Contract write-offs are used when you have some kind of contract or agreement with an insurance payer whereby you agree:
The contract write-off is a portion of your fee that you agree to not be paid. This assumes there is no secondary insurance to which you can bill the unpaid (contract write-off) amount from the primary. If there is secondary insurance, then the amount should be entered as their payer fee due rather than putting it in the contract write-off for the primary payer.
Contract write-offs differ from bad-debt write-offs in a couple of ways. The first is that, with a contract write-off, you have agreed to not be paid. Bad debt write-offs, on the other hand, result when a payer refuses or is unable to pay what they truely owe. Bad debt write-offs are sometimes used to zero a the balances for a patient's services when they leave your care and no payment is forthcoming on their debt, hence the term "Bad debt."
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