When to Write Off a Claim and When to Fight: Building a Write-Off Policy for Your Practice

Feb 27

A denied claim lands on your desk. Do you appeal it, resubmit it, or write it off? In most behavioral health practices, the answer depends on who happens to be handling it that day.

Without a formal claim write-off policy, practices tend to fall into one of two traps: chasing every denial (burning staff hours on $15 claims) or giving up too quickly (leaving recoverable revenue on the table). Neither approach is sustainable. And both cost money.

This post walks through when to appeal, when to let go, and how to build a simple policy that keeps your team consistent and your revenue protected.

What a Claim Write-Off Actually Means

A write-off is the decision to stop pursuing payment on a claim. It removes the balance from your accounts receivable. Once you write it off, that revenue is gone.

Not all write-offs are bad. Contractual adjustments, the difference between your billed rate and the payer's allowed amount, are normal. Every practice has them. The problem starts when preventable write-offs pile up without anyone noticing.

Here are the four types worth knowing:

Contractual adjustments: Normal, expected. The payer's allowed amount is less than your billed rate.
Timely filing write-offs: The claim wasn't submitted before the payer's deadline. Preventable.
Administrative write-offs: Coding errors, missing info, data entry mistakes. Fixable if caught early.
Bad debt write-offs: The patient owes a balance and can't or won't pay. Last resort.

When write-off decisions happen ad hoc, inconsistency creeps in. One staff member spends an hour appealing a $40 claim. Another writes off a $200 denial without a second look.

Consider a Minnesota group practice with 10 providers that discovers, during a monthly A/R audit, that $18,000 in claims had been written off over six months. Most were medical necessity denials that could have been overturned with supporting documentation.

That's the cost of not having a policy.

When to Appeal a Denied Claim

Here's a stat worth sitting with: 81.7% of Medicare Advantage denials that were appealed got overturned.[1] Most practices don't appeal at all. That gap represents real revenue sitting on the table.

So when should you fight? A few categories stand out.

Medical necessity denials are the most common high-value denials in behavioral health. If your clinical notes document functional impairment, symptoms, and treatment goals, you likely have what you need. A 20-minute appeal with supporting documentation can recover $150 to $200 per claim.

Technical and processing denials are usually a quick fix. Wrong modifier, missing authorization number, incorrect patient ID. These don't need a formal appeal letter. They need corrected information and a resubmission.

Authorization-related denials deserve a closer look before you write them off. Sometimes the authorization exists but wasn't attached to the claim. Sometimes it expired one day before the session. Dig into the details before assuming it's a lost cause.

And behavioral health practices have one tool that general medical practices don't: parity law. If comparable physical health claims aren't denied at the same rate, you can cite the Mental Health Parity and Addiction Equity Act in your appeal.[2]

A practical rule of thumb: if the claim is worth more than $50 and the denial reason is correctable or contestable, it deserves at least one appeal attempt. If that appeal takes less than 30 minutes of staff time, the math works.

When to Write Off a Claim

Writing off a claim isn't giving up. It's choosing where to spend your energy. Every hour your team spends on an unrecoverable claim is an hour they're not spending on one that could pay.

Here are the clearest write-off scenarios:

Timely filing has passed and you have no proof the claim was originally submitted on time. Most commercial payers set tight windows, often 90 to 180 days.[3] Once that window closes, it's non-negotiable.
The claim value falls below your threshold (say, under $25 to $30) and requires a manual appeal process. The staff time costs more than the potential recovery.
The denial is based on a documented contractual exclusion. The service isn't covered. Period.
You've exhausted your appeals and have no new information to submit.
Coverage was never active. If eligibility wasn't verified and the patient had no active insurance at the time of service, there's no payer to appeal to.

One non-negotiable rule: every write-off gets documented with a reason code, a date, and the name of who approved it. Write-offs that disappear from A/R without documentation hide patterns you need to see.

Consider a solo practitioner in Illinois who finds three claims from eight months ago that were never submitted. The payer's 90-day filing window closed months ago. These are timely filing write-offs. Painful, but non-negotiable.

How to Build a Simple Claim Write-Off Policy

You don't need a 20-page manual. You need clear thresholds, consistent criteria, and someone accountable for the decisions. Here's a starting framework.

Three tiers based on claim value:

Under $30: One resubmission attempt with corrected info. If denied again, write off and document.
$30 to $150: One formal appeal with supporting documentation. If denied again, escalate for review before writing off.
Over $150: Full appeal process. Escalate to the billing lead or practice owner before any write-off.

Adjust these thresholds based on your practice size and payer mix. The point is having thresholds at all.

Age-based escalation:

Claims at 30 days: standard follow-up
Claims at 60 days: escalate priority
Claims at 90+ days: review for write-off or final appeal (approaching most payers' timely filing limits)

A simple decision tree by denial type:

Medical necessity = appeal (always)
Coding error = correct and resubmit (immediately)
Timely filing = write off (if no proof of original submission)
Authorization expired = check dates, appeal if within window
Eligibility issue = verify, resubmit if coverage existed

Assign one person as the write-off gatekeeper. No claim gets written off without that person's sign-off. This prevents premature write-offs and creates accountability.

And review your write-off totals monthly, broken down by denial type. If you see the same category growing, that's a process problem upstream, not a write-off problem.

A CTSS program in Minnesota put a version of this three-tier policy in place and saw write-offs drop 40% in the first quarter. Claims that used to be silently abandoned started getting at least one shot at recovery.

At BreezyBilling, this kind of review happens during monthly performance check-ins with your dedicated account coordinator. You don't have to build the system alone.

Preventing Write-Offs Before They Start

The best claim write-off policy is one you rarely need to use. Most write-offs trace back to something that went wrong upstream: a missed eligibility check, a late submission, an authorization that lapsed without anyone noticing.

Five upstream fixes that make a real difference:

Verify eligibility before every session, not just at intake. Coverage changes mid-plan happen more than you'd expect.
Track authorization expiration dates and flag them before they lapse. One expired auth can turn every session after it into a guaranteed write-off.
Submit claims within days of service, not weeks. The longer a claim sits, the more likely something goes wrong.
Review aging A/R weekly, not monthly. Monthly reviews mean you catch problems after the window has closed.
Credential new providers before they see patients. Credentialing gaps create claims that were never going to be paid. Every session during that gap is a write-off waiting to happen.

A group practice running ARMHS and outpatient services in Minnesota set up weekly A/R reviews. They caught 12 claims approaching timely filing deadlines and resubmitted before the window closed, recovering $3,200 that would have been written off.

That's the difference between reacting to write-offs and preventing them.

Final Thoughts

A claim write-off policy doesn't need to be complicated. It needs clear thresholds, consistent criteria, and someone accountable for reviewing the decisions.

The goal isn't to appeal everything. It's to make sure you're fighting the right fights and catching preventable losses before they become permanent ones.

BreezyBilling's dedicated account coordinators follow structured denial follow-up workflows for every client. Our timely filing commitment means one entire category of write-offs is off the table. And monthly performance check-ins keep patterns visible before they become problems.

If you're not sure how much revenue your practice is writing off, or whether those write-offs were necessary, we can help you find out. Reach out for a conversation about your billing.

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