Resolve credit balances (patient and payer)

A credit balance is money on an account that you are not entitled to keep. It is a liability. Resolving credit balances promptly is both financial hygiene and, for payer overpayments, a legal obligation with False Claims Act exposure attached.

Prerequisites

A credit balance report from your PM system
Posting current — stale posting produces phantom credits
A defined process for payer overpayments
An uncashed-check ledger

The weekly discipline

Run the credit balance report weekly

Not monthly. The 60-day clock on Medicare and Medicaid overpayments runs from identification, and a monthly cadence can burn a third of the window before anyone looks.

Triage by source

Resolve within 30 days

Anything older than 30 days gets escalated. Anything over 90 days is a finding.

Reconcile against open disputes before refunding

A patient with an open chargeback and a credit balance on the same encounter is a double-refund waiting to happen.

Patient credits

Situation	Action
Patient overpaid, reachable	Refund to the original method, see Issue a patient refund
Patient has a future appointment	Ask before applying it forward
Patient unreachable	Check to last known address, then the escheatment track
Very small balance	Refund anyway, or apply your written de minimis policy consistently

Never apply a patient credit forward without consent. Applying it to a future visit converts the patient’s money into a prepayment they did not agree to. Ask, and document the answer. In some states this is also a refund-timing violation.

Payer overpayments

Materially different obligations.

The Medicare and Medicaid 60-day rule. An identified overpayment must be reported and returned within 60 days of identification. Retaining an identified overpayment creates False Claims Act liability.¹CMS revised the identification standard effective January 1, 2025, replacing “reasonable diligence” with the False Claims Act knowledge standard — actual knowledge, reckless disregard, or deliberate ignorance.¹Practically: discovering an overpayment starts a clock. Weekly review is what keeps the clock manageable. See Report and return overpayments.

For commercial payers, the contract governs, typically requiring refund within a stated period, with the payer often entitled to recoup by offset if you don’t.

Payer type	Process
Medicare / Medicaid	Report and return within 60 days; use the MAC’s or state’s voluntary refund process
Commercial	Refund per contract; some prefer offset against future payments
Any	Verify the overpayment is real before refunding, payers sometimes demand refunds they aren’t owed

Verify before you refund a payer. Payer overpayment demands are sometimes wrong — a duplicate that wasn’t, a COB determination that’s incorrect, or a recoupment already taken. Refunding an amount you don’t owe is a real loss and hard to recover. Confirm against your own records first.

The escheatment pipeline

Unrefunded, unclaimed money does not become yours. It becomes unclaimed property owed to the state. Keep an uncashed-check ledger from day one: check number, amount, payee, issue date, clear date. Reconstructing it in year three across multiple entities from bank statements is exactly the work a state unclaimed property audit will make you do. See Handle escheatment.

Multi-entity considerations

Each PC has its own credit balances, its own refund obligations, and its own escheatment reporting to its own state.

The credit balance report runs per entity
Refunds are drawn on that PC’s account
Escheatment reporting follows the owner’s last known address rules, per state
The 60-day clock runs per entity per identified overpayment

A group reviewing credit balances only in aggregate will miss which entity owes what.

Verify it worked

Credit balance report run weekly, per entity
Every credit triaged by source before action
Nothing unresolved over 30 days
Payer overpayments routed to the 60-day process
Overpayment demands verified before refunding
Patient credits never applied forward without consent
Open chargebacks cross-checked before refunding
Uncashed-check ledger current
Escheatment pipeline defined per state

Common failure modes

Failure	Consequence
Monthly instead of weekly review	A third of the 60-day window burned
Not determining ownership	Wrong party refunded; clock still running
Applying patient credits forward without consent	Refund-timing violation; patient complaint
Refunding a payer demand without verifying	Real cash loss
Refunding a posting error	Same
No uncashed-check ledger	Painful unclaimed property audit
Aggregate-only review in a multi-entity group	Nobody knows which entity owes what

Sources

42 U.S.C. § 1320a-7k(d), enacted by ACA § 6402(a). Identification standard revised by CMS-4205-F, published December 9, 2024, effective January 1, 2025. See Morgan Lewis, Tick-Tock: CMS Overpayment Refund Final Rule; Foley & Lardner, CMS Issues Final Regulations Implementing Changes to 60-day Refund Rule.

Formation & Corporate

Agreements

Credentialing & Payer Enrollment

Billing Operations

Patient Payments & Refunds

Banking & Finance

Compliance Tasks

Resolve credit balances (patient and payer)

Prerequisites

The weekly discipline

Patient credits

Payer overpayments

The escheatment pipeline

Multi-entity considerations

Verify it worked

Common failure modes

Sources

​Prerequisites

​The weekly discipline

​Patient credits

​Payer overpayments

​The escheatment pipeline

​Multi-entity considerations

​Verify it worked

​Common failure modes

​Sources

Prerequisites

The weekly discipline

Patient credits

Payer overpayments

The escheatment pipeline

Multi-entity considerations

Verify it worked

Common failure modes

Sources