[GNC] Where to charge? Ins pays us, we pay vendor. Resolved

[Stephen M. Butler]

On 2/13/20 11:12 AM, Fran_3 wrote:
> In this case the "Doctor" was actually a nationally known diagnostic &
> treatment clinic
> And the "Insurance Company" was Medicare.
> At that time the clinic accepted those insured by Medicare but it was
> not  "Medicare Assigned"
> What all that meant  effectively was the clinic sent the bill Medicare
> and later to the patient.
> Medicare sent the payment to the patient before the patient got the
> bill from the clinic.
> Then later, when the patient got the clinic bill they paid it with the
> money Medicare had sent them to pay the bill.
>
> Regardless of whether this was normal or not, is is the way it happened.
>
> In the "T" account example I provided it was charged initially to the
> medical expanse account
> But when the bill was paid that was offset so the net effect on the
> medical expense account was zero.
>
> But your suggestion seems like a good one to a non-account type..
> Is this what you suggested?
>
> Enter payment from insurance company:    Assign to Checking & Reimbursable
> Enter bill from the Clinic:    Assign to AP & Reimbursable
> Enter payment to the Clinic:    Assign to AP & Checking
>
> Question: Wouldn't a pre-payment be a liability as opposed to an Asset?
> Not that it would matter so long as it was reconciled... right?
> Just asking.
>
> Thanks for the help.


Wow!  I used to work for a medical claims processing company (PPO and
3rd Party Adjudication).  Rare to have payment before the bill!! 
Usually the insurance company would want proof you paid before they
would reimburse!

In this case I'm taking "not 'Medicare Assigned'" to be the equivalent
of "out-of-network".  But not exactly equivalent as normal insurance
wouldn't reimburse for out-of-network without some extenuating
circumstances.

As to the last question, yup.  But so is a negative Asset (a
Liability).  The main reason to split the two is to group accounts of
similar character (negative value vs positive value).  That way if an
account has the opposite sign from "normal", it stands out like a sore
thumb and needs to be researched. 

As to your three step approach, I'd probably combine the 2nd and 3rd
into one and skip the AP.  But your approach works and ensures that in
the end all three accounts net to zero [as would be the case if the
clinic where "Medicare Assigned" and you never saw any of the transactions.

But, fair warning, my background is software development, database
administration and project management.  I've had to write accounting
software in the past so have some insight into the mind of the finance
folks.