Charges are not the same as revenue
A practice may charge a fee for a visit, but insurers pay according to contracted rates. The difference is a contractual adjustment, not a loss or a bad debt. Record revenue at the amount you expect to collect, either by recording net collections or by recording charges with adjustments in a contra-revenue account. Whichever method you use, be consistent, and tie your totals to the billing system's reports each month.
Insurance remittances and patient balances
Insurers send explanation of benefits or remittance advice, with deposits that cover many patients. Post deposits from the remittance summary, not from individual patients in the accounting file. Patient balances belong in the billing system. Your books may carry a summary receivable total only, matched to the aging report. Do not put patient names or diagnoses into your accounting software, since that information is protected and does not need to be there.
Supplies, equipment and malpractice
Separate medical supplies, drugs, lab fees, billing service fees, equipment leases, malpractice insurance, licenses, continuing education and professional dues. Larger equipment purchases are often capitalized and depreciated, and your CPA can tell you which election is useful. Keep service contracts and warranties with the asset records.
Payroll and providers
Practices commonly have physicians as owners, employed clinicians, front desk staff and sometimes contractors such as locum tenens providers. Classify each carefully, run payroll through a proper service, and keep credentials and license renewal dates in a calendar. Owner compensation depends on the entity type, so ask a CPA rather than guessing at draws versus wages.
Metrics worth watching
Review days in accounts receivable, collection rate, the amount of aged claims over ninety days, and revenue per visit. If your deposits are shrinking while visits remain steady, the problem may be in claim denials or slow follow-up. A monthly report comparing billing system collections to bank deposits can catch missing payments, such as a check that was posted to a patient but never deposited.
Reconciling the billing system to the bank
Each month, create a three-way check among the billing system's payment report, the bank deposits and the accounting entries. Insurance payments, patient copays, card deposits and any electronic transfers should each tie out. When a deposit has no matching remittance, or a remittance has no matching deposit, investigate quickly because missed or misapplied payments get harder to trace later.
Keep a short list of recurring items that behave differently: capitation payments, quality bonuses, refunds to payers after an overpayment, and recoupments. A recoupment shows up as a reduction of a deposit and should be recorded as a reduction of revenue or a payable, not ignored.
New providers often work for weeks before a payer finishes enrolling them. Track those claims separately so revenue is not lost or written off in error, and note the date each payer approval comes through.
Common questions
Do I need separate accounts for each insurer?
Not usually. One revenue structure with reporting by payer in the billing system is cleaner than many accounts in the books.
Who should have access to the accounting file?
Only people who need it, with patient identifiers kept out. Follow your privacy and security obligations and ask your compliance advisor.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.