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Line Item Accounting and Refunding Payments

Here's the situation:

You're a PracticeWorks user with Line Item accounting enabled. 

During your monthly routine, you run the Accounts Receivable report and notice a few patients with credit balances. You review the accounts and decide to issue refunds. 

First up is a patient with a prepayment for service never completed. You enter a REFUND and distribute the credit card payment to the refund. One down, two to go. 

The second patient paid 100% for their procedures. Much to the patient's delight, insurance also paid 100%. The insurance payment was recorded, the patient's cash payment was swapped for the insurance payment, and now the cash line item is displayed in blue. You record a REFUND and distribute the cash payment to the REFUND. Two down, one to go. 

The last patient is a friend of the doctor. The procedures were performed and paid in full. The payment was distributed to the procedures. Several days after the visit you realize the courtesy discount promised to the patient was never posted. You entered an adjustment for $9.50, leaving the patient with a credit balance.

It's a month later and you're back at the ledger. You enter a REFUND for $9.50. You right click on the adjustment to distribute it to the REFUND. The Payment Distribution window is empty!

You right click on the REFUND to select View/edit distribution... but find there are no distributions. 

What do you do?

The reason for this is simple; only payments can be distributed to REFUNDS. A courtesy discount is not a payment, it's an adjustment. 

On the ledger, $9.50 of the CASH payment needs to be undistributed. Once this is done the available $9.50 from the CASH payment is distributed to the REFUND, followed by the courtesy adjustment distributed to the procedure(s). 

They key is understanding that only payment types (patient and insurance) can be distributed to refunds. 

Let us know if you found this discussion helpful or post a comment below. 

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Hi Jeremy

This is good to know, probably get a fair few calls on this one scenario 3. Does it message you when it is attempted to tell you only payments can be processed into refunds?

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That's a great question. There's a built in safeguard in that refunds (or more accurately, collection adjustment debits) do not appear on the adjustment credit distributions screens. 

Let's say a ledger has only two undistributed items; a refund (collection adjustment debit) and an insurance adjustment (adjustment credit). If I right click on the insurance adjustment and select View/edit distributions... nothing will appear as available for distribution. Again, this is deliberate since it is not possible to distribute the insurance adjustment to the refund. 

I like the idea of a message or visual indicator letting you know why. We can consider this for a future version dependent on feedback. 

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