> ## Documentation Index
> Fetch the complete documentation index at: https://mso.getlemma.com/llms.txt
> Use this file to discover all available pages before exploring further.
# Resolve credit balances (patient and payer)
> Monthly discipline on the credit balance report, patient credits versus payer overpayments, the 60-day rule, and the escheatment pipeline for unclaimed refunds.
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
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.
```mermaid theme={null}
graph TB
A[Credit balance] --> B{Source?}
B -->|Patient paid too much| C[Patient refund process]
B -->|Payer paid too much| D[Payer refund process
60-day rule if Medicare/Medicaid]
B -->|Both| E[Allocate and split]
B -->|Posting error| F[Correct the posting]
```
Anything older than 30 days gets escalated. Anything over 90 days is a finding.
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](/guides/payments/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.1
CMS 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.1
Practically: **discovering an overpayment starts a clock.** Weekly review is what keeps the clock manageable. See [Report and return overpayments](/guides/compliance/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.
```mermaid theme={null}
graph LR
A[Credit balance] --> B[Refund attempted]
B --> C{Check cashed?}
C -->|Yes| D[Resolved]
C -->|No, stale| E[Due diligence letter]
E --> F{Response?}
F -->|Yes| G[Reissue]
F -->|No| H[Dormancy period elapses]
H --> I[Report and remit 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](/guides/compliance/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
1. 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](https://www.morganlewis.com/pubs/2024/12/tick-tock-cms-overpayment-refund-final-rule-and-practical-implications); Foley & Lardner, [CMS Issues Final Regulations Implementing Changes to 60-day Refund Rule](https://www.foley.com/insights/publications/2024/11/medicare-overpayments-cms-final-regulations-60-day-refund/).
## Related topics
- [Issue a patient refund](/guides/payments/issue-a-patient-refund.md)
- [Report and return overpayments (the 60-day rule)](/guides/compliance/report-and-return-overpayments.md)
- [Handle recoupments and takebacks](/guides/compliance/handle-recoupments.md)
- [Handle uncashed checks and escheatment](/guides/compliance/handle-escheatment.md)
- [Patient refunds and credit balances, explained](/concepts/payments/refunds-and-credit-balances.md)
- [Patient refund timing requirements by state](/reference/banking/refund-check-requirements.md)
- [Unclaimed property (escheatment) by state](/reference/banking/escheatment-by-state.md)