Skip to site content

Indian Health Service The Federal Health Program for American Indians and Alaska Natives


     Indian Health Manual
Share This Page:

Part 5, Chapter 1:  Manual Exhibit 5-1-A

Accounts Receivable Posting and Reconciliation Instructions
(Includes Establishing/Maintaining Accounts Receivable Balance


Attachment 1 - “Accounts Receivable Payment Discrepancies Format”

Attachment 2 - “Sample Accounts Receivable Adjustment Form”

Attachment 3 - “Sample Request for Refund Form”

Attachment 4 - “Sample RPMS A/R Batch Collections Report”

Attachment 5 - “Sample Area Office Collections Report”

Attachment 6 - “Sample Reconciliation Sheet”

  1. POSTING TRANSACTIONS.  These instructions are to be followed when performing posting transactions for all third-party revenue (excluding Federal Medical Care Recovery Act receipts).  The Resource Patient Management System (RPMS) Accounts Receivable A/R application system must be accessed and used to perform these transactions and/or functions.  A description of pertinent transaction terminology is included in this exhibit.

    1. Payments/Collections.

      1. Create RPMS collection points using each allowance category. (Reference the RPMS A/R User Manual to setup allowance categories).

      2. Access each service unit's RPMS database and create an RPMS A/R batch.  Each batch must note the payer type, check number, and amount of the check.  Batches must be created in the appropriate allowance category.

      3. After the batch is created, forward the "Explanation of Benefits (EOB) and copies of the checks to the service unit business Office via overnight mail.

      4. All payments/collections received and deposited must be posted to the individual accounts in the RPMS A/R system within 3 days of the batch creation date.

      5. All payments/collections received must be posted by 11:59 p.m. on the last calendar day of the month.

      6. Local procedures must be established for identifying and correcting payment discrepancies.  (See Attachment 1, "Accounts Receivable Payment Discrepancies Format."   This matrix identifies location scenarios of discrepancies that could occur with payment processing.

    2. Adjustments/Zero Pays.

      1. The Financial Management Officer (FMO) or designee will ensure that the Area Office and/or service unit Finance Office personnel enter adjustments/zeropay documents as a batch in the RPMS A/R system and that the batch is sent to the service unit Business Office within 3 days of receipt.  (Note: Zero pay documents consist of insurance correspondence that denotes no payment will be made by the insurance company, i.e., non- covered services.  Adjustment documents denote that payment was made but no dollar amounts were issued, i.e., deductibles and co-payments.)

      2. The service unit business office manager (BOM) or designee must post all known adjustments in the same month received but no later than 72 hours after the receipt of supporting documentation.

      3. The RPMS A/R message field must be completed to note and establish follow-up activity on each account.

      4. Ongoing follow-up of unpaid/open accounts must be performed in accordance with facility procedures but no later than 45 days after the claim is established in RPMS.

    3. Refunds.

      1. Refund requests must be processed as soon as they are identified and/or must be processed in the same month they are received. Refund requests that include supporting documentation must be posted by the BOM and submitted to the Finance Office (Area Office or service unit) for processing.

      2. The BOM must provide the following documents to the Area Office or service unit Finance Office to process the refund payments to the payer:

        1. Request for Refund Form.  These forms must be numerically sequenced by fiscal year (FY) and facility. Pre-numbered forms (by FY and location number, e.g., 05-0007) should be used in requesting refunds or payment adjustments (see Attachments 2 and 3, “Sample Accounts Receivable Adjustment Form” and “Sample Request for Refund Form”).  (Note:  The location number is the facility accounting location code.)

        2. Final Collection Report Batch Cover Sheet (for original checks).  A copy must be provided that identifies the refunded amount and includes notations on the item, payer, and dollar amount.

        3. Remittance Advice Document.  This is a copy of the applicable remittance advice document.

        4. Copies of Insurance Checks and Supporting Documents.  When applicable, a copy of all insurance checks and all supporting documentation from the insurance company must be provided.  (Note:  If there was an electronic check payment issued for the refund, the service unit will follow the same procedure but will not include a copy of the check.)

      3. Upon receipt of the above documentation, the FMO will complete Form 1047, requesting payment to the payee/insurance company, and process the payment using Form 1047 as the supporting documentation.  After payment is made, the FMO will return the “Request for Refund Form” and a copy of Form 1047to the service unit.

      4. The BOM must post the refund amount for each refund request in the RPMS unallocated amount.  The refund amount must remain in the RPMS unallocated amount until an actual refund check is issued.  Each BOM must monitor the Unallocated Account Report to ensure refunds are processed.  (Note: Refunds will be reflected in the CORE Accounting System (CORE) as part of the daily/monthly collection entry as identified on the Collection Report, i.e., as a decrease in collections and, therefore, an increase in the A/R balances.)

      5. After the refund check has been issued, the FMO must adjust the finance collection report with CORE for the amount of the refund and notify the affected service unit BOM in writing that a check has been issued.

      6. The BOM must monitor or process the refund amount in the RPMS A/R (unallocated amount) as a refund A/R amount.  (Note: If the refund is the result of an overpayment on a bill, the BOM must note/enter in the RPMS A/R (bill message field) the check number and issue date.)

      7. Local service unit Business Office policy/procedures will apply when posting refunds for payment credits; for the recoupment of overpayments; and for penalty and interest payments.

    4. Unallocated Cash.

      1. When third-party revenue is posted to unallocated cash, the transaction must be researched in the same month and removed from unallocated cash prior to the month-end cutoff date.  Posted unallocated cash must be transferred to an individual patient account or posted as a refund once it is properly identified for formal processing.

      2. All third-party revenue remaining in unallocated cash at the month-end cutoff date must be reported to the FMO with the month-end balances.

      3. The FMO will monitor the Batch Statistical Report (BSL) and reconcile unallocated cash amounts.  The FMO must also monitor open refund requests to ensure documentation is submitted that supports the pending request.

        (Note:  Third-party revenue may only be posted to unallocated cash when payments have not been classified or identified and payments have not been specified, e.g., interest payments.)

    5. Transfers (Between Facilities).

      1. When third-party revenue is received that should have gone to another facility/location, the Area Office or service unit Finance Office that received the third-party revenue must:

        1. Provide Notification.  Notify the correct Area Office or service unit Finance Office of the need to transfer third-party revenue between the respective locations.  This includes notifying the correct facility of the transfer and sending documentation (EOB) to the proper service unit.

        2. Adjust Collection Report.  Make the adjustment by decreasing the "Cash" for the incorrect service unit and increasing the "Cash" for the correct service unit on the collection report.

        3. Create A/R Entry Batch.  Access the service unit RPMS A/R subsidiary ledger, and create an A/R entry hatch.

        4. Post to Unallocated Cash.  The amount must be posted to the unallocated cash account.

        5. Refund Out of Unallocated Cash.  Refund the amount out of unallocated cash using the proper reason code.

    6. Recoupments.

      1. Overpayments.  All overpayments are to be posted to the original bill (account) according to the EOB.  This will result in a credit balance on the account that is to be maintained until further official action is authorized.

        1. Notification of Insurer.  The service unit Business Office must notify (preferably by telephone) the insurer of the overpayment and the request for repayment.  This must be done within 2 business days of posting the overpayment.

        2. Message Entry in RPMS A/R.  The official contact must be documented in RPMS A/R as a message entry that identifies all pertinent information, e.g., decision, outcome (for refund or recoupment).

        3. Holding File.  The service unit Business Office must create and maintain a “holding file” for tracking recoupments.  (Note:  For refunds, see refund procedures.)

      2. Payment Credit.  If the insurer recoups the overpayment through a payment credit process, the insurer will send an EOB with the recoupment for the overpayment.  (Note:  The recoupment can be taken in lieu of a payment for an unrelated patient account.)

        1. Negative Adjustment.  The EOB authorizes the recoupment which can now be processed to the account with the credit balance.  A negative adjustment must be posted to the appropriate patient account (bill with the credit balance) using the PAYMENT CREDIT adjustment type and CREDIT TO ANOTHER BILL adjustment category.  (Note:  The negative transaction should zero-out the account.)

        2. Positive Adjustment.  A positive adjustment must be made to the patient account from which the recoupment was taken using the PAYMENT CREDIT adjustment type and CREDIT FROM ANOTHER BILL adjustment category.  (Note:  The positive transaction should zero-out the account.)

        3. Message Entry in RPMS A/R.  A new message entry on the patient account must be made in RPMS A/R to document all transactions (adjustment entries.)

  2. RECONCILIATION.  These instructions are to be followed when performing daily or monthly reconciliation processes for third-party revenue transactions.

    1. Instructions for Performing Daily Facility Transaction Reconciliations.  All IHS facilities have the option of performing daily transaction reconciliations in order to facilitate the month-end reconciliation process.  Daily transaction reconciliation will help identify problems at the month-end reconciliation process by tracking every transaction entered for any given business day.  This is accomplished by performing the following actions:

      1. Run Transactions Report and Bills Listing Report.  The Transactions Report (TAR) and the Bills Listing Report (BLS) must be run at the end of each day that there is any type of transaction activity.  (Note:  If performing a daily reconciliation, the BOM will run a 10-key tape with daily subtotals for bill, payment, and adjustment amounts.  The totals for each bill, payment, and adjustment must reconcile to the TAR and BLS reports.)

      2. Reconciliation to BLS Report.  If billing has occurred, the BOM can reconcile billed amounts (by approval date) with the BLS report at the end of the day. While the BLS report is printing, run a 10-key tape of charge slips billed (or super-bill if used) and then reconcile it to the BLS report.  If charge slips or super-bills are not used, note the total billed for each bill on a reconciliation log as the bills are being approved; run the 10-keytape of the totals at the end of the day, and include all cancelled bills for that day in the totals.  When balanced, the responsible clerk should initial and date the 10-key tape and staple the tape to the BLS report.

      3. Reconciliation to TAR.  If posting payments or adjustment amounts on a daily basis, the BOM can reconcile these payments and/or adjustments with the TAR by transaction date range at the end of the day.  A TAR should be runby collection batch at the completion of posting for each collection batch.  (Note:  When posting adjustments within the collection batch, note the adjustment amount on the EOB or remittance advice (RA) by using a colored pen or circling the adjustment amount.)  While the TAR is printing, run a 10-key for all adjustments within the collection batch, and reconcile the adjustments to the TAR.  When balanced, the clerk should initial and date the 10-key tape and staple the tape to the TAR.

      4. Run TAR by Transaction Date Range.  When reconciling daily (if posting, adjustment, or refund activity occurred that business day), the business office must run a TAR by TRANSACTION DATE RANGE at the end of the day.  (Note:  While the TAR is printing, run a 10-keytape of the adjustment totals from each individual collection batch, and add any adjustments posted through the “ADJ”menu option.)  Adjustments posted through the “ADJ” menu option must be reconciled with the "No Collection Batch" subtotal on the TAR by transaction date or the "Outside Batch Report" at the end of each day.  The adjustment total from the 10-key tape must reconcile to the TAR adjustment column total.  Refunds posted through the "REF" menu option must be reconciled with the "REFUND" column on the TAR.  When balanced, the responsible clerk should initial and date the 10-key tape and staple it to the TAR.

      5. Correct Difference in Amounts/Non-Reconciliation.  If total amounts do not balance/reconcile, the daily transactions must be reviewed and/or audited until the difference is identified and resolved.  (Note:  A reconciliation error will occur ifa bill is cancelled in the third-party billing system and then re-approved.  Remember, each time a bill is approved it automatically uploads to the RPMS A/R system and will he reported on the TAR for each time it is approved.  A separate log to track cancelled bills should he established that identifies/records the bill number, total bill amount, reason for cancellation, and the name of the clerk of record.

      6. Reconciliation to the Period Summary Report.  For each facility, the daily transaction totals must be reconciled to the RPMS A/R Period Summary Report (PSR) by location (ALL Locations) and allowance category (ALL Categories) for that day.

    2. Reconciliation - Finance Office.  The FMO must reconcile balances from the RPMS A/R system with the CORE general ledger using the reports received from the service unit (by allowance category).  The FMO must perform the following functions:

      1. Reconcile Collection/Refund Amounts.  Reconcile these amounts from the collection report to the batches created by the BSL.  This should be accomplished within the same timeframe as the cash collection report.

      2. Encode Finance Collection Entry Report.  Verify the receipt by the Department of the Treasury of all third-party revenue cycle payments (including credit card payments and cash), and enter the total into the Finance Collection Entry Report.  This activity must be performed on a daily basis and within 72 hours of receipt.  (See Attachment 4, “Sample RPMS A/R Batch Collections Report,” and Attachment 5 “Sample Area Office Collection Report” for input.)

      3. Reconcile by Allowance Category.  Reconcile the RPMS subsidiary ledger total/Age Summary Report (ASM) with the CORE A/R balance by allowance category.

      4. Find/Correct Discrepancies.  The finance personnel (Area Office or service unit) must work with the BOM to find and correct/adjust discrepancies when the subsidiary accounts do not reconcile with the CORE accounts.

      5. Monthly Reconciliation - Treasury 224 Report.  Perform a complete month-end reconciliation of CORE with the Department of the Treasury’s 224 Report.

  3. ACCOUNTS RECEIVABLE BALANCE.  The following instructions are for those locations that have not yet established and booked in CORE an initial (First Time Entry) A/R balance and include procedures for maintaining the A/R balance once established.

    1. Establishing the A/R Balance.  The primary and preferred method for establishing the A/R balance is by using the Aged Summary Report (ASM) to retrieve the pertinent information/data and perform the following steps:

      1. Post all payments and adjustments prior to the month-end cutoff date.

      2. Research the RPMS unallocated balance (located/found in the BSL Report).

      3. Review the listing for unallocated amounts, and pull the corresponding EOB/batches and research.

      4. Review all open-batch balances, and post or refund open accounts.

      5. Research all stored batches for individual items, and resolve with third-party payer.

      6. Run a detailed claims report based on the report findings.

      7. Make the necessary corrections/adjustments to RPMS A/R.

      8. Go to the posting menu and post all unallocated cash, or refund the amount in RPMS.

    2. Accessing the ASM.  The ASM is currently available in the RPMS A/R The ASM provides outstanding A/R amounts by allowance category and all insurers by visit location.  The following steps must be performed when accessing the ASM:

      1. Select from the reports (RPT) menu: Age Summary Report.

      2. Do not add information/data at the “Visit Location” prompt.

      3. Select return function key to ensure all transactions for all locations are reflected in the report.

      4. Select by insurer: “ALL INSURERS.”

      5. Select:  Allowance Category.

      6. Submit the ASM with separate RPMS databases for each service unit or health center to the FMO in accordance with local procedures.  (Note:  The subsidiary ledger must not reflect negative balances in the ASM.)

    3. Maintaining the Monthly A/R Balance.  The A/R ending balance in the CORE ledger should equal the amount identified as the ending balance on the ASM after all transactions are recorded.  The ending balance becomes the beginning balance for the following month (see Attachment 6, “Sample Reconciliation Sheet”).

      1. Total monthly or daily collections (per the collection report) should be entered into CORE by service location to decrease the A/R balance using transaction code 220.

      2. By facility and by allowance category, record adjustments to CORE in the same month that they are posted per the PSR using transaction code 132 negative dollar amount.  (Note:  Amounts adjusted during the month, as shown on the PSR, must be recorded in CORE as a decrease to the applicable A/R amount.)

      3. Record billed amounts for the month (as identified in the PSR) as an increase to the CORE ledger for accounts receivable by facility and by allowance category using transaction code 132 positive dollar amount.

  4. TERMINOLOGY.  The following definitions/descriptions of third-party revenue and transactions terms are included for reference and to help ensure a consistent application:

    1. Billed Amount.  The total of all claims that are billed during the current month is the “billed amount,” which is displayed in the PSR report by facility and by revenue source (insurer type).  This amount should reconcile to the BLS in the RPMS Third-party Billing System and the new BSL report in the A/R system.

    2. Payment Amount.  The total of all payments that are posted during the current month is the payment amount which is also reflected on the PSR report by facility and by revenue source.  This amount should reconcile to the amount collected for the month, per the BSL in the RPMS A/R system, plus any payment credits reported for the month.

    3. Refund Amount.  The total of all refunds that have been posted during the current month is the refund amount, which is displayed in the payments column of the PSR report but should be tracked separately for reconciliation purposes.

    4. Adjustment Amount.  The total of all adjustments that were posted during the current month is the adjustment amount, which is presented in the PSR report by facility and by revenue source.

    5. Unallocated Amount:  This refers to any collection received that has not been removed from a hatch and posted to a patient account for the current month.  An unallocated amount must be reported on the spreadsheet submitted to the Area Office with an explanation as to why it has not been removed.  (Note:  Performing a summary of items that still exist in a particular account can capture unallocated amounts that have not been worked on.  When receipts/revenue have been removed from the unallocated category, they are accounted for in other totals and do not have to be accounted for separately.)

    6. ransfers Between Facility Amounts.  These are considered payment credits and are accounted for as payments for the facility that is getting credit for the collection (thereby reducing their A/R but has not yet entered the dollar amount in a collection register.  These amounts are reflected in the PSR report but should be tracked separately for reconciliation purposes.

    7. Posting Transactions.  This refers to the RPMS functionality that allows users and managers to post payments, adjustments, unallocated cash, and refunds into the software program that enables the management of third-party accounts and the production of reports by users and managers.

    8. Payment Refunds.  These are refunds that are made through RPMS when:

      1. a patient or an insurance company overpays on an account,

      2. duplicate payments are received from the payer in error, or

      3. a payment is received at the wrong IHS health care facility.

    Attachment 1

    Accounts Receivable Payment Discrepancies Format

    Purpose:  TO ENSURE A STANDARD PROCEDURE FOR PAYMENT DISCREPANCIES AND TO FACILITATE THE RECONCILIATION BETWEEN BSL AND THE MONTHLY COLLECTION REPORT (RPMS AND CORE)

    SCENARIO
    Check is not yours/overpayment
    COLLECTIONS REPORT CORRECT COLLECTIOIN REPORT INCORRECT
    1.  Refund Insurer Not Applicable Service unit requests "Refund Request Letter" from insurer
    Service unit unallocates the payment amount
    Service unit sends documentation and from letter to Finance
    Finance completes Form 1047 and Requests payment
    Finance returns from the service unit
    Service unit refunds the amount from the batch
    2.  Insurer wants to offset payment Not Applicable Service unit contact insurer regarding overpayment
    Service unit unallocates overpayment amount
    Insurer offsets the next R/A
    Service unit gross R/A amount and unallocated amount from prior check
    Check belongs to another AAO Service Unit Service unit unallocates batch
    Service unit sends documentation and form letter to Finance
    Collection is not adjusted
    Finance creates batch for correct Service Unit
    Finance verifies and returns form
    Original Service Unit refunds batch
    Service unit unallocates batch
    Service unit sends documentation and form letter to Finance
    Finance adjusts the Collection report
    Finance creates new batch for correct service unit
    Finance verifies and returns form
    Original service unit refunds batch
    Batched to wrong pot of money
    DAS does not duplicate batch in different pots
    Service unit posts R/As to patient accounts
    Service unit sends documentation and form letter to finance
    Finance verifies an returns form Finance verifies an returns form
    Service unit posts R/As to patient accounts
    Service unit sends documentation and form letter to finance
    Original Service Unit refunds batch Original Service Unit refunds batch
    Batched to wrong pot of money Service unit posts R/As to patient accounts Service unit posts R/As to patient accounts
    DAS does not duplicate batch in different pots Service unit sends documentation and form letter to finance
    Finance verifies and returns form
    Service unit sends documentation and form letter to finance
    Finance adjusts the Collection report
    Finance verifies and returns form
    Batches exceed Collection report amount Service Unit unallocates excess amount
    Service unit sends documentation and form letter to Finance
    Finance verifies and returns form
    Service unit refunds excess amount
    Service unit posts R/As to patient accounts
    Service unit sends documentation and form letter to Finance
    Finance verifies and returns form
    Finance adjusts the Collection report
    Batches smaller than Collection report amount Service unit documentation and form letter to Finance
    Finance verifies and returns form
    Finance creates new batch for the different amount
    New batch sent to service unit
    Service unit posts R/As to patient accounts
    Service unit documentation and form letter to Finance
    Finance verifies and returns form
    Finance adjusts the Collection report
    _______


    Attachment 2

    [Sample Accounts Receivable Adjustment Form]
    ALBUQUERQUE AREA OFFICE-BUSINESSOFFICE -- AIR ADJUSTMENT FORM

    NUMBER OF FORM: FY 2005-007

    DATE:_______________ SERVICE UNIT:____________________________ CONTACT NAME:_________________________



    REFUND: NEED TAX ID NUMBER OF INSURANCE:_____________________

    BATCH #_________________________ITEM #_________________AMOUNT:_______________

    REASON FOR REFUND:









    ADJUSTMENT

    BATCH #_________________________ITEM #_________________AMOUNT:_______________

    CREDIT SERVICE UNIT:______________________ DEBT:________________________________

    REASON FOR REQUEST:









    AREA FINANCE RESEARCH RESULTS:

    CORRECTED COLLECTION REPORT: A/R ENTRY

    YES:_______ NO:_____ YES:_____ NO:_____






    DATE COMPLETED:_________________

    NAME:


    SEE ATTACHMENT________

    TYPE OF ADJUSTMENT:

    MEDICARE
    MEDICAID
    PRIVATE INSURANCE
    NON-BENEFICIARY
    OTHER


    Attachment 3

    Medicare/Medicaid and Private Insurance
    Request for Refund - [SAMPLE]

    Date of Request__________________
    Request No. FY 005-______(Add facility accounting location code)
    Requested by Facility:


    COLLECTION INFORMATION

    Tin No.:_____________

    Payee:________________________________________

    Payee Address:


    City, State, Zip:


    AUTHORIZATION SIGNATURE

    Facility:__________________________ Date:____________________

    Finance: __________________________ Date:____________________

    ACCOUNTING INFORMATION Area Finance Only)

    Appropriation: 75X0930 CAN#:_________ OC#6162


    Attachment 4 DATE:__________________ BATCH COLLECTIONS REPORT -- FINAL (REPRINT) PAGE 1

    04/08/05 ---- SANTA MARIA HOSPITAL

    BATCH: AAOBO-01/08/2002-11
    TOTAL: 3,147.61


    EOB CHECK 1 01/08/02 1561462-739490 NEW MEXICO MEDICAID 3147.61

    REFUNDED 3147.61
    TAOS-PICURIS HE 3147.61

    SUBTOTAL ------------ 3147.61
    TOTAL --------------- 3147.61

    Collections listed above for Batch: AAOBO-01/08/2002-11 totaling:  3,147.61 are transmitted herewith for appropriate action.

    SMITH, SANDRA M.
    BUSINESS OFFICE
    SANTA MARIA HOSPITAL

    RECEIPT FOR $_______________________IS HERBY ACKNOWLEDGED.

    _________________________________ FINANCIAL MANAGEMENT


    PLEASE CONTACT YOUR AREA DIRECTIVES, DELEGATIONS AND CONTROL OFFICER OR THE MANAGEMENT POLICY AND INTERNAL CONTROLS STAFF at 301-443-2650 FOR A COPY OF THIS ATTACHMENT
    (Albuquerque Area Indian Health service
    Cumulative Collection Report
    Medical Medical Collections


    Attachment 6

    PLEASE CONTACT YOUR AREA DIRECTIVES, DELEGATIONS AND CONTROL OFFICER OR THE MANAGEMENT POLICY AND INTERNAL CONTROLS STAFF at 301-443-2650 FOR A COPY OF THIS ATTACHMENT
    (Sample Reconciliation Sheet
    TSU FEBRUARY 2005)


Back To Top  |  Previous Page
CPU: 35ms Clock: 0s