Stop Calling It “Contractual”: A Simple Adjustment Tracking System That Finds Real Money

Adjustments are the “background noise” of the revenue cycle, like the hum of an HVAC unit you stop noticing until it breaks. When cash tightens or staffing thins, that noise suddenly becomes the loudest thing in the building: Why are write-offs up? Why did net revenue dip? Why are refunds spiking? The uncomfortable truth is that many organizations don’t have a clean answer because too many adjustments get filed under a familiar—but misleading—label: contractual.

Take a breath before you take action: if your adjustment reporting can’t clearly tell you what was expected, what was avoidable, and what was a policy choice, you’re not tracking adjustments; you’re just recording them.

The good news: you don’t need 40 categories to get control. You need a small set of adjustment “money questions” that force clarity.

The simple system: track adjustments by the question they answer

Instead of asking posters to choose between vague buckets, build your tracking around 7 specific, operational questions. Each one should map to a defined list of reason codes in your PM/EHR (and align, when applicable, to payer adjustment codes on the ERA). CMS guidance around remittance reporting reinforces that adjustments should be explained using appropriate group/reason/remark codes—your internal adjustment logic should be just as disciplined.

1) Did we get paid what we were contractually obligated to be paid?

This is the real “contractual” question. It requires an expected allowed amount (fee schedule, PPS rate, case rate, etc.).
Track separately: true contractual allowance vs. variance (underpayment/overpayment) identified after expected vs paid comparison.

What this finds: payer underpayments that are being silently written off as “contractual.”

2) Was this adjustment caused by a preventable denial?

Don’t bury denials inside broad write-off totals.
Examples: timely filing, authorization gaps, invalid subscriber/coverage, coding edits you could have corrected, missing documentation.

What this changes: denial prevention becomes a patient access and morale win with fewer rework loops, fewer tense phone calls, fewer “we’re behind again” Mondays.

3) Did we adjust because we made an upstream error?

This is the “revenue integrity mirror.”
Examples: charge capture misses (late charges), duplicate charges, wrong provider/NPI, wrong place of service, incorrect modifier, eligibility not verified leading to avoidable self-pay.

What this finds: training gaps and workflow fixes that save staff time and protect cash.

4) Did we adjust because of a patient affordability policy?

This is not “bad debt” and not “contractual.” It’s a mission-driven choice that should be visible and defensible.
Examples: sliding fee discounts, prompt-pay discounts, courtesy adjustments, charity care approvals.

What this supports: transparent reporting for leadership and boards—showing how financial policy decisions connect to access and community care.

5) Did we adjust because the payer changed the story after payment?

This is where takebacks and recoupments live.
Examples: payer retractions, post-pay audits, RAC-style activity, coordination of benefits reversals.

What this finds: payer behavior patterns you can escalate, appeal, or contract around, especially when you can quantify trends.

6) Are we holding (or returning) money we shouldn’t keep?

This is the credit balance/refund discipline: high risk, high distraction, and often high volume. Medicare credit balance reporting exists for a reason, and it’s a helpful model for how seriously “refundability” should be tracked.

Track separately: true credit balances, refund issuance timing, root cause (posting, COB, duplicate payment, etc.).

7) Did we adjust because it wasn’t worth collecting?

This is the “strategy” bucket, and it should be small, controlled, and policy-backed.
Examples: small balance write-offs, statement cutoffs, cost-to-collect thresholds.

What this changes: leadership can decide intentionally, rather than letting frontline teams make inconsistent calls under pressure.

How to implement without making it complicated

Keep it simple, but structured:

• Create a one-page adjustment dictionary: each “money question,” allowed reason codes, examples, and what it should trigger (appeal, training, contract review, refund workflow).

• Require a reason on every adjustment (no blanks, no “misc”). If a reason doesn’t exist, that’s a build request, not a freeform note.

• Review weekly with the right people: a 30-minute huddle with billing lead + denial lead + finance to review top movers in each question.

• Tie it back to your “finding money” message: the goal isn’t perfect categorization—it’s turning adjustments into a prioritized worklist (recover cash, prevent rework, reduce refunds, protect patient trust).

The outcome: cleaner numbers, calmer teams, better care continuity

When adjustments are tracked with intention, you stop debating what happened and start acting on it. Underpayments become recoveries. Preventable denials become workflow fixes. Credit balances stop being a fire drill. And the staff who live in the trenches get something priceless: fewer surprises.