USA Payment application and recording

[Andyy]

Is it ok to post payments that did not occur? Or more specifically, apply overpayment credits on one account to another unrelated AR account? Is there a a formal regulation that addresses this?

For example, payer 1 has an overpayment of $1000, without documentation is it ok to post a takeback on payer 1 and post a $1000 payment to another payer 2. Without a paper trail.

Thank you for your input

 

[kirby]

To the first and second questions: NO!
First off, yes there is a regulation that addresses this. Look up the law on "illegal conversion of property."
Second this is a misstatement of the accounting books.
Beyond that, Once payer 1 figures out they overpaid you and asks for a refund after you applied it to payer 2, what are you going to do?

 

[Andyy]

Thank you Kirby, I appreciate your response and input..
It's in healthcare industry, and credits were being moved from HMO payer (let's say BCBS) to Medicare unpaid (denied) claims. I guess with expectation that BCBS won't retract overpayments, or maybe charges under BCBS were underbooked resulting in credit balances on patient accounts. So instead of writing off unpaid Medicare charges, payments were applied through cash transactions that never occurred..

I'm pretty sure that's against insurance rules too, but I wanted to know if it was illegal under GAAP..

 

[kirby]

Misstating accounting records and consequently sending false reports to Medicare - wow - someone in management is on their knees begging for a kick in the teeth... don't do this

 

[Andyy]

Hi, Kirby your answers were very good, thank you..
I also wonder, would recording such false payments be considered Misappropriation of Resident funds? It's not technically theft, but aren't insurance payments made to nursing home on behalf of a specific resident? And moving that payment to unrelated resident be like misappropriating their funds/property?

 

[kirby]

If BCBS overpays then the refund involves BCBS, not payment from a resident.

If you are directly involved in this I suggest you consider other employment.

 

[kirby]

I'm curious. Is the posting method you mentioned an old practice or something newly installed? If new, did it start with a new executive joining the company?

 

[Andyy]

I'm curious. Is the posting method you mentioned an old practice or something newly installed? If new, did it start with a new executive joining the company?

Billing manager was moving cash in this way. My guess is to cover up unpaid AR accounts with available AR credits on other accounts, instead of writing them off as uncollectible?

 

[kirby]

Bingo! Do you know if management is aware of and approves of this? Risky to ask if they approve so if you think they do approve don't ask. If you think they are honest, they would want to know.
If BSBC finds out, BSBC will likely discontinue working with your company if they catch this before your company straightens this out and pays refund to them.