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Reminder: Identifying Adjustments That Create Negative Balances

September 2, 2016

The Department of Health Care Services (DHCS) reminds providers to review prior Remittance Advice Details (RAD) forms in order to identify adjustments that create negative balances and can turn into an Accounts Receivable (A/R). By locating the negative balance associated with an A/R, providers can identify the specific claim details, reconcile their patient accounts and, if necessary, follow up to dispute the adjustment.

Negative Balances
A negative balance is created when an adjustment or void is initiated against a previously paid claim. This adjustment may be due to a variety of reasons, such as policy or rate updates. The adjustment is included in the weekly checkwrite along with any positive reimbursement for other claims. If there is not enough of a positive reimbursement to offset the reversal of payment created by the adjustment(s), a negative balance is generated. Once a negative balance is created, the provider will receive a “no-pay” RAD form indicating the balance due that will be forwarded to the next cycle.

On the following payment cycle (usually the weekly checkwrite), the negative balance becomes an A/R and will continue to offset future claims. The same A/R number will appear on future RADs until the balance is paid in full.

A/R balances that are not paid in full within 90 days of the established A/R date will be transferred to the DHCS Third Party Liability & Recovery Division, Overpayments Section. Refer to the Provider Overpayments (OP) Program Web page of the DHCS website for more information.

Accounts Receivable
Providers can easily track negative balances by reviewing the RAD to identify any adjustments and locating the negative balance on the last page if positive claims do not cover adjustments.

Providers can also identify relevant RAD forms by referencing the 10-digit A/R number that was created from the negative balance on subsequent checkwrites. The 4th and 5th digits of this number indicate the year and the 6th, 7th and 8th digits are the Julian date, which indicates the date the negative balance was created. Providers may reference the Julian Date Calendar in the Claim Submission and Timeliness Overview section of the appropriate Part 1 provider manual to find the associated calendar date. The checkwrite for that date should contain the original claim adjustments that created the negative balance.

For example:

A/R = 3311502009
15 = 2015
020 = the 20th day of the year (January 20)

In this example, the checkwrite showing the original adjustment was issued on January 20, 2015.

If providers do not have RADs or access to them, a written request may be sent to the Cash Control Unit for copies of previous RADs. The written request must contain the National Provider Identifier (NPI), warrant number and warrant release date.

Note:  A cost is associated with the request for copies of RADs.

Letters to the Cash Control Unit should be addressed as follows:

Xerox State Healthcare, LLC
Attn: Cash Control
P.O. Box 13029
Sacramento, CA  95813-4029