Accepting Low Fees

[JTip]

Monday morning, got the ol' EOB from the insurance company and I got to thinking......

So my wife goes in for whatever, office bills $189 and the insurance pays $130, the copay applies to the $130.

I wonder.....does the doctor somehow 'write off' the $59 difference/loss?

Wouldn't that be sweet? I get $400-450 (which I think is 100% fair), but if I take a $350 assignment, I wonder if I could write off $50 as a 'loss'? I can easily show/document that this ($400) is my typical fee but if I want to work for 'that' company (insurance provider) for less.....

I need some coffee....

 

[Don Clark]

Monday morning, got the ol' EOB from the insurance company and I got to thinking......

So my wife goes in for whatever, office bills $189 and the insurance pays $130, the copay applies to the $130.

I wonder.....does the doctor somehow 'write off' the $59 difference/loss?

Wouldn't that be sweet? I get $400-450 (which I think is 100% fair), but if I take a $350 assignment, I wonder if I could write off $50 as a 'loss'? I can easily show/document that this ($400) is my typical fee but if I want to work for 'that' company (insurance provider) for less.....

I need some coffee....

According to may accountant, the answer is "NO". The reason is you can only count a loss on things you receive. You cannot count a loss of a invoice that was never paid. You can sue for the money but as an accounting issue, it is not a loss. Others may disagree but my CPA has never steered me wron over 20 years.

 

[JTip]

I'll ask my CPA this morning via email, see what she says.

You submit your fee sheet, call it $400 for a 1004 and Coester sends you orders for $285. What happens to that other $115 (on paper)?

My 'costs' are $400 and I'm losing money at $285....how the heck do doctors do it?????

More investigation is needed.....

 

[Terrel L. Shields]

how the heck do doctors do it?????

charge too much in the first place... Raise your fee to $800 then "discount" $300

 

[Elliott]

I don't want a billing system like doctors, hospitals, insurance, medicare, and obama care have. Its crazy and no one can understand it. The doctors have to hire people to get paid because insurance slow pays.

 

[JTip]

Contractual Write Offs

Our fees are part of the/any AMC contract.....they don't pay the contract price.....boom.....

 

[hastalavista]

I wonder.....does the doctor somehow 'write off' the $59 difference/loss?

As Don says, the answer is generally "no".
The only way to write that off in that scenario is if the doctor uses an accrual accounting system where it reports the income at the transaction point. If it doesn't receive what was reported, then it can deduct the difference to show what was actually received.

For most of us, we work on a cash basis. We recognize income and expenses when they are received/paid (when they clear into our account or paid out of our account).

Here is a related common misunderstanding:
I do a job and I collect a check. The check bounces. Can I write that bounced check off as a noncollectable on my taxes?
Under the cash system, no. I have expenses that I can report that are related to that assignment, but I cannot write off the check for the amount I never collected.

Under the accrual system, yes. Because I would have reported it as income when I took the check but then wrote-it off against that reported income when it bounced.
In sum and in the context of this discussion, I can only write off uncollected income when I've already reported it as collected income.