Making insurance denials visible in a practice's books
Denials only become visible when a practice records billed charges and a receivable rather than recording revenue when cash arrives, because a denial written off on a cash basis never appears anywhere in the accounts at all. This is an illustrative example set in a US chiropractic practice with a mix of insurance and cash-pay patients.
Scenario — an illustrative example of how Salt approaches this problem. Not a description of a specific client engagement.
The business shape it describes: US chiropractic practice, insurance and cash patients.
- Scenario covers
- Bookkeeping, receivables tracking and denial follow-up
- Software it assumes
- QuickBooks Online
- Jurisdiction
- United States
- Sector
- Health & wellness
- The practice bills insurers electronically and records revenue when payment is received.
- Denied claims are written off without anyone reading the reason code.
- Cash-pay and insurance revenue land in the same account, so payer mix is not a figure anyone can produce.
- Recording revenue on receipt hides denials completely. The claim was billed, nothing came back, and nothing in the accounts registers that anything was lost.
- Every remittance carries reason codes. The 835 electronic remittance advice returns claim adjustment reason codes and remittance advice remark codes stating why an amount was not paid, and they distinguish a correctable submission error from a genuinely non-covered service.
- Timely filing limits are payer-specific and unforgiving. Medicare claims must generally be filed within one calendar year of the date of service, and commercial payers set their own windows in contract, so a denial left for months can become uncollectable regardless of merit.
- For chiropractic, Medicare covers manual manipulation of the spine to correct a subluxation and expects the AT modifier to indicate active treatment. Maintenance therapy is not covered, and providing it without an Advance Beneficiary Notice on file leaves the practice unable to bill the patient either.
- Recording revenue at the charge master rate rather than the contracted allowed amount makes the receivable fiction, because the contractual adjustment was never money the practice was going to collect.
- The revenue posting would change first: billed charges recorded as revenue with a corresponding receivable, contractual adjustments posted down to the allowed amount per payer, and cash applied against the receivable as it arrives.
- Cash-pay and insurance revenue would be separated into distinct accounts, with insurance revenue split by payer, so payer mix becomes a report rather than an impression.
- A weekly denial worklist would be produced from the 835 remittances, sorted by reason code rather than by dollar value.
- Denials would be triaged three ways: correctable and resubmit, appealable on clinical documentation, and genuinely not payable. The first two get worked; the third gets written off deliberately with the reason recorded.
- Reason codes would be counted by cause each month, so a recurring coding or eligibility error is fixed at the front desk rather than appealed one claim at a time for the rest of the year.
- Aging would be reported by payer and by age against each payer's filing and appeal windows, so a claim about to time out is visible before it does.
- Where a claim is appealed, the route and its deadline would be recorded per payer. Medicare appeals run through defined levels beginning with redetermination, each carrying its own filing window.
- Recording revenue on receipt hides denials completely, so nobody argues about them. Making the loss visible means moving to billed revenue and a receivable, which is a bookkeeping change the practice has to be talked through before it will agree to it.
- After that the work is a weekly list worked patiently, separating denials with a correctable cause from the ones not worth resubmitting.
- Coding decisions and clinical documentation stay with the practice and its coder. The accounting work reports what was denied, why, and what happened next.
- A bookkeeper working the receivable does not need the clinical record. Where any protected health information is in scope, a business associate agreement is required before access, and the practice should insist on one.
- The practice would be able to see billed, allowed, paid and denied as four separate figures rather than as one deposit.
- Denials would be worked weekly against payer deadlines instead of discovered after the filing window has closed.
- Payer mix would be visible, which is the figure behind any decision about which services to promote or which contracts to renegotiate.
What we'd flag
Recording billed revenue rather than cash received makes the accounts look worse at first. Receivables that always existed simply become visible, and a proportion of them will never be collected. Expect the first few months to include a clean-up write-off of aged claims already past their filing windows, and expect that write-off to be uncomfortable even though the loss happened long before it was recorded.
Making insurance denials visible in a practice's books
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