Certified Revenue Cycle Representative (CRCR) Practice Exam

What actions should a provider take if a patient declares straight bankruptcy?

1. Seek legal advice on collections

2. Write off the account to a contractual adjustment account

3. Transfer the account to a collection agency

4. Report bankruptcy to credit bureaus

The correct answer is: Write off the account to a contractual adjustment account

When a patient declares straight bankruptcy, it is generally necessary for healthcare providers to write off the balance owed by the patient as a contractual adjustment. This reflects compliance with legal and ethical standards, acknowledging that the patient is unable to pay the debt due to their bankruptcy status. This action helps the provider adjust their accounts receivable accurately and ensures they adhere to the provisions outlined in the Bankruptcy Code, which often protects individuals from collection efforts on discharged debts. Writing off the debt in this manner also allows the provider to maintain a more streamlined and less burdensome financial operation, recognizing that pursuing collections in these circumstances may not yield any benefit. In comparison to the other options, seeking legal advice on collections or transferring the account to a collection agency would typically be inappropriate because bankruptcy halts collection actions. Reporting bankruptcy to credit bureaus may occur in different contexts but is not a direct action the provider takes regarding the patient's account, as reporting the debt is not permitted once bankruptcy has been declared.