Beware the unclaimed funds audit

Issue 7

In this month’s From the Office Manager’s Desk column, Jill Nesbitt describes her practice’s experience with an unclaimed funds audit and explains why it’s important for every practice to have an organized system to handle patient refunds.

We won the lottery! Woo hoo! Lucky us! Okay, not so much, because the lottery we won was to be selected to receive an audit for unclaimed funds.

What, pray tell, is an unclaimed funds audit, you ask? Allow me. Apparently, the state of Ohio has decided that any money businesses owe back to their customers should no longer be kept as a credit on those customers’ account.

Instead, this money should be sent to the state of Ohio. Then, the state will add their information into their unclaimed funds website, where, if they can find this website and provide the proper identification, they can receive this money.

To accomplish this, Ohio has hired auditors to spend a day or two in the business to identify any unclaimed funds for the last 3 years.

How it works

To produce this information, we ran reports to find credit balances.

Then, we had to manually review each one to make sure the patient wasn’t scheduled for an upcoming appointment (or more often, the patient’s family member) or, that the credit had been requested to be left there by the patient as he or she was building credit for major treatment.

Ohio’s rules are that if the credit amount is more than $50, then we are to send a letter to the patient letting he or she know this credit exists and without a response, we will be sending this amount to the state.

Then we had to fill out a special form along with this amount as well. For amounts less than $50, we are to add up the amounts of the credit, write a check to the state and create a final adjustment to bring the patient’s balance back to zero.

There are four auditors for Ohio and we were lucky enough to be selected for this audit. Bring on the Powerball tickets!

Why it’s important to keep track of refunds

In my opinion, the state is gaining nothing by auditing my practice for credit balances. We have a strict collection procedure that asks patients to pay their portion promptly-and we make collection phone calls and send letters to anyone past due even a few weeks.

With this type of collection policy, we feel it’s our duty to also keep track of our refunds. If we expect to be paid on time for the work we do, then we understand that patients expect to receive their refunds in the same timely manner.

The system we use for refunds is:

  • Run an aging report and look for all credit balances, especially those over 30 days.

  • Call every patient due $50 or more to ask those patients how they would like to use this money-maybe this is a step toward saving for whitening or maybe they have a few kids overdue for checkups and we want to leave that on to cover their co-pays-or maybe they want a refund. They choose and we do it.

  • Send letters to patients with $50 or less. We use the DENTRIX quick letters to automatically include their next continuing care date due and again, we give them options. The DENTRIX Office Journal records the date this letter was mailed.

I assume every state has its own version of unclaimed funds audits, but chances are, you won’t be as lucky as we were. However, even without an audit, it makes sense to have an organized system for handling refunds to patients. This can help to avoid patient complaints in the future. 

Handling credit balances properly is just one way you can run a successful dental practice. If you’re interested in new ideas on running a dental practice, please subscribe to my weekly blog.

Jill Nesbitt is a dental consultant and practicing office manager for a multi-specialty private dental group. Nesbitt has managed the practice for 14 years, has state-level quality training, and coaches dental teams to improve the business-side of their practices.

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