Certified Revenue Cycle Representative (CRCR) Practice Exam

What type of account adjustment occurs when a patient refuses to pay a self-pay balance?

1. Adjustment for billing error

2. Charity care adjustment

3. Bad debt adjustment

4. Payment plan adjustment

The correct answer is: Bad debt adjustment

In situations where a patient refuses to pay a self-pay balance, a bad debt adjustment is applicable. This type of adjustment reflects the reality that the amount owed by the patient is unlikely to be collected due to their refusal to fulfill the payment obligation. The process of categorizing this as bad debt allows the healthcare provider to accurately represent the financial status of the account as it indicates that the balance is no longer considered collectible revenue. Understanding this adjustment is essential in revenue cycle management because it impacts the financial statements of a healthcare organization. When bad debt is recognized, it typically results in a reduction of net patient revenue and an increase in expenses related to uncollectible accounts. Other adjustments like charity care adjustments are relevant in cases where a patient cannot pay due to financial hardship, which is not the scenario in question. Payment plan adjustments refer to when a patient agrees to a structured payment method for their balance. Billing error adjustments are made when there was a mistake in the charges billed to a patient, which does not align with a patient simply refusing to pay.