What does the term "write-off" mean in billing?

The term "write-off" in billing refers to the removal of an uncollectible amount from accounts receivable. In the context of healthcare billing, it occurs when a provider determines that certain debts owed by patients, often due to inability to pay or insurance adjustments, cannot be collected.

When an account is written off, it does not mean that the debt has been forgiven or that the patient is no longer responsible for it—rather, it is a reconciliation method used by healthcare providers to maintain accurate financial records. This process helps to reflect the true amount the provider expects to collect, ensuring that financial statements are more accurate by eliminating amounts that are not considered collectible. Also, write-offs are important for financial reporting and can affect decision-making regarding future credit policies and patient care financing options.