Medical and Dental Practice Bookkeeping: Insurance Payments and Patient Receipts#
A medical or dental practice has two money stories running at once. The practice management system says what was charged, adjusted and collected. The bank says what actually arrived. QuickBooks Online sits between them, and in many practices it agrees with neither. This article explains how an offshore bookkeeping team closes that gap, what it needs from you, and what stays with the practice and its accountant.
Why practice books drift#
Insurance money arrives in batches. One deposit can cover many visits, several patients and several adjustments. Patient payments arrive by card, cash, cheque and online, often through a processor that pays out net of fees. If each deposit is booked as plain "income", the books show cash but not the story behind it.
The usual symptoms are easy to spot:
- Revenue in QuickBooks Online that does not match production or collections in the practice system.
- Insurance write-offs sitting in revenue, or not recorded at all.
- Patient refunds booked as expenses.
- A receivable balance that nobody can tie to the practice system's aged report.
How the work is done#
We work inside your QuickBooks Online file. We do not work inside your clinical system.
1. Pick the basis. Together with your accountant we agree how collections, adjustments and refunds are recorded. Some practices book gross charges and show adjustments separately. Others book net collections only. The right choice depends on your accountant's advice and your reporting needs. We follow what you set.
2. Match each deposit to a report. Each bank deposit is matched to a total from the practice management system, such as a payment or deposit report for the same period. Insurance payments are matched by payer batch. Card settlements are matched to the processor's payout report, with fees recorded separately.
3. Record adjustments, write-offs and refunds. Contractual adjustments, write-offs and patient refunds are recorded in their own accounts, using the totals from the practice system. Refunds are not netted against income without a trail.
4. Code supplies and lab costs. Supplier bills and card spend are categorised: clinical supplies, lab fees, equipment, rent, payroll costs recorded from the summaries you send. Lab costs are kept in their own account so they can be reviewed against production.
5. Reconcile. Bank and credit card accounts are reconciled to statements. Undeposited funds are cleared. The receivable balance in QuickBooks Online is compared with the practice system's aged receivables report, and differences are listed.
6. Report. A collections summary by payer type and a monthly profit and loss go back to you, together with a written list of every adjustment we made.
A small illustration#
The numbers below are illustrative round figures, not benchmarks.
| Item | Amount |
|---|---|
| Practice system: insurance payments posted for the week | 40,000 |
| Practice system: patient payments posted for the week | 10,000 |
| Total payments per practice system | 50,000 |
| Bank deposits: insurance (three batches) | 39,500 |
| Bank deposits: card settlements, net of fees | 9,700 |
| Card processing fees withheld | 300 |
| Cash and cheque deposits | 400 |
| Total accounted for | 49,900 |
| Unexplained difference | 100 |
The bank shows 49,600 net, which, with the 300 of fees, gives 49,900. The remaining 100 is not guessed at. It goes onto the open-items list with a note, for example "check whether a payer batch was posted but not yet received", and your office team answers it.
Why this work is hard to staff#
Practice bookkeeping touches a regulated area. The HIPAA definition of a business associate, in 45 CFR 160.103 (current eCFR text), includes a person who provides services such as accounting, consulting, management, administrative or financial services to a covered entity, where the service involves disclosure of protected health information to that person. We are describing the definition only. Whether a particular bookkeeping arrangement needs a business associate agreement is for the practice and its counsel to decide.
For a firm choosing who handles the books, the practical point is that insurance remittances and patient receipts can arrive in reports that carry patient identifiers. The person doing the work has to know how a practice's deposits are built, which fields to leave out of an export, and which totals are enough to reconcile. That is knowledge of the niche rather than of bookkeeping in general. Legal compliance stays with the practice and its counsel; the bookkeeping records the data they need.
What can be handed to an offshore team#
- Matching deposits to practice system totals and processor reports.
- Recording adjustments, write-offs and refunds from summary reports.
- Coding supplier bills, lab costs and card spend.
- Bank and credit card reconciliations.
- Reconciling QuickBooks Online receivables to the practice system's aged report, with differences listed.
- Collections summary by payer type and monthly profit and loss.
What stays with the practice#
- Billing, coding and claims follow-up with payers.
- Decisions on write-offs and patient balances.
- Patient communication.
- Tax returns and tax advice, which stay with your preparer. We record and organise the figures for them.
- Review and approval of the monthly numbers.
A note on patient information#
Bookkeeping works from totals and deposit reports, not from patient-level clinical records. We ask that you set up exports so that patient-identifiable data is left out wherever possible. Where a report cannot avoid it, access should be limited to what the work needs. We sign an NDA before access if you want one. Your own policies and your advisers decide what is appropriate for your practice. This article does not replace that advice.
What to send#
- Read-only or invited access to the QuickBooks Online file.
- Bank and credit card statements, or feeds connected in QuickBooks Online.
- Practice management reports for each period: payments or deposit summary, adjustments, refunds, and aged receivables, with patient names removed where possible.
- Card processor payout reports.
- Payer remittance summaries for batch deposits, if available.
- Your chart of accounts preferences and the basis your accountant has set.
- Supplier invoices or access to the bill inbox.
What comes back#
- Reconciled bank and credit card accounts.
- Deposits matched to practice system totals, with a short matching schedule.
- Collections summary by payer type.
- Monthly profit and loss.
- A receivables reconciliation against the practice system.
- A written summary of every adjustment, and a list of open questions for your team.
Work is reviewed by a Chartered Accountant before it is returned.
Review checks before sign-off#
| Check | Question to ask |
|---|---|
| Deposit match | Does each deposit tie to a report total or sit on the open list? |
| Adjustments | Are write-offs and adjustments in their own accounts? |
| Refunds | Are patient refunds traceable and not netted against income? |
| Receivables | Does the QuickBooks Online balance agree with the practice aged report, or is the gap explained? |
| Undeposited funds | Is the balance zero or explained? |
| Supplies and lab costs | Are they coded consistently with prior months? |
| Payer types | Does the collections summary add up to total collections? |
Frequently asked questions#
Do you need access to our practice management system? Normally no. We work from the reports you export. If you want something checked in the system itself, your office team can look and tell us.
Can you handle both insurance and self-pay patients? Yes. Insurance payments, card receipts, cash and cheques are each recorded and matched to their own report, then summarised by payer type.
Do you file our tax returns or payroll? No. Tax returns stay with your preparer, and we organise the figures for them. Payroll processing is not offered. We record payroll totals from the summaries you send.
What if the receivables do not agree to the practice system? We list the differences by payer and period and send them back with our monthly summary. We do not force the balance to agree.
Where to go next#
If you are an accounting firm sending a medical or dental client to an offshore team, see our back-office support for CPA firms. To see the other industries we work with, visit industries. The core monthly work is described under monthly bookkeeping and reconciliation.
