsibility (copay), or if the Write-off amount wasn't updated properly, you'll want to check that these are still displaying accurately in the Payment Overview portion of the Claim Details page. If these are both correct, this means that our system has done all of the work of accounting for these adjustments for you.
Important: If these entities are incorrectly listed, the dates of service (DOS) will not show as Paid on the Appointment Status Report and Unpaid Insurance Sessions Report, and your client may not be paying the appropriate copay amount.
Our system makes it easy to quickly determine if these entities are still showing the correct amounts.
To check that the Client Responsibility and Write Off amounts are still showing correctly in your account, you will want to navigate to the Claim Details page of each DOS included on the adjusted payment. To do so, you will want to:
- Go to: Insurance > Payments and expand the date range so you can see the "ADJ" insurance payment in question
- Click the blue link of the ADJ payment to open the insurance payment
- If there are multiple dates of service included on the payment, hold down command while clicking the View details link for every DOS.
- Review the Payment Overview portion of the Claim Details page to verify that:
- The Client Responsibility field is accurate according to the finalized payment report
- There is a green checkmark next to each date of service (DOS), indicating that the Write-off is accurate.
Tip: We have a great guide that will walk you through what to look for to make sure each amount is displaying correctly: How do I fix an insurance payment?
What to look for when checking the Client Responsibility:
Now you will want to make sure that the Client Responsibility shown in the Payment Overview matches the Client Responsibility listed on the payment report of the finalized insurance payment.
In this example, the Payment Overview shows a Client Responsibility of $20:
This is also reflected in the finalized Payment Report – which shows a Client Responsibility of $20:
This means that the Client Responsibility is already accurately reflected in this example and no changes need to be made.
If you find that the Client Responsibility amounts do not match, you can follow the steps outlined in our guide for Appointment level billing changes to manually correct this from the client’s billing page of their file.
What to look for when checking that the Write-off amount is displaying correctly:
If the write-off amount is displaying properly, you will see this denoted by a green checkmark in the lower right corner:
In this example, the green checkmark is indicating that the proper write-off amount is being shown and no further changes need to be made.
If you see any of the following statuses, this would be indicative that the incorrect write-off amount is being displayed:
- Write-off missing status means that the amount that the insurance paid is less that the amount that the insurance was charged and the Write-off is listed as $0
- [Insurance Paid < Insurance Charged]
- Payment missing status means that the payments entered from both the client and insurance company are not enough to cover the full fee of that session, so the write-off amount is too low.
- [Insurance Paid + Write-off < Insurance Charged]
- Write-off too high status means that the insurance write-off amount exceeds the expected write off. For example, let's say your session fee is $100, your client has a $20 co-pay, and the insurance is responsible for $60. The expected write-off for that session would be $20 and any amount over that would trigger this status.
- [Insurance Paid + Insurance Write-off > Insurance Charged]
- Duplicate payments recorded status means that the Insurance Paid amount exceeds the fee for the session.
- [Insurance Paid > Insurance Charged]
To correct an inaccurate Write-off amount, you’ll want to start by going to the insurance payment that shows the finalized payment amount (the insurance payment that does not show ADJ).
From there, you can click Edit at the top, locate the client's DOS in question, then enter the difference between the original payment amount and the new payment amount in the Insurance Paid field and Save.
- For example, if you were previously paid $54 for Jamie Appleseed's 7/5 DOS and now the payer has decided to pay $92.16 instead, you’ll enter $38.16 in place of the $92.16.
Once you’ve updated the amounts in the Insurance Paid field, you can go to the adjustment insurance payment (e.g. ADJ 1234567890) and click Delete Payment. This will remove the negative adjustment leaving only the original amount paid and the new additional amount that was paid.
Note: If the payer has decided to pay less than they initially paid, you’ll want to delete the adjustment and the new payment amount, then edit the original payment to show the final amount paid. I recommend using the Administrative Note to make a note of the change that occurred.
What if there are multiple appointments that the payer has performed a clawback on listed in the same insurance payment?
You will notice that the sum of the retractions will always total to equal the unallocated amount, regardless of how many appointments were adjusted by the payer. So, the total amount of the new insurance payment will always be lower than expected, by the amount credited from the initial payment.
What if the finalized amount is the same as the initial payment?
In special cases, payers may reprocess claims and send a new payment report with the same finalized amount. A common example of this is when a client (or a client's parent) loses employment and thus loses their company's insurance plan. To ensure that there is no lapse of healthcare coverage, the government organization, COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985), will offer continued coverage of their healthcare plan, but through a different member ID number. When this happens, payers will reprocess the claims to update their administrative records so they can be tied to the new member ID number, without making a change to the coverage of the claims.
When this happens within SimplePractice, you will see two new payments come in with the same wire number, one will be a $0 payment – denoted with the prefix "NON" to indicate that no new payment was made, and one will be a negative payment – denoted with "ADJ" to indicate the adjustment. You will see that the amounts allocated to each appointment will cancel each other out such that there is no change in the finalized amount of the payment. So, to correct this, you can simply delete the two new payments that came in (the NON payment and the ADJ payment).