Ten Medical Bookkeeping Terms to Know
Medical bookkeeping includes a variety of terms. Understanding these terms can help health care providers stay within their budget and ensure accuracy in their financial statements.
Bad debt: Unpaid patient accounts that a health care organization considers uncollectible and writes off as a loss.
Charge description master (CDM): A comprehensive listing of all billable services and items provided by a health care organization, including procedure codes, descriptions, and associated charges.
Contractual allowance: The difference between the full amount for services a health care provider charges and the negotiated reimbursement rates with third-party payers.
Cost-to-charge ratio: A calculation that uses billed charges to estimate the actual cost of providing health care services.
Gross patient revenue: The total amount a health care company charges for services, before any adjustments or discounts.
Net patient revenue: The total revenue a health care organization earns for patient care services after contractual allowances, adjustments, and discounts.
Relative value unit (RVU): The value of medical procedures and services, considering the resources and time it takes to perform them. It helps determine physician compensation and reimbursement rates.
Revenue cycle management (RCM): The process of efficiently managing a health care organization's revenue stream. RCM includes: tracking claims, ensuring accurate billing, managing accounts receivable, and collecting payments.
Third-party payer: A company, such as an insurance company or government organization, that pays for health care services on behalf of patients.
Uncompensated care: The sum of charity care and bad debt expenses, representing the cost of unpaid health care services.
Medical bookkeeping is vital for providers who must track their budgets to ensure they stay within limits set by government regulations and insurance companies. If you need to outsource your bookkeeping, get a free estimate today.