What is the appropriate account to debit when reducing patient billings caused by arrangements with third party payors?

Question

Quizplus · Accepted Answer

When reducing patient billings due to arrangements with third party payors, the appropriate account to debit is Contractual Adjustments. This is because third party payors negotiate different rates for services, and the medical provider agrees to accept these lower rates as payment in full. The difference between the provider's normal rate and the negotiated rate is recorded as a contractual adjustment, which reduces patient billings.

What Is the Appropriate Account to Debit When Reducing Patient