When should a medical practice write off a claim?
A medical practice should write off an insurance claim when it is past both the timely-filing limit and every appeal window with no proof of timely filing, when the balance is a genuine contractual adjustment, or when the documented cost of working it exceeds its expected recovery. Write off claim by claim with a reason code, never by aging bucket.
Legitimate write-off reasons
| Reason | Qualifies when | Does not qualify when |
|---|---|---|
| Timely filing | Filing limit passed and no clearinghouse acceptance or payer acknowledgment exists | Proof of timely filing exists; appeal the denial instead |
| Appeal exhausted | All appeal levels used or all windows closed | A level remains (Medicare has five, per CMS) |
| Contractual adjustment | Allowed amount per contract is below billed | Payer applied the wrong fee schedule; dispute instead |
| Small balance | Balance is below the cost of working it (set a policy threshold) | Many small balances share one fixable cause (bill them in bulk) |
| Non-covered service | Confirmed non-covered and no ABN or patient responsibility path | Denial was medical necessity, which is appealable |
| Bad debt (patient) | Patient balance after statements and policy steps | Balance was actually insurance responsibility |
Why "everything over 180 days" is the wrong rule
Age is a proxy, and a bad one. The 180+ bucket contains claims with clearinghouse proof of timely filing (appealable), underpayments (disputable), secondary claims never billed (billable), and Medicare claims still inside the one-calendar-year filing limit (CMS). It also contains claims that are truly dead. A blanket write-off discards the first group to dispose of the second. Sorting by reason takes longer once and never has to be done again for those claims.
Before writing off a denial, check the odds
Denials are frequently wrong. An HHS Office of Inspector General review found that 13% of sampled Medicare Advantage prior-authorization denials and 18% of payment denials met Medicare coverage and billing rules (OIG, 2022), and KFF's analyses show most appealed Medicare Advantage denials are overturned (KFF). A denial inside its appeal window is an asset, not a write-off.
A write-off policy that holds up
- Every write-off carries a reason code and the date of the deadline that closed it.
- Write-offs over a set dollar amount require a second approval.
- Write-off totals by reason are reported monthly alongside recoveries; a rising timely-filing write-off line is an operations problem, not an accounting one.
- Claims are reviewed for recoverability before the write-off, not after. A free A/R recovery audit does this review on the whole 90+ day queue.
Sources
- CMS, Medicare timely filing requirements: claims must be filed within one calendar year of the date of service
- CMS, Original Medicare (fee-for-service) appeals: five levels; redetermination within 120 days, reconsideration within 180 days
- HHS Office of Inspector General, OEI-09-18-00260 (April 2022): 13% of sampled Medicare Advantage prior-authorization denials and 18% of payment denials met Medicare coverage and billing rules
- KFF, Medicare Advantage prior authorization analyses (requests, denial rates, appeal rates, overturn rates)
Figures attributed to a source are that source's; commonly used benchmarks are labeled as such. Verify deadlines against your own payer contracts.
Related articles
Related services
- Aged A/R recovery — Claims past 90, 120, and 180 days, worked by deadline and recoverability.
- Denial recovery — Authorization, medical necessity, coding, eligibility, timely filing, and underpayment denials.